Ofgem has confirmed that it will remove the wall type distinction for heating measures in the fourth Energy Company Obligation (ECO4), publishing its decision on the scheme's scoring methodology on 12 April 2022. The decision follows two consultations held in 2021 on the proposed scoring methodology, and sets out Ofgem's final position on how measures will be scored under the scheme1.
The Energy Company Obligation is a government scheme that requires obligated energy companies to deliver energy efficiency measures to domestic premises in Great Britain. It is administered by Ofgem, while the 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.
On the wall type question, Ofgem stated:
"We will retain our proposed approach and remove the wall type distinction for heating measures."
The decision document also records several other outcomes. Ofgem confirmed it will split the standard heating control measure, and will remove the pre-main heat source for insulation measures1. It intends to introduce partial project scores (PPS) for new district heating system connections in ECO4, and will implement pre-calculated, deemed PPS based on floor area and intermediate SAP band, including a correction factor of 10%1. 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.
On some points, Ofgem postponed its decision. It said it would postpone a decision until further information on guidance is available1. BEIS also decided not to take forward its proposal to make the English Boiler Plus standard a specific ECO requirement throughout Great Britain1. BEIS published the Government Response to the consultation on 1 April 20221.
| Decision area | Outcome |
|---|---|
| Wall type distinction for heating measures | Removed |
| Standard heating control measure | Split |
| Pre-main heat source for insulation measures | Removed |
| PPS for new district heating connections | To be introduced |
| English Boiler Plus as ECO requirement | Not taken forward |
Why it matters for households
The removal of the wall type distinction affects how heating measures are scored when a property is assessed for ECO4 funding. Under the previous approach, the type of wall a property has could influence the scoring of a heating measure. Removing that distinction means the scoring of heating measures no longer turns on wall type, which may change which properties and which packages of measures meet the thresholds for support1.
The scoring methodology determines how much a measure contributes towards a supplier's obligation, and therefore which measures are likely to be delivered. For a household, the practical effect is on whether a proposed heating upgrade, such as a new boiler or heating control, counts towards a supplier's targets and can be funded through the scheme. The decision to split the standard heating control measure and to remove the pre-main heat source for insulation measures also changes how individual measures are treated within a project1.
The PPS figures are intended to represent average annual energy bill savings, calculated from the difference between a property's starting and finishing SAP ratings1. That links the scoring directly to estimated bill savings rather than to the physical characteristics of the wall. Households considering ECO4 will still be assessed on the property's energy performance, and the role of Ofgem remains that of administrator rather than policymaker.
What happens next
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. 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 20121.