Written by Kate Hallewell
Did you know that the fourth phase of the Government’s Energy Company Obligation called ECO4 is currently accepting applications from homeowners?
Here we explain the grants and the changes that have been made to the scheme. So grab a cup of coffee and get ready to learn everything there is to know about ECO4!
The Energy Company Obligation (ECO) is a scheme that requires energy suppliers to improve energy-efficiency in UK homes while also tackling fuel poverty. It has been running since 2013, through several iterations, and the current phase is known as ECO4.
This latest phase of the scheme has £4 billion of funding allocated to it and it is expected to run until March 2026.
This blog covers the changes to the scheme, compared to previous phases. Find out everything you need to know about the current phase – ECO4.
1. What is the Energy Company Obligation?
The Energy Company Obligation (ECO) is a scheme that requires energy companies to help households who are struggling with their fuel bills. It is a government initiative that obligates energy companies to reduce carbon emissions and help the UK meet carbon reduction targets.
In accordance with the guidelines, under the ECO4 obligation, energy suppliers are to deliver lifetime savings by installing energy efficiency measures that reduce energy usage in homes throughout England, Scotland and Wales.
The Energy Company Obligation (ECO) launched in 2013 and over 3.6 million measures, including the work of heating and insulation installers, have been implemented in over 2.4 million homes to date.
2. What is ECO3?
ECO3 is the previous phase of the Energy Company Obligation. It started in December 2018 and was available until 31 March 2022.
(ECO1, ECO2 and ECO2t were earlier phases of the scheme. There’s more information regarding these phases on the Ofgem website).
3. What is ECO4?
ECO4 is the fourth and final phase of the government’s Energy Company Obligation. It started in August 2022 and it is due to continue until 31 March 2026, but it could end earlier if energy companies meet their obligation.
The Government has made £4 billion of funding available to this stage of the programme and a number of changes were made to the eligibility criteria.
We estimate that over its four years ECO4 will upgrade around 450,000 homes, most of them to EPC band C, ensuring that current and future households living in those homes will not face fuel poverty. It will reduce household bills by around £290 on average but for the least efficient homes this could be up to £1,600.
4. ECO3 vs ECO4: what are the differences?
- Funding increase: ECO4 has a larger funding pool compared to ECO3, allowing more households to benefit from energy-saving measures.
- Wider eligibility: ECO4 expands eligibility criteria to include more low-income households, ensuring more people can access support.
- Focus on efficiency: ECO4 places a stronger emphasis on improving overall home energy efficiency, aiming for higher energy savings per household.
- Comprehensive measures: Unlike ECO3, which often focused on single measures, ECO4 encourages a whole-house approach to maximise efficiency gains.
- Support for vulnerable groups: ECO4 has enhanced provisions for vulnerable groups, such as the elderly and those with disabilities, ensuring they receive adequate support.
- Long-term savings: The changes in ECO4 are designed to provide long-term energy savings, reducing household energy bills more significantly than ECO3.
5. Unpacking the changes
Changes made for the ECO4 phase include:
- 5.1. Changes to qualifying benefits (removing a number of disability benefits)
- 5.2. Changes to the number of measures to be installed under Local Authority Flexible Energy (up to 50% of measures can be installed under council rules whereas it was previously capped at 25%)
- 5.3. Additional Energy Performance Certificate (EPC) improvement requirements
- 5.4. Removal (almost) of boilers from the scheme (only non-condensing boilers can be upgraded under new rules).
5.1. Changes to qualifying benefits
The Government removed a number of disability benefits from the new scheme. They also added Housing Benefit and Pension Credit Savings Credit in the new phase.
Qualifying benefits in ECO4:
| ECO4 Qualifying Benefits |
|---|
| Child Benefit* |
| Child Tax Credit |
| Employment and Support Allowance (ESA) – Income Based |
| Housing Benefit – new eligible benefit |
| Income Support |
| Jobseekers Allowance (JSA) – Income Based |
| Pension Credit Guarantee Credit |
| Pension Credit Savings Credit – new eligible benefit |
| Universal Credit |
| Working Tax Credit |
*If Child Benefit is the only benefit you receive, you will also need to meet an income test (there are no income requirements if you have claimed any of the other benefits listed).
Single Person Child Benefit Income Thresholds
| Number of children | Maximum income |
|---|---|
| 1 | £19,900 |
| 2 | £24,800 |
| 3 | £29,600 |
| 4+ | £34,500 |
Couple Child Benefit Income Thresholds
| Number of children | Maximum income |
|---|---|
| 1 | £27,500 |
| 2 | £32,300 |
| 3 | £37,200 |
| 4+ | £42,000 |
Qualifying benefits (from ECO3) that were removed in ECO4:
| Armed Forces Independence Payment |
| Attendance Allowance |
| Carer’s Allowance |
| Constant Attendance Allowance |
| Disability Living Allowance (DLA) |
| Industrial Injuries Disablement Benefit |
| Personal Independence Payment (PIP) |
| Severe Disablement Allowance |
| War Pensions Mobility Supplement |
If you claim one of the benefits that has been removed, you could still qualify through the health or vulnerable routes. Our blog on the 6 ways to qualify explains the various ways a household can be eligible for funding.
5.2. Changes to the number of measures to be installed under Local Authority Flexible Energy
During ECO3 energy companies were allowed to use a maximum of 25% of their obligation through Local Authority Flexible Energy rules (Local Authority Flexible Energy is often called LA Flex).
Local Authority Flexible Energy allows councils to set their own eligibility criteria and they do this through publishing a Statement of Intent for flexible energy and the rules help households that don’t claim benefits access funding.
As part of the changes in ECO4, suppliers can deliver up to 50% of their obligation through Local Authority Flexible Energy (double the number previously allowable).
5.3. Energy Performance Certificate (EPC) improvement requirements
There are additional requirements for minimum increases in the energy-efficiency rating of properties after measures have been installed. This is sometimes referred to as the minimum uplift.
Where a property has an existing Energy Performance Certificate (EPC) band of F or G, the grants will need to improve the rating to at least a D rating.
Where a property has an existing Energy Performance Certificate (EPC) band of band D or E, the grants must improve the rating to at least a C rating.
The idea is that the innovations in this approach will increase the number of grants and the energy-efficiency savings achieved.
The Government is also proposing that a minimum number of band E, F and G homes are to be upgraded, so that the most inefficient homes are not left behind.
5.4. Boiler grants removal (almost) from the scheme
Almost 134,000 boilers were installed under ECO3, whereas under ECO4 boilers are limited to 5,000 and there are additional rules around the types of boilers that qualify. This means that very few households are eligible for boiler grants under the new rules.
6. What if I’m affected by the changes to qualifying criteria? Do I miss out?
Hopefully, the answer is ‘no’, as there has been a new category added to eligibility in the ECO4 phase. Even if you receive one of the benefits that has been removed from the qualifying criteria since the end of ECO3, you may still meet funding requirements. There is a new ‘ECO4 Flex’ category that provides generous funding to vulnerable households and anyone with health conditions made worse by living in a cold home, such as a respiratory condition.
Additionally, home owners with old inefficient boilers should consider a replacement heating measure and apply now as very few boilers qualify under the ECO4 programme rules and, even if your boiler does qualify, once the cap is reached, boiler grants will be no more.
Please use our free checking tool to see if you are eligible for a grant, including via the ‘ECO4 Flex’ route.
7. How many ECO measures have been achieved in the ECO4 phase of the scheme?
The good news is that, as of 10 June 2024, Ofgem reported that, “A total of 109,416 Energy Company Obligation 4 projects have been submitted, an increase of 8,708 projects from the previous month.”
Clearly, this is very positive feedback showing that UK householders see great value in the scheme, leading to potential reductions in heating bills thanks to energy-saving property upgrades taking place. Such upgrades include cavity wall insulation, loft insulation work, and enhancements to inefficient heaters, along with boiler upgrades, including the installation of air source heat pumps for much more efficient heating systems and ventilation measures.
If you haven’t already done so, now is the time to do your scheme eligibility check. Why? While this phase of the ECO scheme is set to conclude on 31 March 2026, it could wrap up sooner if the energy suppliers meet their obligation before that date.
Use our simple grant checker tool to see if you qualify for home energy efficiency upgrades – it will take you less than a minute!
Success stories from the ECO4 scheme
Phil's Warm Home - Measures Received
Phil's Warm Home - Outcome
Claire's Efficient Heating - Measures Received
Claire's Efficient Heating - Outcome
Tina's Energy Upgrade - Measures Received
Tina's Energy Upgrades - Outcome
FAQs about the ECO4 scheme
What is the ECO4 scheme?
The ECO4 scheme is the latest phase of the UK Government’s Energy Company Obligation, aimed at helping low-income households improve their energy efficiency through various grants and support measures.
Who is eligible for the ECO4 scheme?
Eligibility requirements have been broadened in ECO4 to include more low-income households, particularly those on certain benefits or living in energy-inefficient homes.
What if I don't qualify for the ECO4 scheme?
Even if you don’t meet the eligibility criteria for the ECO4 scheme, there are a number of other grant schemes available, such as the Boiler Upgrade Scheme (BUS) and the Great British Insulation Scheme. Energy Saving Genie’s free grant checker will provide you with information relevant to these grants, if applicable to your circumstances.
What types of energy-saving measures can I receive under ECO4?
ECO4 covers a wide range of measures related to heating controls, including insulation, heating system upgrades, smart thermostats, and whole-house retrofits to improve overall energy efficiency. The focus in this phase of the scheme is on upgrades, rather than repairs to existing household heating measures (such as a boiler repair).
How do I apply for the ECO4 scheme?
You can apply through the Energy Saving Genie’s free grant checker, which will determine your eligibility and connect you with Trustmark-approved installers. From there, the installer will act on your behalf, taking care of all paperwork, including determining installation costs, which are the responsibility of the energy supplier.
How long does the process take?
The process for an installation customer varies depending on the type of measures required, but typically, from application to grant installation, it can take a few weeks to a couple of months. The process is completed with relevant certification and warranties supplied to the installation customer.
What are the benefits of the ECO4 scheme?
The benefits include reduced energy bills, improved home comfort, and a decrease in carbon emissions, contributing to a greener environment. In the short term, this means savings on heating costs for you and a warm home especially during our Winter months, and in the longer term, a more sustainable future.
If you have any questions or enquiries related to the scheme, please email us.
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