Ofgem has published its decision on the scoring methodology for the Energy Company Obligation (ECO4) scheme, covering parts 1 and 2 of its 2021 consultation. The decision document, published in April 2022, summarises responses to both consultations and sets out Ofgem's final position on how measures will be scored under ECO41. A single consultation decision covering parts 1 and 2 was published in March 2022, according to the consultation stages figure in the document1.
The Energy Company Obligation is a government scheme that requires obligated energy companies to deliver energy efficiency measures to domestic premises in Great Britain1. It is administered by Ofgem, while policy and legislation are set by the Department for Business, Energy and Industrial Strategy (BEIS)1. ECO3 ran from 3 December 2018 to 31 March 2022, and ECO4 is intended to run from 2022 to 20261. An interim delivery period will allow suppliers to continue to deliver measures to ECO3 rules from 1 April 2022 to 30 June 2022, with some exceptions1.
On the scoring methodology, Ofgem confirmed that full project scores will be based on starting and finishing intermediate SAP bands, and that scores will be segregated into four floor area segments1. The regulator will implement pre-calculated, deemed partial project scores (PPS) based on floor area and intermediate SAP band, with a 10% correction factor included in the final set of PPS1. Scheme rules will require that the PPS for a measure represents its average annual energy bill savings, based on the difference in average annual bill expenditure between the starting and finishing SAP ratings of the property1.
Several specific decisions were set out. Ofgem will retain its proposed approach and remove the wall type distinction for heating measures, and will split the standard heating control measure1. The decision is to remove the pre-main heat source for insulation measures1. Ofgem intends to introduce PPS for new district heating system connections in ECO41. On one matter, Ofgem decided to postpone its decision until further information on the guidance is available1. BEIS decided not to take forward its proposal to make the English Boiler Plus standard a specific ECO requirement throughout Great Britain1.
"This document summarises the responses to both our consultations and details our final position."
On SAP, a complete edition of SAP 10 (SAP 10.2) was published in February 2022 and is expected to be adopted for Building Regulations purposes in England from June 20221. Ofgem's understanding is that ECO4 legislation will instruct it to calculate scores with reference to SAP 2012, though it will continue to express thresholds to one decimal place1.
Why it matters for households
ECO4 is the mechanism through which obligated energy suppliers fund energy efficiency improvements in homes, particularly for low income and vulnerable households. The scoring methodology determines which measures are prioritised and how much credit suppliers receive for installing them, which in turn shapes what work is offered to householders. The removal of the wall type distinction for heating measures and the splitting of the standard heating control measure change how those measures are valued. The interim delivery period to 30 June 2022 means some work may still be delivered under ECO3 rules in the short term. The policy and legislation sit with DESNZ, the department that succeeded BEIS, and complaints and redress routes are covered separately under energy complaints and redress.
What happens next
ECO4 is intended to run from 2022 to 20261. The interim delivery period runs from 1 April 2022 to 30 June 2022, with some exceptions1. SAP 10.2 is expected to be adopted for Building Regulations purposes in England from June 20221. BEIS published the Government Response to the consultation on 1 April 20221.