ECO4: The Current Energy Company Obligation Scheme

ECO4 is the current Energy Company Obligation scheme: a UK Government backed programme, administered by Ofgem, that obliges medium and large energy suppliers to fund energy efficiency and heating improvements in homes across Great Britain¹. It launched in 2022 and was designed as a scheme worth £4 billion³. Unlike a conventional grant, the money does not come from a government pot you apply to: it comes from the energy suppliers themselves, who are legally required to deliver the work⁵.

The scheme runs from 27 July 2022 to 31 December 2026, following a nine-month extension to its original end date of 31 March 2026⁶. Its focus is deliberately narrow: low income, vulnerable and fuel poor households living in the least energy efficient homes, upgraded as whole houses rather than one measure at a time⁴. For a household that qualifies, that can mean insulation, a new heating system and even solar panels funded through the supplier obligation.

ECO4 explained and its funding sources

ECO4 is the fourth Energy Company Obligation, the latest in a line of schemes that began in 2013, and it is administered by Ofgem under the Electricity and Gas (Energy Company Obligation) Order 2022, as amended⁶. It is a UK Government backed scheme regulated by Ofgem, covering Great Britain².

The crucial point for a householder is who actually funds the work. ECO4 is a supplier obligation, not a grant scheme⁵. The Energy Company Obligation places a legal duty on medium and large energy suppliers to deliver energy efficiency improvements to domestic households¹¹. Suppliers that supply electricity or gas to at least 150,000 customer accounts in a relevant qualification year are obligated, and each supplier's obligation is calculated based on each unit of supply above that threshold⁶.

In practice this means the work is arranged through suppliers and their delivery partners, and the cost is ultimately carried by the suppliers themselves rather than paid out of a household's pocket or a grant application. The scheme was designed to be worth £4 billion over its life³. For the household, the practical effect is that qualifying measures are installed at no direct cost, but the route in runs through a supplier, an installer working for a supplier, or a council referral, not through a government grant portal.

Why the scheme exists: heating costs for low income households

The stated objective of ECO4 is to reduce fuel poverty by improving the least energy efficient housing stock, occupied by low income, vulnerable and fuel poor households⁴. Obligated suppliers are legally required to reduce heating costs for those households by funding energy efficiency, insulation and heating measures⁵. The scheme also carries a second purpose: reducing household energy costs and carbon emissions together¹¹.

The target group is defined consistently across the official documents: households living in fuel poverty or vulnerable to the risk of living in a cold home, in houses that are energy inefficient¹. The scheme improves the least energy efficient homes as a way of meeting the Government's fuel poverty and net zero commitments¹².

This is where ECO4's value to a household's energy independence lies. A poorly insulated home with an old heating system is dependent on large amounts of purchased energy, whatever the price does. Insulation, an efficient heating system and solar generation reduce the amount of energy the home must buy, and so reduce exposure to price rises. What ECO4 does not do is remove the household's dependence on the supplier-funded delivery chain: the measures are chosen and installed under scheme rules, and the funding cannot be topped up from other government schemes, as covered later in this page.

How the supplier obligation works: HHCRO and the caps

ECO4 consists of one distinct obligation, called the Home Heating Cost Reduction Obligation (HHCRO)¹³. The ECO scheme works by placing the HHCRO on medium and large energy suppliers¹⁵. The delivery target is divided between obligated suppliers according to each supplier's relative share of the domestic gas and electricity market⁶.

The obligation is not a free-for-all: several caps shape how suppliers can meet it.

• ECO4 Flex cap: suppliers can achieve no more than 50% of their HHCRO through measures installed under ECO4 Flexible Eligibility⁶.
• PPS cap: measures under the relevant private sector provision are capped at 12.5% of a supplier's total HHCRO¹³.
• BFR cap: broken heating replacements are capped at 0.5% of each supplier's total HHCRO obligation¹³.

Suppliers that exceed the customer thresholds have an obligation calculated on each unit of supply above the supplier allowance⁶. For the household, the practical meaning is that suppliers have strong reasons to find eligible homes and install qualifying measures in them, but they also have limits on how much of their obligation they can meet through any one route, which shapes what is on offer in a given area at a given time.

Who qualifies: benefits, EPC bands and property rules

Eligibility has two halves: who lives in the home, and what the home is. On the person side, you must be in receipt of a means tested benefit, or qualify through one of the ECO Flex routes¹¹. The qualifying benefits include Income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Income Support, Pension Credit (Guarantee Credit or Savings Credit), Universal Credit, Housing Benefit, Tax Credits, and Child Benefit subject to income thresholds that depend on household composition¹¹.

On the property side, only homes in EPC band D to G can be treated⁹. The rules differ by tenure:

A privately rented home must have an energy efficiency rating of E, F or G, and the owner's permission is required before work proceeds¹⁶. Private rented households must be in EPC bands E, F or G for all eligible routes¹⁹. Care homes and student halls of residence are not eligible, as these are commercial properties¹⁴.

There is also a minimum improvement requirement: properties starting in EPC bands F and G must be improved to band D, while properties starting in bands E and D must be improved to band C⁵. This is the engine of the whole house approach: a single measure rarely moves a home two bands, so the rule pushes suppliers toward packages of work.

The routes in: Help to Heat, LA Flex, In-Fill and Supplier Flex

ECO4 recognises several eligibility routes: the Help to Heat Group, Social Housing, LA Flex, In-Fill and Supplier Flex²⁰. The Help to Heat Group is the benefits route described above, with the eligible benefits listed in the scheme guidance¹³.

LA Flex, formally the Local Authority Flexible Eligibility element, exists because many low income and vulnerable households receive no means tested benefit at all. Councils can voluntarily participate in ECO4 Flex to identify those households⁴. Local authorities, and the Scottish and Welsh governments, refer households they assess as eligible, and suppliers install against those referrals²¹. There are four separate qualifying routes for identifying low income and vulnerable households, and in ECO4 suppliers may also provide evidence for routes 2 and 4⁸.

• Route 1: owner occupied households in EPC bands D to G¹⁴
• Route 2: EPC bands E to G, owner occupied and private rented households meeting at least two proxy criteria, such as low income and vulnerability⁵
• Route 3: EPC bands D to G owner occupied and E to G private rented households referred by a GP, a health professional or similar⁵
• Route 4: a route applicable to ECO4 Flex only, where suppliers and local authorities can propose new methods to DESNZ for identifying low income and vulnerable households, demonstrating the methodology is more effective than Routes 1 and 2²²

In-Fill allows measures on neighbouring properties: cavity wall insulation, solid wall insulation and district heating connection can be delivered to homes adjacent to an ECO eligible property, in any tenure and at any starting SAP band, with the applied measure matching that of the associated property¹³. Cornwall Council reports 2,583 households supported to make their homes warmer under LA Flexible Eligibility in its area²³.

Measures covered: from loft insulation to renewable heating

The ECO4 measures table sets out a wide list of qualifying actions¹³:

• Wall, roof, floor and loft insulation
• Boiler upgrades to non-renewable and renewable heating systems
• Boiler repair of a broken heating system, and replacement of a broken efficient heating system
• First time central heating
• Electric storage heater upgrades, repairs or replacement
• Connection to a district heating system
• Heating controls
• Solar PV
• Draught proofing, window glazing and higher performance external doors¹³

Councils describe the same range in household terms: examples of measures that can be installed under ECO4 Flex include solid wall insulation, cavity wall insulation, room in roof insulation, loft insulation, flat roof insulation, electric storage heater upgrades, first time central heating to an air source heat pump, boiler upgrades from oil, LPG and solid fuel to an air source heat pump, and solar photovoltaic panels⁵. Derbyshire's guidance lists support to install central heating where a home has no boiler or radiators, to replace storage heaters or coal fires with gas central heating, and to replace non-condensing or heat only boilers with modern combi boilers¹¹.

Two exclusions matter. ECO4 will not provide loft or cavity wall insulation on their own¹¹. And in general, the replacement, upgrade or repair of a boiler, central heating system or electric storage heater is not eligible in the private rented sector under the relevant provisions¹³.

Prioritising the building envelope before technology

ECO4's defining change from earlier ECO phases is its shift to a fabric-first, multi-measure, whole-house retrofit approach⁸. The scheme focuses on whole house retrofits for low income and vulnerable households⁶, tackling fuel poverty while reducing carbon emissions through supporting whole house energy efficiency improvements¹⁷.

Fabric-first means the building envelope comes before the heating system: insulation reduces the heat a home loses, so the heating that follows can be smaller, cheaper to run, or both. The minimum improvement requirement drives this. Because a home starting in band F or G must reach band D, and one starting in E or D must reach band C⁵, a supplier cannot discharge its obligation with a token measure. The work has to add up to a genuine transformation of the home's energy performance.

For the household, this is the difference between ECO4 and the lighter-touch schemes around it. The Great British Insulation Scheme continues ECO4's focus on reducing fuel poverty and energy bills, but aims to deliver rapid installation of single energy efficiency measures to a wider pool of households in the least efficient homes⁴. ECO4 goes deeper on fewer homes. The trade-off is a longer, more involved project: multiple measures, more disruption, and an eligibility and declaration process that confirms the property's status before installation begins²⁰.

Timelines, cut-off dates and the extra nine months

The obligation period runs from 27 July 2022 to 31 December 2026 and is split into four phases⁶:

Suppliers notify Ofgem of their domestic customer numbers and supply by fixed deadlines in each phase: 17 August 2022 for Phase 1, 1 February 2023 for Phase 2, 1 February 2024 for Phase 3 and 1 February 2025 for Phase 4⁶.

The end date has moved. ECO4 was originally due to end on 31 March 2026⁷. The Government consulted on extending the scheme and confirmed a nine-month extension to 31 December 2026⁷. The delivery guidance was updated to reflect that extension¹³.

How a household applies

There is no single national application portal. The route depends on how you qualify and where you live.

If you qualify through benefits, the Help to Heat route, you can approach an obligated energy supplier or an installer working with one. If you qualify through your council, the process starts locally. Households wishing to apply for ECO4 Flex funding in Ceredigion, for example, contact one of the council's approved ECO4 Flex providers or agents, who facilitate the application⁵. In Greater Manchester, eligible households apply through Greater Manchester's Retrofit Portal⁹. West Lindsey directs residents to its local authority partner, YES Energy Solutions¹⁷.

Council practices differ widely. Bridgend Council states it will not accept ECO related requests directly: residents assessed as potentially eligible are referred on to the relevant funding scheme provider or an approved installation company, with applications checked via its ECO Flex delivery partner E.ON¹. Leeds restricts its scheme to those managed by Leeds City Council or contractors endorsed by the council¹². To benefit from ECO4 Flex you must own your own home or have your landlord's permission⁵.

The eligibility and pre-installation declaration form confirms the eligibility of properties receiving measures under ECO4 or the Great British Insulation Scheme, and collects project level information before installation²⁰. Local authorities send their LA declaration notifications to Ofgem for review, by email to ECO4Flex@ofgem.gov.uk at the beginning of the scheme⁸.

How the scheme has performed and what it costs

The final stage impact assessment for the mid-scheme changes put the total discounted costs of ECO4 compliant delivery, at a 75% compliance level, at £671.8 million, against total discounted benefits of £752.4 million²⁴. On those figures the scheme's benefits exceed its costs, though the assessment is a modelled estimate, not a delivery record.

Delivery itself is monitored. Ofgem commissions randomised audits of solid wall insulation installed through ECO4 and the Great British Insulation Scheme, and publishes the results as official statistics, to understand the extent of problems with installed measures²⁶. That audit programme exists because quality has been a live concern: a measure that is installed badly, particularly external or internal solid wall insulation, can create damp and structural problems that cost more to put right than the original work saved.

The scheme's design has also drawn criticism of a different kind: the whole house requirement means some households are refused work they would happily accept. ECO4 will not fund loft or cavity wall insulation on their own¹¹, and measures may be rejected at the notification stage²⁷. For a household that wanted one measure quickly, the lighter Great British Insulation Scheme exists alongside, though a measure notified under that scheme cannot then count under ECO4¹³.

Filling the gaps by combining ECO4 with other support

The blending rules are strict and worth knowing before you plan any work. Funding for measures delivered under ECO4 must not be blended with funding from other government schemes or grants, including but not limited to the Warm Home Discount, the Boiler Upgrade Scheme, the Social Housing Decarbonisation Fund and the Home Upgrade Grant²¹. The delivery guidance states it plainly:

The same rule applies across the scheme's documents: funding for measures delivered under ECO4 cannot be blended with other government schemes or grants¹⁴. A measure does not count as a qualifying action on ECO4 if it has been notified under the Great British Insulation Scheme¹³.

There is one point of contact between the schemes in the other direction: ECO4 approved insulation measures can be delivered under the Great British Insulation Scheme where that scheme's own measure type and eligibility requirements are met²⁸. And homes qualifying under ECO4 Flex Route 2 are also eligible under route D of the Warm Homes Local Grant²⁹, which is a separate scheme with its own funding.

Life after the scheme closes

ECO4 closes on 31 December 2026¹³. The scheme was originally due to end on 31 March 2026, with no subsequent ECO5 replacement named at that point⁵, and the nine-month extension was confirmed to bridge the gap to whatever follows⁷.

For a household, two practical points follow. First, eligibility and notification must fit inside the scheme's lifetime; the extension consultation and guidance set the end date at 31 December 2026⁷. Second, the successor landscape is already taking shape: the Warm Homes Local Grant is running for 2025 to 2028²⁹, and the Great British Insulation Scheme continues ECO4's focus on fuel poverty with a lighter, faster model⁴. Households that miss ECO4 will not be left without options, but the successor schemes have different eligibility rules, different measure lists and, in some cases, different funding structures, so a household that nearly qualifies now should check the alternatives rather than assume the same package will be available later.