The government set out an expansion of the Energy Company Obligation (ECO) to £1 billion per year from 2022 to 2026 in the British Energy Security Strategy, published in April 20221. The scheme, which places obligations on energy suppliers to fund efficiency improvements in low-income homes, is described in the strategy as helping 113,000 low-income households each year1.
The strategy frames the expansion within a wider package on energy efficiency, stating that households on the lowest incomes have already saved around £300 a year on bills through efficiency measures, and that over £6 billion is being invested in decarbonising the nation's homes and buildings1. Alongside the ECO expansion, the strategy commits to zero-rating VAT for the next five years on the installation of energy saving materials, including insulation and low carbon heating1.
"Expanding the Energy Company Obligation to £1 billion per year from 2022-2026"
The document also sets a 2035 date by which the government intends to phase out the sale of new and replacement gas boilers1. On immediate bill support, it confirms a £200 reduction in energy bills from October for all households in Great Britain through the Energy Bills Support Scheme, and an increase in the Warm Home Discount to £150 in October, extended to assist three million people1.
| Measure | Detail |
|---|---|
| Energy Company Obligation | £1 billion per year, 2022 to 20261 |
| Households helped annually | 113,000 low-income households1 |
| Warm Home Discount | Rising to £150 in October, covering three million people1 |
| Energy Bills Support Scheme | £200 reduction from October for all Great Britain households1 |
| VAT on energy saving materials | Zero-rated for five years1 |
The strategy does not set out how the £1 billion annual figure is divided between measures or suppliers, and no breakdown of funding by nation or by measure type is given1. The Energy Company Obligation is the supplier-funded route through which much of this support reaches homes, and the ECO4 scheme is the current phase of that obligation. Households in England and Northern Ireland have separate support routes, and vulnerable and medically dependent households are a named priority group across schemes.
Why it matters for households
The ECO expansion determines how much supplier-funded support is available for insulation and heating improvements in low-income homes over the four years from 2022 to 2026. For a household that qualifies, the practical effect is that the cost of measures such as insulation is met through the obligation rather than by the occupant. The strategy links efficiency measures to lower bills, citing around £300 a year in savings already achieved for the lowest-income households1. For a home's energy independence, the relevant point is that efficiency reduces the amount of energy that must be bought in the first place, which matters more when prices are set by international markets. The strategy states that the price paid for gas is set internationally and that the UK uses gas both to generate electricity and to heat the majority of its 28 million homes1.
What happens next
The strategy lists several dated commitments alongside the ECO expansion. The Boiler Upgrade Scheme was launched in April 2022 with £450 million, the £240 million Net Zero Hydrogen Fund was to launch later in April, and the £120 million Future Nuclear Enabling Fund was to launch in April1. A comprehensive Energy Advice Service was to launch on GOV.UK by summer, and the first UK-Qatar Strategic Energy Dialogue was to be hosted in May, with more details announced in May1. The strategy also commits to phasing out the use of Russian oil and coal by the end of 20221.
Sources1 cited
- British Energy Security Strategy, data.parliament.uk