Energy Company Obligation (ECO)
The Energy Company Obligation (ECO) is intended to provide additional support in the domestic sector, with a particular focus on vulnerable consumer groups and hard-to-treat homes.
ECO was introduced in January 2013 and is being funded and delivered by larger energy suppliers across Great Britain. It is administered by Ofgem. ECO is worth around £1.3 billion every year.
Through ECO, energy suppliers must improve the energy efficiency of households through the establishment of three distinct targets:
- Carbon Emissions Reduction Obligation (CERO)
Focusing on hard to treat homes and, in particular, measures that cannot be fully funded through the Green Deal.
- Carbon Saving Community Obligation (CSCO)
Focusing on the provision of insulation measures and connections to district heating systems to domestic energy users that live within an area of low income. A minimum of 15% of all activity within the CSCO will be delivered within rural areas.
- Home Heating Cost Reduction Obligation (HHCRO) (Affordable Warmth)
Requiring energy suppliers to provide measures which improve the ability of low income and vulnerable households (the ‘Affordable Warmth Group’) to affordably heat their homes.
Changes to ECO
DECC carried out a consultation on proposals to change the Energy Company Obligation. Key proposals included the extension of the scheme from 2015 to 2017, modifying the eligibility criteria for CSCO and allowable primary measures under CERO. For EAS’s response to that consultation, please see here.
The new obligation period, known as ECO 2, launched on 1 April 2015 and will run until 31 March 2017.
For statistics on ECO, please see the UK Government (DECC) Household Energy Efficiency National Statistics page
The Scottish Government produced a report in March 2016 of the energy efficiency measures which were installed in Scotland under ECO1 (between 1 January 2013 and 31 March 2015). See here for the report.
For Further Information
ECO website - Ofgem
ECO website - Department of Energy and Climate Change (DECC)