What is ECO?
The Energy Companies Obligation (ECO) was introduced at the beginning of 2013. It is an energy efficiency programme that replaces two previous energy efficiency schemes: the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP).
ECO places legal requirements on Britain’s larger energy suppliers to deliver energy efficiency measures to domestic energy users. It has been designed to work alongside the Green Deal to provide additional support to vulnerable consumer groups and those with hard-to-treat homes.
In early December 2013, as part of the Energy Bill announcements, the government revealed proposed changes to ECO – you can find out more about these changes below.
If you would like to find out more about ECO, contact the fuel poverty scheme in your London Borough by using our Directory or contact the Energy Saving Advice Service on 0300 123 1234.
How does it work?
There are three strands to the Energy Companies Obligation; the Carbon Emissions Reduction Obligation (CERO), the Carbon Saving Community Obligation (CSCO) and the Home Heating Cost Reduction Obligation (HHCRO). Each of these strands imposes specific requirements and targets on energy suppliers, to March 2017.
Home Heating Cost Reduction Obligation (HHCRO)
(Also sometimes referred to as ‘Affordable Warmth’ or ‘AW’)
The Home Heating Cost Reduction Obligation requires suppliers to provide measures that improve the ability of low income and vulnerable households to heat their homes. This section of ECO covers private sector housing only, and actions must deliver affordable warmth to those who need it most and result in heating savings (e.g. cavity wall insulation, replacement or repair of a boiler).
Carbon Emissions Reduction Obligation (CERO)
The Carbon Emissions Reduction Obligation requires action on hard to treat homes and measures that can’t be fully funded through the Green Deal. Solid wall and hard-to-treat cavity wall insulation are the primary focus of this measure. In early December 2013 DECC proposed that district heating, easy to treat cavity wall insulation and loft insulation be included as allowable primary measures under CERO.
Carbon Saving Community Obligation (CSCO)
The Carbon Saving Community Obligation requires the provision of insulation measures and connections to domestic district heating systems in low income areas. Within the obligation there is a sub-target, whereby a percentage of each supplier’s CSCO must be met by promoting measures to vulnerable households. In December 2013 DECC proposed that at least 25% of each supplier’s CSCO must be achieved by promoting measures to households living in areas rated lowest on the Index of Multiple Deprivation, but this is still to be consulted on.
Changes to ECO: Update December 2013
The government recently revealed proposed changes to ECO as part of the Energy Bills announcements. These changes are still to be consulted on, but include the following:
– An extension of the ECO scheme to March 2017.
– The targets for CSCO and HHCRO will remain the same to 2015 and be extended at the same pace to 2017.
– There will be a 33% reduction to the Carbon Emissions Reduction Obligation target to 2015. This target will be extended at this revised pace to 2017.
– Energy suppliers will be able to carry forward any ‘over delivery’ from predecessor schemes (CERT and CESP), and count this towards their ECO targets. They will also be able to carry forward any ‘over delivery’ on their 2015 ECO targets, and count them towards their 2017 targets.
– Companies who have delivered ‘substantial early progress’ against their current Carbon Emissions Reduction Obligation target will have a reduction in the number of measures they’re required to deliver under CERO
– 25% of each supplier’s Carbon Saving Community Obligation must be achieved by promoting measures to households living in the lowest areas on the Index of Multiple Deprivation. Qualifying criteria will also be simplified. Originally, energy companies were required to meet 15% of their CSCO target by promoting measures to low income and vulnerable households living in rural areas.
– District Heating will be included as an allowable primary measure under CERO, as will loft and easy to treat cavity wall insulation.
– The introduction and standardisation of measures to help prevent fraud, particularly around loft and easy to treat cavity wall insulation.
– A minimum of 100, 000 solid wall insulations is to be delivered by 2017 across all companies and all elements of ECO
Ofgem are administering and monitoring ECO until 2015. Further details can be found on their website, including information for domestic consumers, installers and suppliers. They also publish monthly ECO compliance reports.