Energy Company Obligation Scotland

How successful has the Energy Company Obligation been in Scotland, and what does the future hold for the energy efficiency scheme?

Overview of The Energy Company Obligation (ECO)

The Energy Company Obligation in Scotland is part of a government energy efficiency scheme in Great Britain that is designed to reduce carbon emissions and help vulnerable households that are deemed to live in fuel poverty. The scheme is the Westminster government’s flagship environmental programme and is seen as one of the main methods of improving the energy efficiency of the country.

The largest utility companies provide funding that improves the ability of low-income households to heat their homes. Help is provided in the form of non-repayable grants for energy-saving measures for private tenants and homeowners who claim specific means-tested benefits.

Eligible Benefits

Your home may be eligible for an energy efficiency upgrade if a member of your household claims one of the following means-tested benefits:

  • Housing Benefit
  • Working Tax Credit
  • Child Tax Credit
  • Universal Credit
  • Pension Guarantee Credit
  • Pension Savings Credit
  • Income Support
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)

In addition, your home must be off the gas grid and have an energy rating of E or below. The energy efficiency of your house can be checked via it’s Energy Performance Certificate, which is usually provided with your home report. If you can’t access this, we can provide a free assessment to determine which measures are suitable for your home.

Energy Savings

A variety of home improvement measures can be installed under ECO, including heating & insulation, solar panels, and upgraded heating controls.The Scottish and UK governments both support OFGEM in administering the Energy Company Obligation.

“The Energy Company Obligation (ECO) has been in place since 2013 and is responsible for the installation of around 3.5 million insulation and heating measures in 2.4 million homes. ECO is an established scheme having undergone multiple iterations, with ECO4 the latest scheme, delivering £4 billion from 2022 to 2026”

Gov.uk

History of the Energy Company Obligation

The Energy Company Obligation has seen a considerable degree of success. From the scheme’s inception in 2013, until the end of 2023, over 3.8 million energy-saving measures were installed in 2.5 million homes across Britain, 11% of which were in Scotland.

The total delivery cost for suppliers during this period stands at £7.8 Billion. Along with the Green Deal, ECO has saved approximately 60 million metric tonnes of CO2 emissions.

ECO4

The latest incarnation of the Energy Company Obligation is known as ECO4. It began in 2022 , and runs until March 2026. Although the ethos remains the same—to lower energy costs for vulnerable households, this version differs substantially from earlier versions of the scheme.

Deep Retrofit

Whereas ECO versions 1-3 focused on installing single measures like cavity wall insulation and replacement boilers in millions of properties, the ECO4 scheme has moved towards a deeper retrofit approach. This means that fewer homes are treated, with more measures installed at each property. Therefore, houses with lower energy ratings are targeted, as they are seen as having more potential for improvement.

Energy Company Obligation Scotland - stats
Measures v homes fitted under the Energy Company Obligation

Cost per installation

This approach has seen a huge shift in the cost of making individual homes more energy efficient. The average investment per property in earlier versions of the Energy Company Obligation was around £3500. Under ECO4 the average amount spent on a property is around £26,000. This is an increase of 640%. In the most recent quarter, The average home saw improvements worth £33,000.

These costs are due to the multiple measure “whole house” approach which ECO has adopted. The depth of retrofit upgrades is hugely beneficial to low-income households in terms of annual bill savings. But with limited finance available from funders, the smaller pool of houses being upgraded means that many eligible households may not benefit from the scheme. E3G

The future of ECO

The Energy Company Obligation in Scotland and the wider country has been a huge success. Millions of homes have benefited from crucial energy-saving measures, The government-backed scheme has seen energy companies contribute billions through various obligations in a drive to reduce carbon emissions and lower energy bills for vulnerable households. However, the deep retrofit approach that ECO4 has adopted, whilst hugely beneficial for a number of properties, the cost of multiple measures, including heating & solar panels, means that funding will only reach a limited number of families living in fuel poverty. Perhaps a different approach is needed for future versions of the scheme, where measures are perhaps limited to two per household. This would mean a larger pool of houses could benefit from the scheme.

Apply for an ECO Grant