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 two distinct targets:
- Carbon Emissions Reduction Obligation (CERO)
Focusing on hard to treat homes. There is a requirement that 15% of suppliers’ Carbon Emissions Reduction Obligation be delivered in 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
The current obligation period, known as ECO2t, launched on 1 April 2017 and will run until September 2018. This is a transition towards a longer term scheme which will run from 2018 to 2022. The Department for Business, Energy and Industrial Strategy (BEIS) is carrying out a consultation on this longer term scheme at present, also known as ECO3. The consultation is looking at:
- the scheme moving to a 100% Affordable Warmth scheme for fuel poor, low income and vulnerable households
- the energy efficiency and heating measures that can be delivered under the scheme
- the proportion of the scheme that can be delivered under Local Authority Flexible Eligibility
- how ECO can support innovation
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