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With the rising cost of energy, more households are at risk of falling in to fuel poverty. Households that spend more than 10% of their income on fuel to heat their homes are classed as being in fuel poverty. Households on very low incomes tend to underheat their homes significantly which can pose health problems, particularly for the most vulnerable.

Tackling fuel poverty is a priority for the Government, and improving the energy efficiency for low income households is the best solution to alleviate fuel poverty.

The Energy Company Obligation (“ECO”) is a government programme which puts an obligation upon energy supply companies to help reduce carbon emissions by delivering energy efficiency measures to low income households and vulnerable consumers. ECO plays an important role in supporting the upfront costs of heating and insulation measures for these households. Efficient central heating systems, as well as insulation, are key to helping improve people’s ability to heat their homes, bringing a variety of benefits.

Since ECO first launched on January 2013 over 1.4 million homes have been improved with the installation of energy efficiency measures. ECO is currently in its second phase which is due to end on 31st March 2017. The Government will continue their commitment beyond March 2017, and have announced plans for a new supplier obligation called ECO: Help to Heat. The proposed plan includes a one year transitional period from April 2017 to March 2018, followed by phase 3 of the scheme from 2018 to 2022.

This year will see the introduction of many reforms during the transition to help target the scheme and make it easier to deliver. For example, ECO: Help to Heat will see an increase of funding focused on fuel poverty from £310million to £450 million.

The key principles set out for the transitional year and the longer plan are:

  • Focus on households who are in need
  • Improve cost effectiveness from previous phases by simplifying the process
  • Reduce carbon emissions

Another consultation will begin in early 2017 during the transitional year ahead of the launch for the longer-term scheme in 2018. The Government have proposed to re-balance the obligation during the transition with greater focus on Affordable Warmth to provide more support for low income households.

What does this mean for Installers?

To make the transition easier for the industry, there will be some continuity from the existing scheme as we move towards a fuel poverty focused obligation. The eligible measures under the current scheme will continue to be eligible during the transition, such as:

  • Internal wall insulation
  • External wall insulation
  • Cavity wall insulation
  • Loft insulation
  • Room in roof insulation
  • Flat roof insulation
  • Underfloor heating
  • Draught proofing
  • Window glazing
  • Boiler replacement
  • Electric storage heaters
  • Heating controls
  • Flue gas heat recovery
  • Micro CHP
  • Heat pumps
  • Photovoltaics
  • Micro wind
  • Micro hydro

Energy suppliers will be able to select measures they believe are most cost effective to achieve their obligation requirements. From 2017, the range of measures delivered under Affordable Warmth will be broadened to include more heating and insulation measures.

For the installation of energy efficiency measures under ECO, installation companies will still be required to comply with the Publicly Available Specification (“PAS”) 2030 standard to maintain a high quality of work. There is due to be a new version of PAS 2030 released in early 2017 with the consultation period of a draft version now closed. A greater emphasis will be placed on the assessment and design stage of measure delivery in the new PAS following a move away from the Green Deal. The ECO will look to benefit from the strengthened PAS 2030 framework.

Companies delivering measures during the transitional period and the next phase of ECO must be certified against the updated PAS 2030. To take advantage of the coming opportunities contractors should be looking to achieve the updated PAS 2030 certification.