Ofgem published version 1 of its Energy Company Obligation (ECO4) Guidance: Delivery on 14 October 2022, setting out the procedures for administering the Electricity and Gas (Energy Company Obligation) Order 20221. The document is aimed at suppliers and the wider supply chain and describes how measures eligible to count towards the ECO target are delivered, how a supplier achieves its obligation, and the criteria each measure must meet1.
The guidance states that the overall obligation period runs from the commencement date of the ECO4 Order on 27 July 2022 to 31 March 20261. It also records that ECO3 Interim Delivery allowed suppliers to deliver to ECO3 rules and ECO3 scoring methodology for three months between 1 April 2022 and 30 June 20221. Ofgem lists the ECO4 guidance as a set of documents, covering delivery, supplier administration, local authority administration, new measures and products, and monitoring1.
The delivery guidance sets out which measures are eligible by property and route. Its tables include the following combinations1:
| Route | Property | Rating | Measures |
|---|---|---|---|
| HTHG | Owner-occupied | D | All measures |
| Social housing | Social housing | D | Insulation measures only, and insulation measures to meet the minimum insulation requirement |
| Social housing | Social housing | E to G | Insulation measures, first time central heating, renewable heating, district heating connection and insulation measures |
| ECO4 Flex route 1 | Owner-occupied | D to G | All measures |
| ECO4 Flex routes 2, 3 and 4 | Owner-occupied | E to G | All measures |
| In-fill | Any | Any | Cavity wall insulation, solid wall insulation and district heating connection |
| In-fill | Any | D to G | Solid wall insulation and/or district heating connection |
On in-fill, the guidance states that all in-fill homes, whether flats or houses, will not be required to meet the project minimum requirement or the minimum insulation requirement1. It adds that in-fill measures cannot be transferred until all the in-fill and primary measures are approved, and that once verified they can only be transferred as a group1. Where a pre-existing Energy Performance Certificate based on a SAP assessment exists, issued in the past two years and three months before the day of completion of the in-fill measure, the most recent EPC can be used1.
On rural and off-gas premises, the guidance states that projects delivered in rural off-gas properties in Wales and Scotland will receive an uplift of 35 per cent1. In England, an uplift for measures delivered to off-gas premises will not apply, as these homes are expected to receive support under the Home Upgrade Grant1. In Wales, Rural Urban Indicator Codes D1, D2, E1, E2, F1 and F2 qualify as rural areas; in Scotland, classifications 6, 7 and 8 classify as rural areas1.
The guidance also covers the private rented sector, stating that properties occupied by a member of the Home Test Group, or a person declared as eligible by the local authority living in a property with an initial SAP energy efficiency rating of E, F and G, are eligible to receive ECO4 measures1. It lists solid wall insulation, first time central heating, district heating connection and renewable heating among the qualifying actions1.
"Once the ECO4 LA Flex Register becomes available in 2023, the LA should notify their declaration to Ofgem on the LA Register."
Why it matters for households
ECO4 is the obligation under which energy suppliers fund energy efficiency measures in homes, so the delivery guidance is the document that determines which homes can receive which measures and on what terms. For a household, the route into the scheme matters: the tables above show that owner-occupied homes on the lowest energy efficiency ratings can access the widest set of measures, while social housing and in-fill properties are restricted to particular categories1. The 35 per cent uplift for rural off-gas properties in Wales and Scotland changes the value a supplier can claim for work in those areas, while the absence of an equivalent uplift in England reflects the expectation that off-gas homes there are supported through the Home Upgrade Grant instead1. The rules on in-fill, including the requirement that measures are transferred as a group, affect how projects are assembled and completed1. The guidance also sets out how ECO4 interacts with other funding, including the Warm Home Discount, the Home Upgrade Grant, the Boiler Upgrade Scheme and the Social Housing Decarbonisation Fund1. Households seeking measures through their local authority route will be affected by the declaration process described in the guidance1.
What happens next
The guidance states that the ECO4 LA Flex Register is expected to become available in 2023, at which point local authorities should notify their declarations to Ofgem on that register1. No further dated steps are set out in the document.
Sources1 cited
- ECO4 delivery guidance, ofgem.gov.uk