Energy Company Obligation (ECO)
The Energy Company Obligation (ECO) is intended to provide additional support in the domestic sector, with its main focus on low income, fuel poor and vulnerable households.
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 one obligation, with a rural sub-obligation.
- 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 ‘Help to Heat Group’) to affordably heat their homes.
The current obligation period, known as ECO3, launched on 3 December 2018 and will run until March 2022. The 2015 Spending Review set out plans to have a supplier obligation in place until 2022 with a focus on fuel poverty. The Department for Business, Energy and Industrial Strategy (BEIS) carried out a consultation in 2018 to re-focus ECO on the fuel poor. Changes made after the consultation include:-
- low income and vulnerable households
- requiring 15% of measures to be delivered to rural homes
- increase the proportion of the scheme that can be delivered under Local Authority Flexible Eligibility to 25%
- reducing the current supplier obligation threshold of 250,000 customer accounts (or equivalent) for the scheme, in a phased way, to 150,000 customer accounts (or equivalent) from 2020
- allowing up to 10% of a suppliers’ obligation to be met through the delivery of new, innovative products
Under ECO2, which ran from April 2015 to March 2017, suppliers also delivered against a further obligation called the Carbon Saving Community Obligation (CSCO). Ofgem published a final report on CSCO in September 2017. See here for the report.
For statistics on ECO, please see the UK Government (BEIS) 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