Of the estimated 8.5 million British homes with solid walls, less than 10% currently have any solid wall insulation (SWI). Yet ECO3 sets an annual target of 'treating' just 17,000 such homes, whether by SWI or other measures.
Since its launch in 2013 the Energy Company Obligation (ECO) has been a cornerstone of government efforts to improve the energy efficiency and heating systems of UK households.
All major energy suppliers (with more than 250,000 customers) are obliged to fund and install measures, such as loft insulation or new boilers, for eligible households in order to meet certain targets.
It has delivered over 2.2 million improvements to some 1.8 million homes.
The current scheme, called ECO2t, finishes in September 2018.
The next phase, called ECO3, will run from October 2018 to March 2022, at a cost of £640 million per year.
Major changes: CERO scrapped and scheme broadened
The major change in policy is the scrapping of the Carbon Emissions Reduction Obligation (CERO) to focus exclusively on the part of ECO called Affordable Warmth (hitherto also known as the Home Heating Cost Reduction Obligation, or HHCRO).
The scheme will be enlarged to cover an estimated 6.5 million households, chiefly those whose occupants are classed as low-income or vulnerable. This forms part of the government's Clean Growth Strategy, which aims to upgrade all fuel-poor homes to at least EPC band C by 2030.
Smaller suppliers will also join the scheme, with the threshold set at 150,000 customers from 2020.
Here we summarise some of the other key aspects of the proposals for ECO3; for detail about the current ECO2 scheme see Insulation and heating grants.
- Up to 25% of eligible households to be identified by local authorities. This introduces greater flexibility, which is potentially valuable in some circumstances: e.g. exploiting economies of scale when installing solid wall insulation in a terrace of houses where only certain households qualify under the ECO criteria.
- 15% of measures to be delivered in rural areas.
- Measures will include first-time central heating systems and replacement of broken heating systems (including oil-fired boilers), as part of a package to include insulation where applicable.
- Ground source heat pumps will be supported by ECO funding even if the household also receives the Renewable Heating Incentive (RHI). Other heating technologies eligible for the RHI will not be supported by ECO funding, although the rights to RHI payments could be assigned to a third party, such as the installer to help pay for the cost of installation.
- Limited ECO funding is proposed for 'innovative' products, installation methods and processes: e.g. technologies that reduce the cost of solid wall insulation.
- ECO installers would be approved and compliant with a quality mark framework.
- ECO support for the least energy efficient social housing would continue, i.e. with an EPC rating of band E or lower.
The Energy Saving Trust expressed concern that the overall level o f ECO funding would be insufficient to meet the 2030 target for fuel-poor homes as set out in the Clean Growth Strategy. They also argue for a more diverse funding landscape for energy efficiency in England, with significant public funding as in Scotland and Wales. They also regretted the omission of renewable heat measures from ECO funding.
National Energy Action (NEA) also called for additional funding mechanisms, estimating that the limited funding proposed under ECO3 will leave nearly a quarter of a million fuel-poor households living in F and G-rated homes long after 2020.