The Energy Company Obligation 2022 to 2026 policy guidance was published in July 2022, covering how obligated suppliers, manufacturers and installers apply for Innovation Measures, Alternative Methodology and Data Light Measures1. The scheme, which began operating in January 2013, has delivered over 3.5 million improvements in around 2.4 million homes1. ECO4 runs until 31 March 2026 at an increased value of around £1bn per year1.
Under ECO4 the supplier target is based on annual bill savings, and the scheme carries a minimum requirement to improve the Standard Assessment Procedure rating of band D and E homes to at least band C, and band F and G homes to at least band D1. Ofgem is the ECO4 scheme administrator, and a Technical Advisory Panel appointed by Ofgem assesses applications for Innovation Measures, making a recommendation on approval and the appropriate level of uplift1.
The guidance sets two levels of uplift for Innovation Measures: 25% for an application with a reasonable explanation around improvement against commonly available products, and 45% for substantial improvement against specific criteria1. Suppliers can meet up to 10% of their obligation through delivering Innovation Measures, with a maximum of 5% through promoting a single Innovation Measure product1. For Data Light Measures there is a scheme-wide cap of 5,000 per measure type, while there is no delivery cap for Standard Alternative Methodology measures1.
"ECO4 requires that all ECO measures, except for certain district heating system measures and novel DLMs, must be delivered by TrustMark Registered Businesses"
The guidance also states that measures installed under ECO4 must carry at least a two-year insurance backed guarantee1. Measures are excluded where they are wholly or partly fuelled by coal, oil, biofuel or Liquid Petroleum Gas, where they are wholly or mainly fuelled by other fossil fuels, where they are a district heating connection, or where they are a repair1.
| Item | Figure |
|---|---|
| Scheme start | January 20131 |
| ECO4 end date | 31 March 20261 |
| Scheme value | Around £1bn per year1 |
| Improvements delivered to date | Over 3.5 million, in around 2.4 million homes1 |
| Innovation Measure uplift | 25% or 45%1 |
| Supplier obligation cap for Innovation Measures | 10%, with 5% maximum for a single product1 |
| Data Light Measures cap | 5,000 per measure type scheme-wide1 |
Why it matters for households
The Energy Company Obligation is the main supplier-funded route by which low income and vulnerable households in the least energy efficient homes receive insulation and heating improvements without paying the full cost. The guidance confirms that ECO4 is fully focused on those households, and that the minimum requirement is a move up the SAP scale rather than a fixed list of measures1. For a household, the practical effect is that the scheme is aimed at homes in bands D to G, and that the improvement delivered is judged by the resulting energy rating.
The uplift structure matters because it determines whether newer products reach homes at all. The guidance records that under ECO3 the blanket 25% uplift did not fully support more costly measures with greater benefits, and that some suppliers went through the application process and then delivered the standard counterpart instead1. The 45% tier for substantial improvement is intended to change that calculation. The requirement that measures be delivered by TrustMark Registered Businesses, and carry a two-year insurance backed guarantee, bears on what a household can expect in terms of who does the work and what protection applies afterwards1.
The caps shape how much of the scheme can be met through newer or less proven routes. Innovation Measures are capped at 10% of a supplier's obligation, and Data Light Measures at 5,000 per measure type across the scheme, so the bulk of delivery remains through established measures1. The regulation and policy framework behind these rules sits with the government department then known as BEIS, which handled enquiries about the guidance1.
What happens next
The guidance states that Ofgem has published separate guidance setting out its application and administrative process for the Innovation Measure, Standard Alternative Methodology and Data Light Measure routes1. ECO4 runs until 31 March 20261. No further dates are given in the guidance.
Sources1 cited
- Energy Company Obligation guidance 2022 to 2026, assets.publishing.service.gov.uk