ECO

About ECO

The Energy Company Obligation (ECO) is a government energy efficiency scheme in Great Britain designed to tackle fuel poverty and help reduce carbon emissions.

The scheme has seen 4 iterations, ECO, ECO1, ECO2 and ECO3, a brief overview can be found at the bottom of this page. The ECO3 scheme closed on 31 March 2022 and the ECO4 Order came into force in July 2022. ECO4 applies to measures installed from 1 April 2022 and will cover a four-year period until 31 March 2026.

How does ECO Work?

The ECO scheme works by placing a Home Heating Cost Reduction Obligation (HHCRO) on medium and large energy suppliers. Under HHCRO, obligated suppliers must promote measures that improve the ability of low-income, fuel-poor, and vulnerable households to heat their homes. This includes actions that result in reduced energy usage, such as installing insulation or upgrading a heating system. The overall target for these measures is divided between suppliers based on their relative share of the domestic gas and electricity market.

Who is the scheme for?

The ECO scheme supports energy efficiency measures in the homes of those considered to be in fuel poverty, if you’re a homeowner or tenant you can find out more in the homeowners and tenants section.

What Makes ECO4 Stand Out from ECO3?

“ECO4 vs. ECO3: Understanding the Differences”

The introduction of ECO4 marks a notable shift in the government’s approach to energy efficiency schemes. While ECO3 targeted eligible applicants through larger energy suppliers with over 150,000 domestic customers, ECO4 introduces a more inclusive framework. By implementing a buy-out mechanism, ECO4 eliminates obligation thresholds, enabling smaller energy companies to participate in the scheme. This change not only promotes competition but also expands the pool of beneficiaries, ensuring that more households can access energy-saving improvements.

Furthermore, ECO4 expands eligibility criteria to encompass low-income households that may not qualify for traditional benefits. By broadening the scope of eligibility, the scheme aims to address energy poverty more effectively. Additionally, reforms in local authority flexibility empower energy suppliers to fulfill obligations through alternative avenues, such as community initiatives. While these changes represent a departure from the previous model, the overarching goal remains consistent: to enhance energy efficiency and alleviate the burden of high utility costs for vulnerable households.

History of ECO