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Understanding the Energy Company Obligation (ECO) Scheme: Innovations and Improvements

The Energy Company Obligation (ECO) scheme, active since 2013, is a critical initiative to enhance energy efficiency in UK homes. Its primary goals are alleviating fuel poverty, contributing to carbon reduction targets, and promoting energy-efficient practices. With an extended timeline until March 2026 and a budget of around £1 billion per year, ECO4, the latest phase of the scheme, focuses on low-income and vulnerable households, helping them improve their home's energy efficiency.

Key Focus of ECO4

Obligation Targets and Scoring
Under ECO4, energy suppliers have a statutory target based on annual bill savings. The scheme is particularly aimed at homes in the least energy-efficient categories, specifically improving houses in SAP bands D and E to at least band C and bands F and G to at least D.

Emphasis on Innovation
ECO4 has introduced innovation mechanisms to support the development of domestic energy efficiency measures. However, ECO4 has removed the Demonstration Action mechanism, considering it less effective for testing single measures in fuel-poor households.

Uplift Levels for Innovation Measures (IMs)
ECO4 introduces two levels of IM uplift: 25% for reasonable improvements over existing products and 45% for substantial improvements, encouraging a diverse range of innovative products.

Standard Alternative Methodology (SAM) and Data Light Measures (DLMs)
These are optional measures under ECO4, allowing for the scoring of innovative measures not yet recognised in the Standard Assessment Procedure (SAP).

Delivery Caps
ECO4 imposes delivery caps for IMs and DLMs, with a 10% cap on overall IM delivery and a 5% sub-cap for single innovation measures. SAM measures, however, do not have a delivery cap.

Role of Ofgem and Compliance Standards

Ofgem's Role
As the ECO4 scheme administrator, Ofgem and a Technical Advisory Panel assess applications for IMs. They ensure that each measure meets product installation and consumer protection standards equivalent to ECO4's wider requirements.

Compliance and Eligibility Criteria
All measures must comply with the relevant Publicly Available Specifications (PAS), Microgeneration Certification Scheme (MCS), or equivalent standards to be eligible under the ECO4 scheme.

Installation Standards and Guarantees
TrustMark Registered Businesses must deliver all ECO measures, with a few exceptions. These measures require at least a two-year insurance-backed guarantee, extending to 25 years for certain insulation measures.

The Path Forward: Encouraging New Technologies

SAP and New Measures
ECO4 encourages the inclusion of newer energy-efficient measures not yet recognised in SAP. These measures can obtain scores through SAM or DLM routes, contributing towards supplier obligations and overall scheme goals.

Cybersecurity and Smart Technologies
For smart technologies and flexible heating systems, cybersecurity considerations are crucial. These systems must be safe, secure, and able to respond to digital signals in real-time.

Ongoing Developments
ECO4 is actively working with industry experts to include new and innovative products within the scheme's framework, aligning with ongoing revisions of PAS standards.

To learn more about the ECO scheme and how you might benefit, even if you think you might not qualify, please visit our Eligibility form or contact a team member at 0333 577 5852.

Do you want to make your home more energy-efficient and save money on your energy bills?

You may be eligible for an ECO 4 Energy Efficiency Grant. The grants can help you cover the cost of various energy efficiency improvements.

Regulated Ofgem and all work carried out through Trustmark installers to guarantee the highest quality.  

To determine eligibility, simply complete our eligibility form.

It only takes a few minutes, and it could save you hundreds or even thousands of pounds.

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