The Government decided not to proceed with doubling the Energy Company Obligation (ECO) scheme, according to reporting cited by the Energy and Climate Intelligence Unit (ECIU) on 10 August 2022. The proposal to double the scheme had been developed by the energy industry1.
The decision was reported alongside ECIU analysis of what it called the "stark differences between highly insulated and poorly insulated homes". The analysis, based on Cornwall Insight estimates for the October 2022 and January 2023 price cap, found homes rated band F on the Energy Performance Certificate (EPC) system were set to have a gas bill £968 higher than a home rated EPC band C, the Government's target for 2035. The average UK home is rated band D, and these homes were set to pay £420 more for gas over the winter compared to a band C home1.
Taken together, gas and electricity bills for the worst rated homes were put at almost £2,000 extra compared to band C, with average band D homes paying almost £600 extra. ECIU said wholesale gas costs were set to have added around £2,500 to energy bills during the gas crisis1.
| EPC band | Annual total energy bill 2022/23 (estimate, £) | Extra annual bill payments compared to EPC band C (£) |
|---|---|---|
| EPC C | 3,877 | |
| EPC D | 4,474 | 598 |
| EPC E | 5,186 | 1,309 |
| EPC F | 5,854 | 1,978 |
| EPC G | 5,581 | 1,704 |
ECIU noted that EPC band G homes have lower energy bills than band F because of the way the EPC is calculated, and that band G homes often use other secondary sources of heat such as biomass1.
Jess Ralston, Senior Analyst at ECIU, said the ECO4 scheme had worked well and was knocking at least £600 a year off the bills of fuel poor households, but that government was non-committal on doing more.
"The ECO insulation scheme has worked well and is knocking at least £600 a year off the bills of fuel poor households, but government is non-committal on doing more."
ECIU also cited a Gemserv industry survey showing 80% of installers said they had capacity to take on 25-50% more work, and 96% expected job creation from an ECO Plus scheme. Its earlier analysis found energy efficiency schemes such as ECO had contributed to savings of £1.2bn per year under current prices1.
Why it matters for households
The gap between a band C home and a band F home was put at £968 on gas alone, and £1,978 across gas and electricity, for the 2022/23 winter. That difference is the practical value of the insulation and glazing measures that move a property up the EPC bands, and it sits with the household rather than the supplier. The decision not to double ECO means the rate at which those measures are installed through the obligation is not being increased, at a point when the analysis puts the average band D home £598 a year worse off than band C1.
For a household, the EPC band is the number that links the property to the bill. The Energy Company Obligation is one route by which that band can change without the household paying the full cost, and its funding comes from energy suppliers rather than directly from government. The reported decision leaves the scheme at its existing scale. ECIU's position is that insulation reduces gas demand and bills permanently, in contrast to increasing UK gas supply, which it said would not come online soon and would not cut demand or price1.
What happens next
No further detail on the decision, or on any replacement for a doubled ECO, is given in the reporting cited. The ECIU release points to an updated version of its analysis published later in 20221.