The government published its response to the Energy Company Obligation (ECO4) consultation on 1 April 2022, setting out final policy for the scheme that runs from 2022 to 20261. The Department for Business, Energy and Industrial Strategy received 144 responses to the consultation1. The response confirms that ECO4 will apply in England, Scotland and Wales, and that implementation is subject to Parliamentary approval of the Electricity and Gas (Energy Company Obligation) Order 2022, and in Scotland to approval by the Scottish Ministers1.
The solid wall minimum target is set at 90,000 solid wall measures over the four-year scheme1. The consultation had discussed a solid wall minimum requirement of 22,000 solid wall insulation measures per year; the government said updated modelling led it to increase the figure2. The solid wall minimum requirement will be retained, and the option to meet it through solid wall alternative measures will be removed2. A separate minimum equivalent upgrade of 150,000 private tenure band E, F and G homes will also apply1.
"Government will implement a solid wall minimum target of 90,000 solid wall measures over the 4-year scheme"
The government estimates ECO4 will upgrade around 450,000 homes over its four years, most of them to EPC band C, reduce household bills by around £290 on average, and by up to £1,600 for the least efficient homes, and support around 18,000 jobs across Great Britain1. The overall target is £224.3 million in notional annual bill savings by March 2026, and the eligible pool is estimated at at least 3.5 million homes1. ECO4 remains focused on low income and vulnerable or fuel poor households in band D to G homes; owner-occupier homes must be rated D to G, while private rental and social housing must be rated E to G1.
On delivery, the ECO3 scoring methodology applies for three months, between 1 April 2022 and 30 June 2022, and suppliers can choose to deliver early to ECO4 rules and be awarded ECO4 deemed scores from 1 April 20221. Up to 10% of ECO3 delivery may be carried over into ECO4, but the government decided not to implement carry-under1. Measures carried over into E, F and G-rated homes will not count towards the ECO4 EFG minimum, and solid wall alternative measures carried over will not count towards the solid wall minimum2. The government also decided to reduce the supplier allowance by 50%1.
| Item | Figure |
|---|---|
| Solid wall minimum | 90,000 measures over four years1 |
| Private tenure EFG minimum | 150,000 homes1 |
| Homes expected to be upgraded | around 450,0001 |
| Average household bill reduction | around £290, up to £1,600 for least efficient homes1 |
| Overall target | £224.3 million in notional annual bill savings by March 20261 |
| Eligible pool | at least 3.5 million homes1 |
Up to 50% of the obligation target can be met under the reformed ECO4 Flex, which is voluntary for local authorities, the Scottish Government, the Welsh Government and suppliers1. Minimum insulation preconditions apply to homes receiving heating measures: band D homes receiving any heating measure other than first time central heating must have at least one primary insulation measure, and E, F and G homes receiving any heating measure, plus band D homes receiving first time central heating, must have all exterior facing cavity walls and loft or roof insulated, unless eligible fabric measures are already installed to current Building Regulation standards, the home is listed, or it is in a conservation area and cannot have insulation installed2.
Why it matters for households
The solid wall minimum and the EFG minimum direct a fixed share of ECO4 spending towards the least efficient homes, which are typically the hardest and most expensive to treat. For a household in a solid wall property, that matters because solid wall insulation is one of the costlier measures under the scheme, and the minimum target is intended to keep delivery flowing to homes where it might otherwise be skipped in favour of cheaper measures. The insulation preconditions attached to heating measures mean a home receiving a new heating system will generally also need fabric work, so a single upgrade can address both heat loss and heating efficiency. The government's own estimate of around £290 off the average bill, and up to £1,600 for the least efficient homes, indicates the scale of the difference between a partial and a whole-house upgrade1. Eligibility remains tied to income and to the home's energy performance rating, so not every household in a hard-to-treat property will qualify. Details of the scheme are set out in the ECO4 guide, and the rules on combining ECO4 with other funding are covered in the guide to funding ECO4 measures with other government grants.
What happens next
ECO4 early delivery measures can be lodged with TrustMark from 1 July 2022, and measures installed before 1 August 2022 can be notified by 30 September 20221. The domestic Renewable Heat Incentive ended on 31 March 2022 and is replaced by the Boiler Upgrade Scheme1. The government also stated that £950 million of funding for the Home Upgrade Grant was announced in the 2021 Autumn Budget and Spending Review, bringing the total committed to that scheme to £1.1 billion1.
Sources2 cited
- ECO4: 2022 -2026: government response, assets.publishing.service.gov.uk
- Government Response to ECO Consultation - National Insulation Association, nia-uk.org