The government response to the consultation on the design of the Energy Company Obligation ECO4 was published on 1 April 2022, setting out the policy of the scheme from April 2022 until March 20261. The scheme, worth £4 billion, delivers energy efficiency and heating measures to homes in Great Britain1. BEIS received 144 responses to the consultation, which ran from 20 July 2021 to 3 September 2021 after the close date was extended1. The department said the responses were broadly supportive of its proposals2.
The response confirms how the transition from ECO3 will work. Between 1 April 2022 and 30 June 2022, measures may be installed to ECO3 rules, subject to certain measure exclusions, and early delivery of ECO4 measures during any gap between ECO regulations will be allowed1. Up to 10% of ECO3 delivery may be carried over into ECO4, subject to certain measure exclusions, but carry-under will not be implemented1. The National Insulation Association, summarising the outcome, noted that solid wall alternative measures and measures delivered into E, F and G rated homes can be carried over but will not count towards the ECO4 minimum targets3.
On eligibility and targets, the response states that households in receipt of means tested benefits will be eligible, and that up to 50% of the obligation target can be met under the reformed ECO4 Flex, which is voluntary for local authorities, the Scottish and Welsh governments, and obligated suppliers1. The eligible pool will be at least 3.5 million homes1. Only energy efficiency band D to G homes are eligible for ECO4, and for social housing and private rented accommodation the scheme will support the least efficient homes in bands E to G only1. The response sets an EFG minimum target, increased to 150,000 private tenure homes, and a solid wall minimum target of 90,000 solid wall measures over the four-year scheme1.
Other confirmed policies include a broken boiler and electric storage heating replacement cap for efficient heating of 5,000 per year, with inefficient heating systems upgraded with efficient heating not subject to a cap, and repairs capped at 5,000 homes per year1. Two uplifts for innovation will apply, and demonstration actions will be removed1. Score uplifts of 35% apply in off-gas rural areas in Scotland and Wales1.
"We estimate that over its four years ECO4 will upgrade around 450,000 homes"
The same document estimates most of those homes will reach EPC band C, that household bills will fall by around £290 on average, up to £1,600 for the least efficient homes, and that the scheme will support around 18,000 jobs across Great Britain2. The overall target is £224.3 million in notional annual bill savings by March 20262. Ofgem, which administers ECO, published its own decision on the ECO4 scoring methodology on 12 April 2022, confirming that full project scores will be based on starting and finishing intermediate SAP bands and that the wall type distinction for heating measures will be removed4. Ofgem noted that BEIS decided not to take forward its proposal to make the English Boiler Plus standard a specific ECO requirement throughout Great Britain4.
Why it matters for households
ECO4 is funded through energy suppliers rather than direct government spending, and the cost is recovered through bills, so the scheme's design shapes what work is available in a given home. The band restrictions matter: a home rated D to G can qualify, but social housing and private rented homes must be E to G, so a band D rented property falls outside1. The fabric first conditions mean many homes receiving a heating measure must first have insulation installed, which changes the sequence and scope of a typical upgrade3. For off-gas rural homes in Scotland and Wales, the 35% score uplift gives suppliers a stronger incentive to deliver there1. The £290 average bill reduction and the £1,600 figure for the least efficient homes are estimates for upgraded properties, not a guarantee for any individual household2.
What happens next
Implementation is subject to Parliamentary approval of the Electricity and Gas (Energy Company Obligation) Order 2022, and in Scotland is also subject to the approval of the Scottish Ministers2. The government said it will lay affirmative regulations in Parliament, and BEIS will issue new guidance on innovation and the new fuel poverty targeting methods approach under ECO4 Flex, route 41. BEIS will no longer publish separate ECO Flex guidance; Ofgem will publish separate guidance for local authorities, the devolved administrations and suppliers1. ECO4 early delivery measures can be lodged with TrustMark from 1 July 2022, and measures installed before 1 August 2022 may be notified by 30 September 20222.
Sources4 cited
- Design of the Energy Company Obligation ECO4: 2022-2026 - GOV.UK, gov.uk
- ECO4: 2022 -2026: government response, assets.publishing.service.gov.uk
- Government Response to ECO Consultation - National Insulation Association, nia-uk.org
- Energy Company Obligation (ECO4) Consultation: scoring methodology part 1 and 2 decision, ofgem.gov.uk