ECO4 finally arrives in the UK
ECO4 legislation was finally laid before parliament this week, signalling an end to the uncertainty and delays blighting the scheme.
This phase of ECO was originally due to commence in April 2022 and run until March 2026. In part, the complex number of changes that were being introduced under this phase of ECO plus delays with the team responsible for drafting the new rules resulted in the necessary legislation not being laid before parliament in time. As a result, the industry operates under a three-month transitional period called ECO3T from April 2022 – June 2022, where delivery continues to follow the existing ECO3 rules. With the ECO4 order finally laid before parliament on 22nd June, the good news is that any remaining uncertainties about the rules and delivery mechanism will now be resolved, with the scheme aiming to kick off in full from 1st July 2022.
What is ECO?
The Energy Company Obligation (ECO) is a government energy efficiency scheme operating across Great Britain that aims at reducing carbon emissions and tackling fuel poverty. It targets low-income and vulnerable households and aligns with the government’s heat and buildings strategy. It forms one of the key policies for eradicating fuel poverty and meeting the UK’s net-zero commitments. The four-year scheme is estimated to be worth £1bn pa. It will improve the energy efficiency of ~450,000 households delivering total annual bill savings of ~£224m across the lifetime of ECO4.
What is changing under EOC4?
There are a considerable number of changes introduced under ECO4; however, the most fundamental is the approach to treating the worst homes first with a fabric first whole house retrofit approach. As opposed to single-measure solutions such as boiler upgrades, qualifying households will now receive a package of measures, including insulation and low-carbon heating solutions, to raise the home’s EPC rating to C or above.
A high-level summary of the principle changes includes:
- changes to the eligibility criteria,
- EPC minimum requirements,
- a radical overhaul of the energy efficiency measure scoring system,
- reduced support for gas boilers installations and repairs,
- no support for LPG or oil-fired heating systems,
- minimum insulation preconditions,
- changes to the Local Authority Flexibility scheme (LA Flex).
Household eligibility changes
As consulted, eligibility for non-means tested benefits are removed under ECO4. This primarily affects disability benefits, such as Attendance Allowance and Personal Independence Payment. However, a few new means-tested benefits are added to the list, including housing benefits, pension credit savings and those eligible for the warm homes discount.
New scoring mechanism
A multi-measure scoring system will be introduced to encourage a whole-house approach. Minimum Requirements (MR) will also be implemented as follows:
- Homes with a starting SAP band of F or G should be improved to at least SAP band D
- Homes with a starting SAP band of E or D should be improved to at least SAP band C
ECO4 scores will be calculated based on annual bill savings rather than lifetime savings. Scoring will be split into two categories:
Partial Project Scores: These are scores attributable to individual measures and will be used to help plan the package of measures a home receives. Due to the time, it will take to install multiple measures, PPS also provide a way for measures to be recognised as they are installed and notified. The emphasis will, however, be on delivering a complete package of measures, so individual scoring will be subject to penalties where a complete package is not delivered.
Full Project Scores – This is the final score attributed to a package of measures within a home. It is achieved when the minimum requirements have been met and override partial project scores. A 10 per cent deflator will be applied to all partial project scores to account for the interaction between measures and to calculate the Full Project Score.
In a bid to support the government’s net zero commitments, fossil fuel heating solutions offered under ECO4 have been significantly reduced.
- Gas Boiler upgrades will be limited to 5000 installations pa.
- Oil and LPG heating systems are excluded under ECO4.
- Off-gas properties are not eligible for First Time Central Heating (FTCH).
Minimum insulation preconditions
For any home receiving a heating measure, including heating controls, insulation measures must be installed or should be already present. All band E, F and G homes receiving any heating measure and band D homes receiving FTCH must first have all the exterior facing cavity walls and loft (including rafters) or roof (including flat, pitched and room-in-roof) insulated. All band D homes receiving any heating measure other than FTCH must have installed at least one primary insulation measure (flat roof, pitched roof, room-in-roof, cavity or solid wall, park home and floor insulation).
The solid wall minimum criteria will be increased from 17,000 homes to 22,000 homes.
LA Flex changes
During ECO3, energy companies were allowed to use a maximum of 25 per cent of their obligation through Local Authority Flexible Energy rules (LA Flex). Local Authority Flexible Energy allows councils to set their eligibility criteria.
As part of the changes, ECO4 suppliers can now deliver up to 50 per cent of their obligation through LA Flex Energy. However, the government will strengthen controls under ECO4 Flex so that only low-income households get support under this route. LA Flex eligibility will be governed by one of the four routes outlined in the consultation and written into the regulations.
New and innovative heating controls can play a crucial role in ECO4
Space heating is one of the largest sources of CO2 in the UK and Europe. Whilst the benefit of fabric insulation measures is well recognised, the potential of modern, adequate heating controls for reducing demand and improving comfort is yet to be realised.
Smart thermostats and intelligent thermostatic room controls can help to reduce a home’s space heating demand by intelligently controlling the temperature across the home and aligning it more closely with the occupants’ requirements for heat.
Whilst heating controls are unlikely to improve a property’s energy efficiency rating to the minimum requirement under ECO4; they offer an excellent cost-effective solution as a part of a whole house retrofit package.
Purposefully designed to be easy to use, Secure’s new simple controls range of smart thermostats and cutting-edge intelligent thermostatic radiator valve are ECO4 qualifying measures that achieve impressive cost savings and SAP improvements at a fraction of the cost of other eligible measures. The range includes the C1727, H3747, and Radbot 1 thermostatic radiator valve (TRV).
The C1727 is a smart programmer with a receiver (up to two channels), and the H3747 is a smart programmer with a receiver (up to four channels). Both models feature easy and intuitive daily or seven-day scheduling. The units can connect to smartphones without Wi-Fi, or the users can purchase a Wi-Fi adaptor to allow users to control their heating from anywhere.
They are Boiler Plus compliant, come with a 12-year battery life warranty, and can be retrofitted on many existing controls. They qualify under the Smart Thermostat measure category for ECO4, and the product also has Innovation Measure status, which attracts a 25 per cent uplift on the standard smart thermostat ECO scores.
Radbot 1 is an intelligent TRV designed to instantly increase the efficiency of existing heating systems and reduce the cost of heating homes. Installing Radbot 1 on all radiators in a home can reduce heating costs by up to 30 per cent.
The smart device, which can be easily fitted in minutes to traditional radiators throughout the home, uses a self-learning algorithm that continually monitors the home environment, predicting and adjusting heating to occupancy patterns. If no one is in the room, Radbot 1 detects this and automatically lowers the temperature, saving users time and money.
The device operates without an internet connection, so there’s no need for a home wireless internet link, a smartphone app, or remembering passwords for an account.
Radbot 1 qualifies for ECO4 under the measured category of Time and Temperature Zone Controls and can provide between 1 to 7 SAP points. With low capital costs and quick and straightforward installation, Radbot 1 is one of the most cost-effective measures available under ECO4.
The Simple Controls range from Secure comes with a seven-year, no-quibble warranty.