The ECO 4 scheme (the government’s Energy Company Obligation) is the fourth, and likely final, entry to the scheme to help qualifying households receive funding for the installation of home improvements that promote energy efficiency such as insulation.
The Energy Company Obligation scheme is designed to increase energy efficiency measures in the least energy efficient homes – typically to support low income households. Its aim is to target vulnerable households living in fuel poverty to improve their home’s energy efficiency rating. ECO4 began in April 2022, and is due to continue until March 2026.
Here, we’ll provide you with the key details you need to know about the ECO4 scheme, so you can be prepared to submit your application for a free insulation grant if you are eligible.
What are the main goals of ECO4?
One of the main aims of the ECO4 scheme is to help the government lower carbon emissions in domestic homes across the UK in order to achieve its legally binding goal of reaching net-zero emissions by 2050. To do this, it places the responsibility of providing the grants to eligible households on the main energy companies and energy suppliers that serve our homes. These include British Gas, E (Gas and Electricity). E.ON Energy, Ecotricity, EDF Energy, ESB Energy, Scottish Power, Shell Energy, Octopus Energy, OVO Energy and Utilita.
Government figures have shown that over 3.1 million energy-efficient measures have been installed in more than 2.4 million homes through the ECO scheme since its inception.
Both homeowners and privately renting tenants can get involved in the ECO4 scheme if they meet the criteria. If you are a landlord for example, and your tenant is receiving one or more eligible benefits, you may want to encourage them to apply for funding. This will mean your building’s energy efficiency will be improved with new insulation and it will likely see an increase in value too as a result. Your tenant will also benefit thanks to the improved energy efficiency of the home they’re staying in, reducing their energy bills and making their home more comfortable as a result.
Making use of the Energy Company Obligation (ECO4 scheme) just makes sense.
What energy efficiency measures can ECO4 cover?
- insulation – loft, cavity wall, etc
- new heating systems – such as an air source heat pump instead of electric storage heaters
- repairing and replacing inefficient boilers
What is happening with ECO4?
Several changes came into effect as a result of this final rendition of the ECO scheme series, and we will detail these below. With so much outdated information out there, it’s important to make sure you’re reading about the ECO4 scheme, and not any of its predecessors.
Changes to ECO4
The removal and addition of eligible benefits
A number of disability-related benefits were removed from the eligibility criteria in order to create a greater emphasis on household income and better target households falling below the new minimum energy efficiency requirements . This will mean that rather than simply claiming a benefit, there’s a clearer focus on low-income homes and ensuring those who are struggling to heat their homes and pay their energy bills can access this funding.
If a member of a household is claiming an income-related benefit and the combined annual income of the household is less than £31,000, they could be viable for free insulation grants through ECO4. In place of the disability benefits that have been taken out of the criteria, Housing Benefits and Pension Credit Savings Credit will be added in their place.
ECO4 eligible benefits:
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance (ESA)
- Income Support (IS)
- Pension Credit Guarantee Credit
- Working Tax Credit (WTC)
- Child Tax Credits (CTC)
- Universal Credit (UC)
- Housing Benefit (new eligible benefit for ECO4)
- Pension Credit Savings Credit (new eligible benefit for ECO4)
- Child Benefit (only where the income threshold is not met)
Benefits that won’t qualify for ECO4 grants:
- Disability Living Allowance (DLA)
- Personal Independence Payment (PIP)
- Severe Disablement Allowance
- Industrial Injuries Disablement Benefit
- War Pensions Mobility Supplement
- Constant Attendance Allowance
Increase in the percentage of measures that can be fitted under Local Authority Flexible Energy
When the ECO3 version of the scheme was running, energy companies were allowed to use 25% of their obligation through the Local Authority Flexible Energy rules (sometimes called LA Flex). This meant councils and local authorities were able to have their own criteria for grants in place. They did this by submitting a statement of intent for flexible energy and the rules could help households that were not claiming any benefits to access the funding.
This changed with ECO4. Companies are now able to use up to 50% of their obligation through the Local Authority Flexible Energy (now double the amount previously permitted).
Energy Performance Certificate (EPC) requirements
Through ECO4 there are extra requirements for the minimum increases in energy efficiency ratings after the new measures have been installed. For example, in homes that have an existing EPC band of F or G, the grants will need to improve the rating to at least band D. Whereas if a home has an existing band of D or E, the funding grants are required to improve the rating to a minimum of band C.
The reasoning behind these changes is to increase the number of grants and energy-efficient savings that households can make with the new improvements in place. Also, the government stated that a minimum number of homes in bands E, F, and G will be upgraded to ensure the most inefficient properties are not forgotten about or missed out.
These energy inefficient properties will be targeted under ECO4 to ensure that their energy inefficiency is improved through a variety of methods, including cavity wall insulation, loft insulation measures, and more!
Removal of boilers from the scheme (almost)
Just under 134,000 boilers were installed as part of the ECO3 scheme, but under ECO4 there is a limitation of only 5,000 boiler grants available to be applied for by potential customers. Also, there’s extra rules regarding the types of boilers that will qualify for the scheme. This means that significantly fewer households will be entitled to boiler grants under ECO4 – meaning those of you looking to benefit from the Energy Company Obligation (ECO 4) scheme would do well to consider how insulation can help turn your property into one of the most energy inefficient properties on your street, rather than improving your boiler. Whilst boilers have been removed, companies like ZOA ECO Grants are still offering support via other grants and schemes.
Boost to ECO with the Great British Insulation Scheme
To bolster the ECO Scheme, the government launched in September 2023 the Great British Insulation Scheme (GBIS), previously known as ECO+, which aims to help more than 300,000 homes in England, Scotland and Wales get their homes better insulated. This £1 billion insulation scheme runs parallel to ECO4 rather than replacing it and aims to help households in lower council tax bands with energy inefficient homes get support for upgrades such as roof, loft or cavity wall insulation.
The scheme is expected to extend support to a wider range of households than existing government-funded schemes like ECO4 since eligibility is not just based on income or receipt of benefits but instead supports households based on the following criteria:
- low council tax band (A-D in England and A-E in Scotland and Wales)
- with an Energy Performance Certificate (EPC rating) of D or below
What is staying the same as ECO3 in the new ECO4 phase?
PAS 2035 will continue to be a requirement
ECO4 stayed the same as the previous phases of the scheme when it came to mandating compliance with PAS 2035. This means that energy efficiency installers who want to fit energy efficient improvements in homes through the ECO scheme will need to have PAS 2030:2019 certification. Also, any projects that are going to be funded through the scheme are required to be managed by a TrustMark Approved Retrofit Coordinator.
Along with the PAS 2035 requirement, all energy-efficient improvements that are fitted within one home can be packaged together and scored as a combined unit. This is where ECO4 breaks away from ECO3, as in the previous adaptation of the scheme the improvements were all scored independently.
Who needs to know about the ECO4 changes?
Anybody – landlord, private tenant, or homeowner – would benefit from knowing which benefits would grant access to the funding available, especially if fuel poverty and energy inefficiency with insulation, heating systems, and energy inefficient boilers is a problem.
If you previously looked at applying for ECO3, but were ineligible due to claiming benefits which didn’t provide access to the scheme, it is still worth looking into now, since the benefit criteria has changed.
Likewise, if you didn’t qualify previously because you aren’t in receipt of any benefits, then ECO4 could provide you with a new route to improve the energy efficiency rating of your home. ECO4 specifically aims to help homes that don’t claim benefits access funding.
In short, if you think you may be entitled to a free insulation grant under ECO4, but you’re just not sure, then the best thing you can do is check through our website as soon as possible by clicking the ‘Check If You Qualify’ link on your page, or filling out the enquiry form here.
With each energy supplier and local authority having slightly different eligibility criteria, the quickest way to find out if you can improve the energy efficiency of your home and reduce its carbon footprint is by checking with us today.
A note on boilers and ECO4
Although we’re insulation experts, homeowners that have old and inefficient boilers should still apply for the ECO4 scheme as soon as they can, as there’s now a very limited number of boilers (5,000 to be exact) that will qualify under the new terms. Even if your boiler is one that could be eligible, as soon as the maximum cap has been hit you won’t be able to get a boiler grant and no more will become available.
Your ECO4 Scheme Next Steps
Contact us today to confirm your eligibility for free insulation funding, and we can put you in touch with ECO experts that will handle your application process from start to finish.