AgilityEco Briefing on the ECO Consultation

*Update – read our full response to the ECO+ consultation* 

AgilityEco welcomes this week’s publication of the government’s consultation on the new ECO+ obligation on suppliers for the three years from April 2023. This followed a sustained campaign by many organisations, including AgilityEco, for more significant investment into domestic energy efficiency.

The deadline for responses is 23 December, and we will post our full response on our website in due course. We are keen to receive comments and thoughts from our partners, and we urge as many of you as possible to respond to BEIS directly, as this scheme will significantly impact the support available to help households reduce their energy use.

Our initial thoughts are as follows:

A summary of the obligation

• The aim is to provide rapid installation of energy efficiency measures to a broader pool of households than currently supported by ECO4 (and local authority-funded programmes), with a total ambition of 410,000 homes treated between 2023-2026.
• The obligation to deliver will be placed on energy suppliers in the same way that ECO4 is – each supplier will have targets based on total annual bill savings, and it will be up to them to arrange for installations that meet this target effectively. The scheme will officially start in April 2023, but suppliers can start delivering early if they wish to. AgilityEco will help to facilitate that, as we know how urgent the situation is for many low-income households.
• There will be a total of £1bn available over three years, with a nominal value of £130m in year one, £435m in year two and a further £435m in year three.

Who is eligible?

• There are two groups of households eligible for ECO+: the low-income group and the general eligibility group.
• The low-income group is effectively the same as ECO4: households on means-tested benefits or made eligible by their local authority or energy supplier via ECO flex. At least 20% of the total budget must be spent on this group, and if the property is suitable for support under ECO4, that must be used instead. BEIS mentioned the introduction of a checking mechanism to ensure ECO4-eligible households are not routed through ECO+ as an easier option.
• The general eligibility group is instead defined by council tax band (A-D in England, A-C in Wales, A-E in Scotland) – over 80% of the population fall into these bands! The idea is to have a very straightforward way to confirm eligibility whilst excluding high earners.
• In both cases, households must have an EPC rating of D or below.
• Private rented homes are eligible for higher cost measures only if they fall outside the Minimum Energy Efficiency Standards (MEES) regulations (or have a valid exemption)
• Socially rented properties are included for insulation measures only to provide maximum flexibility and allow area-based delivery. Only EPC bands E-G are permitted, except for innovation measures where EPC band D is also acceptable.

How will they access the scheme?

As a private sector-led scheme, ECO relies on individual energy suppliers and installers providing an offer to households. In this consultation, BEIS are seeking views on how to make it easier for households to refer themselves and whether some form of national portal or referral route might be achievable. They are also looking to encourage local authority referrals and may allow that at a higher rate than under ECO4.

What measures can they receive?

ECO+ is focused on delivering straightforward improvements to a large number of properties and takes a ‘fabric first’ approach so properties can receive one of the following measures:

• Cavity wall insulation
• Solid wall insulation (both external and internal)
• Loft insulation
• Pitched roof insulation
• Flat roof insulation
• Underfloor insulation
• Solid floor insulation
• Park home insulation
• Room-in-roof insulation

Owner-occupiers can also receive smart thermostats and/or thermostatic radiator valves (TRVs) as secondary measures.

Unlike ECO4, there is no minimum EPC rating improvement.

How much funding will be available per property?

Properties will be scored using the ECO4 rules, with households receiving a ‘partial project score’ as they would under ECO4 where the minimum requirement is not met. However, there will be no 20% partial project deflator under ECO+ or the additional 10% correction factor deflator to reflect the risk of double counting savings where multiple measures are installed. This means that the higher the expected annual bill savings from the property, the more funding is available. This will continue incentivising installers to target specific property sizes and measure types over others.  Based on initial calculations and without the benefit of any Impact Assessment, here is our estimate of indicative funding values:

• The size of the obligation has been modelled using the assumed costs of loft and cavity wall insulation under ECO4. However, they have received a 60% uplift for modelling purposes as the government expects the cost of this measure will increase (as well as a 10% inflation increase from ECO4). This should be enough to avoid a customer contribution being required.
• Other more expensive measures are likely to require a contribution from customers in the general eligibility group. However, exactly how much is yet to be seen and will be driven by consumer demand. We expect the vast majority of ECO+ will be delivered through low cost measures.  
• An uplift in score for rural properties in Scotland and Wales will apply, as it does under ECO4. England is excluded because it has the Home Upgrade Grant (HUG) programme, though as HUG is means-tested and focuses on the installation of multiple measures, this does mean some English households may miss out.
• As with other publicly-funded schemes, ECO+ funding can’t be blended with other grant funding for the same measure, but different schemes can fund different measures in the same property.

What about quality control and administration?

• All installers on the scheme must be Trustmark registered and provide an appropriate guarantee for their work according to the Trustmark guidelines, similar to ECO4 requirements.
• It’s suggested that the lower cost and simpler nature of some of the measures, such as loft insulation and heating controls, might allow a lighter touch compliance regime rather than PAS2030:2019. The new Trustmark ‘Licence Plus’ standard is namechecked – this has not yet been fully agreed upon but is likely to be ready in the new year.
• To confirm a property’s starting EPC will require either a valid EPC or RdSAP assessment; this requirement will be driven by the specified Trustmark scheme rules, which is likely to be License Plus.

ECO4 Changes

BEIS are making use of the consultation period and parliamentary time afforded to ECO+ to make slight adjustments to ECO4 regulations. These proposals include amendments which:

• Allow electric heating systems installed alongside solar PV measures to be classed as renewable.
• Allow heating upgrades from electric room heaters to electric storage heaters.
• Allow connections to gas fuelled district heating systems in off-gas homes.
• Make ECO4 ready for the transition to SAP/RdSAP 10.

We hope this briefing has been helpful and welcome any comments. Please get in touch via partnerships@agilityeco.co.uk with your thoughts.