Supporting detail:

Energy Company Obligation (ECO)

ECO was introduced in January 2013 to reduce Britain’s energy consumption and support people living in fuel poverty by funding energy efficiency improvements in homes. The larger energy companies are set obligations to install insulation and heating measures in order to achieve reductions in energy usage and heating costs. ECO works alongside the Green Deal as a way of providing consumers support and funding for these measures.

ECO and Green Deal will help reduce carbon emissions from Britain’s domestic building stock, which is an essential part of the UK’s plan to meet its statutory domestic carbon emission reduction targets by 2050. Government has recently extended the ECO scheme to March 2017.

ECO is administered by the Office for Gas and Electricity Markets (Ofgem).

Scope of the ECO

There are 3 obligations under the ECO.

Carbon Emissions Reduction Obligation

This provides solid wall, cavity wall and loft insulation measures, and connections to district heating systems, alongside secondary measures including double glazing and draught proofing.

Carbon Saving Community Obligation (CSCO)

This provides insulation measures and connections to district heating systems to households in specified low income areas. Suppliers must meet 15% of their obligation by installing measures in rural areas. Ofgem has published a tool to assist installers and customers to identify eligible CSCO and CSCO rural areas.

You will find a list of small area geographies eligible for CSCO support in The Future of the Energy Company Obligation document.

Affordable Warmth Obligation

This provides heating and insulation measures to consumers living in private tenure properties that receive particular means-tested benefits. This obligation supports low income consumers that are vulnerable to the impact of living in cold homes.

How ECO is funded

ECO is funded by the larger energy suppliers. Energy suppliers obligated under the scheme decide how they meet their obligations, including which homes to treat and how much subsidy they provide to each heating or insulation measure. This may depend on the size and type of the property, the consumers’ individual circumstances and whether other finance is also being used, for example Green Deal finance.

How ECO is delivered

Energy suppliers provide contracts with partners, such as local authorities, installers and Green Deal providers. They may also deliver measures directly through in-house installation arms.

ECO Brokerage is a market-based mechanism that supports open and competitive delivery of ECO. Brokerage operates through fortnightly, anonymous auctions where ECO providers can sell ‘lots’ of tonnes of carbon savings or bill savings to energy companies in return for ECO subsidy.

Compliance and monitoring of ECO

Ofgem monitors energy suppliers and enforces compliance under the obligations. Energy suppliers must report on their delivery against their obligation to make sure they are on track to meet their target by 2015 and 2017.

Under both the ECO 1 Order and the ECO 2 Order energy suppliers will also need to report on their costs of delivery, to help us achieve greater transparency around any costs passed on to the consumer.

You can read the consultation on in-use factors and download the calculation of the ECO targets in the final impact assessment.

Ofgem has published ECO 1 guidance for suppliers and ECO 2 guidance (administration and delivery) which provide information on administrative requirements and processes for the ECO supply chain. In addition, Ofgem’s website provides information tailored for domestic customers, installers and suppliers.

In accordance with article 7(6) of the Energy Efficiency Directive the Secretary of State has issued to Ofgem a Letter of direction for ECO 1 (PDF, 530KB, 2 pages) and a Letter of direction for ECO 2 (PDF, 90.3KB, 2 pages) on the measurement, control and verification of energy efficiency improvements. In line with these letters, Ofgem have set out the requirements in relation to technical monitoring under ECO.

ECO and Green Deal statistics

The latest statistics on the Green Deal and Energy Company Obligation (ECO) are available on GOV.UK. These include summary figures on the number of Green Deal assessments, as well as information on ECO Brokerage and the Green Deal supply chain.

Ofgem also publish monthly reports on supplier progress against their obligations.

Further information

The Energy Saving Advice Service provides impartial information about eligibility, access to ECO and the other types of support available.

Call: 0300 123 1234.

Visit Ofgem’s website or read our guide on getting help to keep your home warm for further information.

Complain about improvements made to your home

Installations issues are a matter that should always be taken up with the company who carried out the work in the first instance. You may also wish to consider contacting Citizens Advice if your problem is still not dealt with.

Your improvement works may also be covered by a guarantee or warranty. Check your paperwork to find out if you’re covered and how to complain.