The Energy Companies Obligation (ECO)

Alongside the Green Deal, a new Energy Companies Obligation (ECO) is in operation ‘to reduce the UK’s energy consumption and support people living in fuel poverty’. It provides targeted financial assistance for those householders who cannot achieve significant energy savings without an additional or different measure of support:

Lower income and the most vulnerable households.
Those living in harder to treat properties.

It is recognised that in these cases the Green Deal 'Golden Rule' cannot be met, because the overall cost of the work would not be equalled or outweighed by the resulting savings in energy bills.

For lower income and vulnerable households the UK Government recognises that the Green Deal is unlikely to work as these households are already struggling to heat their homes suitably. The ECO therefore has an ‘Affordable Warmth’ target, which is distinctly different from the carbon targets in the previous CERT and CESP programmes.

ECO was introduced in January 2013 and will run until March 2015 across Great Britain. It is being delivered by energy suppliers.

ECO creates a legal obligation on energy suppliers to 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.

Home Heating Cost Reduction Obligation (HHCRO)

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.

ECO is administered by Ofgem. For more information and relevant documents about ECO please visit the Ofgem website

Documents and Links:

For more information please see Department of Energy and Climate Change (DECC) ECO website

28 January 2013: Energy Action Scotland's Response to Energy Companies Obligation (ECO) 2012-2015: Guidance for Suppliers

In late November 2012 the new Draft ECO Order was published by the UK Government

In June 2012 the Government released a response to the November 2011 consultation. Find it here.

A policy overview of the Energy Company Obligation was published by DECC in May 2011 and was followed up by the Green Deal and Energy Company Obligation consultation in November 2011.

Consultation on Energy Company Obligation in-use factors This consultation is now CLOSED

For a more in-depth look see Green Deal - ECO section of our members area. If you are not already a member see here.