The House of Lords Grand Committee considered and approved the draft Electricity and Gas (Energy Company Obligation) Order 2022 on 12 July 2022, establishing the expanded ECO4 scheme in Great Britain until March 20261. The order succeeds the previous ECO order in Great Britain and replaces ECO3, which came to an end in March1.
The order extends the scheme by four years to 2026 and expands it from around £640 million to around £1 billion per year1. It introduces mandatory minimum energy efficiency improvements: homes in EPC bands F and G must be improved to a minimum band D, and bands D and E homes to a minimum band C1. At least 150,000 EPC bands E, F and G private tenure homes are to be upgraded, and solid wall insulation is to be installed in at least 90,000 homes1. Broken boiler replacements will continue to be limited, with upgrades capped at 20,000 homes1. The proportion of a supplier's obligation that can be delivered under flexible eligibility rises to 50%, enabling local authorities, energy suppliers, Citizens Advice and the NHS to identify households vulnerable to living in a cold home1.
The government estimates around 800,000 measures will be installed in around 450,000 homes, with around 360,000 homes upgraded to EPC bands B and C1. Expected savings are around £300 on average over the lifetime of the measures and up to £1,600 for those in the least energy-efficient homes, though savings could average around £600 next winter1. Measures installed since 1 April can count towards suppliers' obligation targets, and nearly 33,000 measures have already been installed since that date1.
"The Government held a consultation on these reforms last summer and published the government response in April."
The government increased the EPC bands E, F and G minimum requirement from 100,000 to 150,000 private tenure homes following consultation, and is providing extra incentives for measures in rural off-gas-grid areas in Scotland and Wales1. The repair of oil and liquefied petroleum gas heating systems will be allowed as a last resort in off-gas-grid homes where low-carbon heating measures cannot be installed1. One peer noted that the legislation had been due to have legal effect on 1 April and said 25,000 households could have benefited during the delay1. Another raised concerns about the adequacy of the solid wall minimum requirement and about gaps in energy advice provision1.
Why it matters for households
The order sets the framework for supplier-funded energy efficiency grants in Great Britain for four years, so the terms on which a household can obtain Energy Company Obligation support are now fixed until March 20261. The mandatory minimum improvement standards mean that a home starting in band F or G must reach at least band D, and one starting in band D or E must reach at least band C, which shapes the scope of work a property can receive1. The expansion to around £1 billion per year increases the funding available through suppliers, and the higher flexible eligibility proportion widens the routes by which a household can be referred, including through local authorities, Citizens Advice and the NHS1. The government's estimate of around £600 average savings next winter applies to the measures delivered under the scheme, not to household bills generally1. The order sits within the wider UK home energy regulation and policy framework.
What happens next
The order provides for the expanded and reformed ECO scheme in Great Britain until March 20261. Measures installed since 1 April 2022 count towards suppliers' obligation targets, split into interim delivery for measures installed between 1 April and 30 June to slightly amended ECO3 rules, and early delivery for measures installed to the new rules1. The government has not reported a commencement date for the order beyond the scheme running to March 20261.
Sources1 cited
- Electricity and Gas (Energy Company Obligation) Order - Hansard - UK Parliament, hansard.parliament.uk