The Future of the Energy Company Obligation
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Update 02 October 2014
Our response to the consultation on converting SAP/RdSAP 2012 CO2e to SAP/RdSAP 2009 CO2 emissions as described in the 21 August 2014 update has been published.
Update 21 August 2014
Following consultation, we are now inviting views from interested parties on how the transition between SAP/RdSAP 2009 and SAP/RdSAP 2012 should be managed. We propose to include a conversion factor in the ECO Order 2012 and the ECO Order 2015-2017 which will convert emissions savings from CO2e into CO2. More details can be found in the discussion paper published on the ECO Steering Group website, and we welcome stakeholder views before 3 September 2014.
The consultation sought views across England, Scotland, and Wales on a range of proposed changes to ECO. We have now carefully considered all the views expressed.
Changes to apply in relation to the current obligation period finishing on 31 March 2015:
- The March 2015 Carbon Emissions Reduction Obligation (CERO) target will be reduced by 33 per cent, with the inclusion of loft insulation, cavity wall and District Heating Systems (DHS) as eligible measures if installed on or after 1 April 2014.
- The March 2015 Carbon Saving Community Obligation (CSCO) and Affordable Warmth (also known as the Home Heating Cost Reduction Obligation (HHCRO)) targets will remain the same.
- Eligibility for the CSCO element of ECO is extended from 15 per cent to approximately the 25 per cent lowest areas on the Index of Multiple Deprivation. In addition, the qualifying criteria for the CSCO rural sub obligation will be simplified by allowing energy suppliers to deliver against this sub-target to any domestic property located in approximately the poorest 25 per cent of rural areas, as well as to households in rural areas who are members of the Affordable Warmth Group. These changes will apply for measures installed from 1 April 2014.
Changes to apply for the first time in relation to a new obligation period commencing on 1 April 2015:
- The ECO scheme will be extended to March 2017 with new targets imposed for CERO, CSCO and Affordable Warmth at a pro rata of the new March 2015 levels.
- Overachievement against March 2015 targets can be carried forward to count against March 2017 targets, subject to certain criteria. In the case of Affordable Warmth, only measures installed from 1 January 2014 may be carried forward and, if so, they will be subject to an ‘exchange rate’ which equalises the value across both ECO periods.
- A deflated Affordable Warmth score will apply for replacement gas ‘qualifying boilers’.
- An uplifted Affordable Warmth score will apply for insulation measures and ‘qualifying boilers’ in households whose main space heating systems are ‘non-gas’.
- A new measure, a ‘qualifying electric storage heater’, will be introduced under Affordable Warmth. The savings from repair or replacement of a ‘qualifying electric storage heater’ will be scored in the same way as a ‘qualifying boiler’ and in doing so, receive a higher notional bill saving.
All replacement boilers and electric storage heaters delivered under Affordable Warmth will be required to include a minimum warranty.
- The Future of the Energy Company Obligation: Small Area Geographies Eligible for ECO CSCO Support
The proposals contained in The Future of the Energy Company Obligation consultation were highlighted as part of Government’s announcement on 2 December 2013 to reduce pressures on consumer bills and ensure ECO provides value for money for energy consumers; whilst continuing to help tackle fuel poverty, support the development of a sustainable energy efficiency supply chain and improve the energy efficiency of our housing stock.
The key proposals include the extension of the scheme to 2017, modifying the eligibility criteria for Carbon Saving Communities Obligation (CSCO) and allowable primary measures under Carbon Emissions Reduction Obligation (CERO) to ensure it is easier and cheaper to deliver, and to reduce the 2015 CERO obligation by 33 per cent. Alongside the changes trailed in the December announcement, we are further taking this opportunity to put forward a number of other improvements to ECO based on the experience of delivering the scheme since it commenced at the beginning of 2013. These include proposals to make ECO easier to administer, easier for customers to understand, and easier to access in rural and off-grid areas.
This consultation is a key opportunity to make sure that the way we implement these changes are as effective as possible, taking account of the needs of the industry and the experience of delivering ECO over the last year. It is very much our intention, based on the range of proposals in this consultation, to place ECO on a firm footing for the future.
- Please note the consultation document was updated on 14 March, with Question 10 removed due to repetition.
Last updated 27 October 2014 + show all updates
Updated ECO impact assessment.
Updated with response to the consultation on converting SAP/RdSAP 2012 CO2e to SAP/RdSAP 2009 CO2 emissions.
Government response published.