ECO3 and the changes it will bring Aug 01, 2018

Government responds to ECO3 Consultation.

The eagerly anticipated Government Response to the ECO3 consultation, which outlines the future of the Energy Company Obligation (ECO) programme, was published on the 19th July 2018.

ECO was launched in January 2013 and requires major EnergyCompanies to fund heating and insulation measures in domestic properties acrossGreat Britain. The scheme has delivered over 2.2 million energy saving improvements in around 1.8m homes to date.

The next phase of ECO will come in to effect from October2018, and YES Energy Solutions welcomes the Government’s plan for ECO3. YESEnergy Solutions is dedicated to alleviating fuel poverty across the UK, and so we particularly welcome the new scheme’s focus on supporting low income and vulnerable households.

Main Changes

Affordable Warmth

ECO3 will now be 100% focused on Affordable Warmth, with extended eligibility criteria allowing for 6.6 million vulnerable households to access funding.Affordable Warmth focuses on residents who claim certain benefits and struggle to pay their heating bills. The new funding criteria is as follows:

The shift to 100% Affordable Warmth means that no funding will be available to ‘able to pay’ households*. The CERO strand which helps any resident access funding for insulation upgrades will be axed in October.

*With the exception of in-fill rules for solid wall insulation and district heating projects.

Boiler replacements

There will be a cap of only 35,000 replacement heating system upgrades (e.g. boiler replacements) a year in ECO3. To be eligible, the current heating system must be broken down and unable to be economically repaired. This is in comparison to ECO2T criteria which currently allows boilers at less than 86% efficiency to qualify for funding for a replacement. For electric storage heaters – 100% of the total heaters in the property must be broken to get funding through ECO3.

Inefficient heating systems can be upgraded (e.g. boiler replacements when the current boiler is not broken down) when coupled with an insulation measure. The insulation measure will be ‘Primary’ and the heating measure ‘secondary.’ However, loft insulation has been excluded for this option.

LA Flex

The new scheme will also extend the use of Council backed validations. Flexible Eligibility (referred to by many as LA Flex) was a new concept introduced in the current ECO period (ECO2T), and has been adopted by over 70 Local Authorities and Council consortiums to date.

In ECO3, 25% of the obligation will be available through theLA Flex mechanism, which has great potential for Councils across the country and will see more Council backed schemes flourish. This was a policy welcomed by the majority of those who responded to the ECO3 proposals:

YES Energy Solutions is currently working with a number ofLocal Authorities to establish how they can adopt LA Flex, and we recently worked with APSE to publish a guide to help with the process which can be accessed here.

Private Landlords

Restrictions for private landlords will see only properties with EPC band F or G be eligible for high cost measures such as External WallInsulation, and only properties with EPC band E or above will be eligible for other ECO measures.

The Government has decided to restrict ECO measures allowed in the private rented sector to reflect that landlords are separately required to meet minimum energy efficiency standards for certain private rented sector properties in England and Wales.

Social Housing

Residents living in social housing will still benefit fromECO funding if their property is in the EPC band rating of E, F or G. ECO3 will also extend measures delivered under innovation to those social housing properties with an EPC band rating of D, E, F and G.

Funding will also be available to those living in social housing for first central heating installations. In the current ECO2T period, social housing with electric storage heating was restricted from having funding towards a central heating upgrade. In ECO3 this criteria has been removed. However, the electric storage heaters must be either broken down or deemed inefficient.

Innovation & In-Situ measures

With the new criteria, 10% of an energy company’s obligation can be used to fund new, innovative measures that haven’t yet been rolled out into the mass market.

Innovation measures will be subject to an uplift, which will allow for a more favourable funding rate to be available. These will be subject to the same safety standards as other ECO measures. In-Situ measures will also be available, but they will be capped at 10% and will be separate to innovation measures.

Oil Boilers Survive the Chop

Oil Boilers will not be excluded from the next phase of ECO, as initially proposed, following responses which suggested the removal of oil boilers would unfairly discriminate against rural homes leading to higher levels of fuel poverty.

ECO3 will allow for limited oil boiler delivery to take place, and will also allow for the repair of broken oil boilers within the 5%cap for all boiler repairs. This will not apply to First Time Central Heating(FTCH) installations and is only applicable to broken boilers.

More Obligated Energy Companies

Obligations for growing Energy Companies will also change, with a change in criteria which determines whether the supplier is ECO obligated; the current standard of 250,000 energy accounts will be reduced to200,000 in April 2019, and 150,000 in April 2020.

This could mean that many smaller suppliers who don’t currently find themselves obligated under the current criteria will become obligated in the coming months.

YES Energy Solutions work with many obligated energy companies to ensure energy saving measures are installed for customers who meet the right criteria, which in turn ensures that our partner’s obligations are met and often exceeded.

Other notable policy changes:

• 15% of measures to be delivered to rural homes
• 10% of a suppliers obligation can be met through the delivery of new, innovative products
• Equivalent of 35,000 broken heating systems to be replaced per year
• Equivalent of at least 17,000 solid walled homes to be replaced per year
• Allowing for the replacement of inefficient heating systems if installed alongside insulation

For more information on the next phase of ECO and how it can support your energy saving objectives, get in touch today.

T: 01422 880100 (office hours: 9am - 5pm, Mon - Fri)

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