How could ECO3 impact Local Authorities? Apr 17, 2018


The Government’s latest proposal to change the way ECO funding works is likely to spark more Council backed energy efficiency schemes.

A consultation on the future of the Energy Company Obligation (ECO) programme was launched by the Department for Business, Energy and Industrial Strategy in early April. It sets out a series of new rules covering the next delivery period, referred to as ECO3.

ECO3 will run from Oct 2018 to March 2022.

The scheme has gone through many amalgamations since its launch in 2012, but the next phase is likely to have a focus on Local Authority intervention.

ECO is currently the main energy efficiency programme for domestic properties in Great Britain, where major Energy Companies are obligated to fund energy saving measures.  

In the new phase, the Government is favouring the use of Flexible Eligibility where Councils’ can define their own criteria to help vulnerable people get funding towards heating and insulation upgrades in their homes. 

Flexible Eligibility 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. The Government are now proposing to expand the use of Flexible Eligibility over ECO3. 

By giving Council’s the ability to qualify households for ECO funding, means more Council backed schemes will flourish and a broader range of vulnerable people will be supported.

Other proposed changes to the legislation show that ECO will focus purely on reducing fuel poverty. A broader benefit criteria and opportunities for Social Housing providers is likely to widen the net of eligible households. 

The ECO3 consultation closes on the 29th April.

Download the ECO3 consultation

YES Energy Solutions will be responding ahead of the deadline and will publish our feedback on this website. 

Main Changes in ECO3

Here is a summary of the main changes proposed by the Government in the ECO3 consultation:

  • ECO3 will focus purely on fuel poverty alleviation. CERO (the Carbon Emissions Reduction Obligation), which currently provides funding for insulation upgrades for all households regardless of personal circumstances, will be removed.
  • HHCRO (the Home Heating Cost Reduction Obligation), will become the only ECO target that Energy Companies will need to meet. HHCRO (also referred to as Affordable Warmth) offers funding for heating and insulation upgrades to householders on certain income related benefits, or those that qualify through Flexible Eligibility (e.g. meet a participating Council’s criteria set out in their Statement of Intent).
  • The benefit criteria for HHCRO will be widened. Income thresholds will be removed for Tax Credits and Universal Credit. Disability benefits and Ministry of Defence administered benefits will be included in the criteria. And people claiming Child Benefit with a low household income will also be eligible for support. 
  • There will be more use of Flexible Eligibility. More Local Authorities will be able to drive ECO support within their catchment areas. Energy Companies will be able to deliver up to 25% of their target through Local Authority referred measures. Households will be verified for support against a Council’s own eligibility criteria set out in a Statement of Intent. Although the criteria is open to interpretation, Council’s must show that they are supporting people in fuel poverty, or those whose health is at risk due to living in a cold home.
  • Social Housing Providers can benefit from HHCRO funding providing their properties are in EPC band E, F or G. They can also access funding for first time central heating in properties that currently have electric storage heaters (this is currently excluded in the current phase of ECO).
  • 15% of an Energy Company’s target will need to be achieved by delivering energy saving measures in rural properties. 
  • There will be opportunities for Energy Companies to trade their obligations and also over delivery in the current ECO period to count towards their ECO3 targets.
  • The Government will be exploring tools to help ECO participant’s better target eligible households (such as a map suggesting where the most likely properties to meet HHCRO criteria are situated).
  • Funding for oil and coal fuelled heating system will be axed and gas boiler replacements will be capped so that other energy saving measures (such as cavity wall and loft insulation) will be prioritised.
  • Each obligated Energy Company will need to meet a proportion of their target by funding solid wall insulation measures (a collective target of 17,000 homes per year has been proposed).
  • There will still be the facility to fund insulation improvements in homes that don’t qualify through HHCRO criteria, providing they are part of an in-fill project where the majority of households are eligible. The Government has proposed thresholds on what the split will be.
  • ECO funding will no longer be able to be combined with the Domestic RHI Scheme which offered residents payments for investing in renewable heat technologies.
  • Energy Companies will have an option to meet a proportion of their target by funding innovative energy saving products, technologies and processes to help advance the energy efficiency industry.  This could be new insulation materials, smart thermostatic devices, energy efficiency lighting, behavioural advice…etc
  • A new quality mark will be implemented which all installers will need to hold and work under if they want to be part of the ECO programme.

Please note that these are just proposals at the moment. The industry has until the 29th April 2018 to respond to the consultation. The Government will then review the feedback and then set out the definitive rules ahead of the schemes launch in October.  

Support with LA Flexible Eligibility

If you represent a Local Authority that is interested in ECO and would like to drive referrals through the Flexible Eligibility route, then YES Energy Solutions are here to help.

As an award winning funding provider, we can offer guidance on how to write your Statement of Intent and how the funding process works.

YES Energy Solutions work in partnership with many obligated Energy Companies. We also manage a broad range of Council backed ECO schemes. We have ECO funding in place and are helping many Local Authorities take advantage of Flexible Eligibility.

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

Or Contact Us

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