The Energy Company Obligation moved into a new phase in April 2022. ECO3 closed at the end of March 2022 and ECO4 commenced in April 2022, although the ECO4 Order did not come into force until July 2022, according to the Household Energy Efficiency Statistical Release1. Installations made between 1 April and 30 June 2022 could be counted as either "ECO3 Interim Delivery" or "ECO4 Early Delivery"1.
Delivery under the new phase started slowly. ECO4, including ECO3 Interim, began in the second quarter of 2022, initially delivering 10,500 measures per month, down from 30,200 at the end of ECO32. Across 2022 as a whole, 159,700 measures were delivered through ECO, a fall of 59 per cent compared with 2021, and 72,800 households received an ECO measure, 61 per cent fewer than in 20211. ECO measures accounted for 78 per cent of all measures installed in 20221. Delivery later picked up, peaking at 33,800 measures in April 20242.
The scheme's shape changed with the phase. Under ECO4, 71 per cent of measures installed to the end of the third quarter of 2025 were heating and micro-generation measures, up from 57 per cent in ECO3 and 33 per cent in ECO1 and ECO2, with heating controls alone accounting for 49 per cent of ECO4 measures2. Insulation's share fell from 67 per cent in ECO1 and ECO2 to 29 per cent in ECO42. By the end of September 2025, around 949,800 measures had been installed under ECO4 in around 280,100 households, including measures carried over from ECO32. All surplus actions, of which there were 60,700, had to be notified to Ofgem by 30 June 20232.
Separately, on 23 March 2022 HM Revenue and Customs set out a time-limited zero rate of VAT for the installation of certain energy saving materials in residential accommodation in Great Britain3. The measure took effect from 1 April 2022 and runs until 31 March 2027, after which installations revert to the 5 per cent reduced rate unless further legislation extends it4. It applies to England, Scotland and Wales; in Northern Ireland the list of qualifying goods and rate of VAT remain unchanged3. The relief is no longer restricted by the social policy conditions or the 60 per cent test, and wind and water turbines were brought back into scope4. The Spring Statement 2022 said the government would expand the scope of VAT relief available for energy saving materials and ensure households having them installed pay 0 per cent VAT5.
"ECO3 closed at the end of March 2022 and the new phase of ECO (ECO4) commenced in April 2022 (although the ECO4 Order did not come into force until July 2022)."
| Measure | 2022 delivery |
|---|---|
| ECO | 159,700 |
| LAD1 and LAD2 | 35,100 |
| Sustainable Warmth (LAD3 and HUG1) | 6,900 |
| SHDF | 2,300 |
| GHGV | 160 |
Source: Household Energy Efficiency Statistical Release, March 20231
Why it matters for households
ECO is the main obligation through which energy suppliers fund efficiency improvements in homes, so the transition between phases directly affects what work can be funded and when. The gap between ECO4 starting in April 2022 and its Order coming into force in July 2022 created a three-month window in which installations could be logged under either phase1, and monthly delivery in that period ran at roughly a third of the rate at the end of ECO32. For a household, the practical effect was fewer measures installed across Great Britain in 2022 than in the previous year, with the overall count down 55 per cent to around 204,1001.
The shift towards heating measures under ECO4, and away from insulation, changes what a funded package tends to contain. Heating controls made up 49 per cent of ECO4 measures to the end of the third quarter of 2025, while insulation's share of the phase fell to 29 per cent2. ECO4 uses a whole-house approach, and many eligible homes must have insulation installed before heating measures2. The average number of measures per household rose to 4.10 under ECO4 alone, against 1.45 at the end of ECO32.
On the tax side, the zero rate applies to installation of qualifying energy saving materials in residential accommodation in Great Britain, which reduces the upfront cost of eligible work for the period it is in force3. It does not apply in Northern Ireland, where the treatment is unchanged3. The rate is time-limited to 31 March 20274.
What happens next
The zero rate of VAT on the installation of certain energy saving materials runs until 31 March 2027, after which it reverts to 5 per cent unless further legislation extends it4. All ECO3 surplus actions had to be notified to Ofgem by 30 June 20232. The annual detailed statistical release was published on 27 March 20252. The sources do not state an end date for ECO4.
Sources5 cited
- Household Energy Efficiency Statistical Release, assets.publishing.service.gov.uk
- Household Energy Efficiency Statistical Release November 2025, assets.publishing.service.gov.uk
- Changes to the VAT treatment of the installation of Energy Saving Materials in in Great Britain - GOV.UK, gov.uk
- The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 - GOV.UK, gov.uk
- Spring Statement 2022, assets.publishing.service.gov.uk