What could the ECO4 consultation mean for installers?
A consultation on the next phase of the Energy Company Obligation (ECO) scheme has been launched to seek views on current proposals.
The consultation sets out the Government’s plans for a four-year scheme worth £1 billion a year from April 2022 to March 2026.
ECO4 is likely to have profound implications for installers, with not only how they operate under the scheme but also which customers they can service.
Proposals suggest there will be no support for EPC band A, B and C.
There will also be a re-write of the rules around flexible eligibility which is detailed here.
ECO4 may bring in minimum requirements
For properties taking part in the scheme, works may be subject to a minimum requirement of improvement measured by SAP score on EPC's (Energy Performance Certificate).
Improvements required will depend on their starting EPC (Energy Performance Certificate) rating.
Properties that don’t meet the Minimum Requirement (i.e. the required EPC increase) will receive deflated scores for package measures. There will be some exemptions to meeting the Minimum Requirement for properties in E, F or G EPC bands.
ECO4 changes to funding allocations and deemed scores
Amendments are proposed to the method of producing deemed scores for properties and therefore the funding amount for measures.
The updated scoring methodology plans will be based on:
the difference in average annual bill expenditure between the starting SAP rating of the property (pre-retrofit) and the finishing SAP rating of that property (post-retrofit).
The floor area of a property
This would be evidenced via a valid pre-installation EPC or a pre-installation SAP assessment as part of PAS 2035.
For the property’s finishing SAP rating, the proposals allow any evidence considered appropriate by Ofgem, which could include a post installation EPC or post installation SAP assessment.
Measures will be packaged together for each property and scored as a package, rather than individually as in ECO3 to reflect the new PAS2035 approach.
Partial deflated scores may be given to properties found to be non-compliant with the Minimum Requirement or when a property owner cancels the works when some of it has already taken place.
Lifetime Bill Savings to be abolished in ECO4
ECO scores are no longer to be multiplied by measure-specific lifetimes for ECO4, with scores only being calculated on annual bill savings.
Measures will no longer be scored by their lifetime savings, lifetime savings will still be set and these will be used to dictate warranty periods.
Uplifts in ECO4
Proposals state that ECO4 will maintain the following uplifts:
Innovation Measure uplifts
Replacement of efficient broken boiler and electric storage heater (ESH) uplifts;
Off mains-gas uplifts.
Added to the uplifts for ECO4 will be a new Hard to Treat policy for E, F and G homes.
ECO4 will remove the LA Flex F & G non-PRS uplift and introduce new uplifts for efficient broken heating repairs, hard-to-treat issues and pay-for-performance.
Measures in ECO4
The proposal for ECO4 is aligned with the Government’s goals to achieve net zero by 2050, therefore greater emphasis has been placed on the transition to low carbon technologies.
The proposals require a whole-house approach, in line with the latest PAS 2035 legislation, providing long term energy efficiency benefits for householders.
Projects must be completed within three months of installation of the first measure being finished.
Fossil fuel heating
Oil and LPG heating systems would be excluded in the current proposals - this is to encourage a switch to low carbon heating for off-gas properties.
Furthermore, off-gas properties would not be eligible for First Time Central Heating (FTCH). Only homes already connected to the gas network can qualify for FTCH – subject to cavity wall and loft insulation measures being pre-existing or installed ahead of the heating measure.
In addition, FTCH must be a low temperature heating system, more efficient, safer, cleaner and easier to integrate with heat pumps.
Warm air central heating systems would now fall under FTCH in the new proposals.
BEIS will limit the amount of funding given to gas heating measures.
Broken efficient boilers will be capped but broken inefficient boilers will not be capped.
Fabric first approach
Greater emphasis is being placed on insulation improvements in the proposed reforms.
Obligations for solid wall insulation installs have been increased for suppliers from 17,000 under ECO3, to 22,000 in ECO4.
Cavity wall and loft/room in roof insulation must be installed before FTCH measures.
Private rented sector
The private rented sector has additional restrictions to which measures can be installed in the proposals in the ECO4 proposals.
Of the measures installed in the property in the whole-house approach, at least one must be either; solid wall insulation, first-time central heating, a renewable heating system or district heating.
Once fulfilled, other appropriate ECO4 measures can be installed to meet the minimum EPC score increases (i.e loft insulation, cavity wall insulation etc.)
Installs in the scheme must be compliant with the latest PAS specifications and installed by a PAS certified installer.
This ensures householders benefit from robust installation standards and the whole-house, end-to-end coordination of projects via the requirements for retrofit co-ordinators.