Home heating and energy grants have been around for the last several years to help the most vulnerable tackle the ever-rising gas and electricity increases. The government’s ECO (Energy Company Obligation) Scheme has been the most recent way in which home energy grants have been delivered.
We expect that the current scheme – ECO3 – will be replaced by a new one, called ECO4, later than initially planned, in July 2022.
The ECO4 Scheme is currently going through a period of consultation and legislation, but here we explain the likely changes and why they’re happening.
What is the ECO Grant Scheme?
The Energy Company Obligation (ECO) is a UK Government policy designed to help vulnerable households reduce their energy bills and tackle fuel poverty. The scheme obliges energy suppliers to provide funding for home energy efficiency improvements to eligible households.
So how has the ECO Grant Scheme changed?
Under the current scheme, ECO3, home energy suppliers are required to deliver a certain number of home energy efficiency improvements each year. The target for 2020/2021 was to improve the energy efficiency of 450,000 homes.
From July 2022, the government’s new ECO4 Scheme will come into effect. Under this scheme, home energy suppliers will still be required to deliver a certain number of home energy efficiency improvements each year. However, the targets will be different.
What are the Government targets for the scheme?
The government has not yet released the targets for ECO4, but we do know that they will be more ambitious than those under ECO3.
The government is expanding the Energy Company Obligation Scheme (ECO4) to £1 billion per year for a four year period (2022-26), requiring energy suppliers to improve the energy efficiency of low-income homes.
This is good news for householders who qualify for the scheme, as energy-saving improvements will help to lower energy bills during a time where the energy price cap is increasing and the general cost of living is on the rise.
How is the grant scheme funded?
Just like in ECO3, the ECO4 Scheme will be funded through the major energy companies.
The Energy Company Obligation Scheme is an obligation placed by the government on to the energy companies, to provide funding for energy-saving measures. It’s part of a wider government strategy to reduce carbon emissions and help householders save money on their energy bills.
What energy-saving measures are likely to be funded through the ECO4 Scheme?
There are three types of home energy efficiency improvements that are likely to be funded through the scheme:
- insulation measures such as cavity, solid wall, under floor and loft Insulation
- renewable measures such as solar panels, solar battery storage and air source heat pumps
- heating measures such as energy efficient heating appliances or first time central heating.
Will the eligibility criteria change?
Just like the ECO3 Scheme, ECO4 funding will be available to those who privately rent or own their own homes and are in receipt of low-income means tested benefits. This may include Child Tax Credits, Universal Credit and Income Based Jobseekers Allowance, amongst others. The qualifying criteria is expected to change under ECO4 rules, by reducing the number of social benefits.
Benefits that are no longer eligible:
- Disability Living Allowance (DLA)
- Personal Independence Payment (PIP)
- Attendance Allowance
- Carers Allowance
- Severe Disablement Allowance
- Industrial Injuries Disablement benefit
- War Pensions Mobility Supplement
- Constant Attendance Allowance
- Armed Forces Independence Payment
However, local authorities will have further flexibility to expand the eligibility criteria within their local communities. For example, this could include a criteria which extends to those residents who have certain health-related illnesses or are within a particular income bracket.
Eligibility will also take your EPC rating into account and this will be used as a factor when deciding which measures you qualify for. There will be greater emphasis in the ECO4 Scheme, on installing multiple energy efficiency measures in your home, to upgrade the EPC rating by two bands, in some cases.
Will I still be able to get a grant for replacement boilers?
As the country starts to prepare itself for a greener future, its reliance on gas is something that has been on the agenda for many politicians who want to help reduce the UK’s carbon footprint.
There is a move towards low-carbon alternatives as opposed to fossil fuel hungry boilers.
Therefore, under ECO4, it is likely there will be a limit to how many boilers are installed through the scheme. We expect there to be a limit of 5,000 boiler replacements nationally. This will mean, very few households will be eligible for a boiler replacement through ECO4.
However, there will be funding available for low-carbon alternatives such as air source heat pumps.