ECO Funding – Energy Companies Obligation
The ECO Funding scheme began in December 2012. It’s an energy efficiency programme that replaces CERT and CESP (Carbon Emissions Reduction Target and Community Energy Saving Programme, respectively).
Working with the Green Deal, ECO funding provides additional support for a range of energy efficiency packages. ECO funding provides insulation and heating packages to low income and vulnerable households. Insulation measures are also provided for low income communities.
Eligibility and ECO Funding
ECO funding can pay for a variety of energy efficiency measures. These include external wall insulation, cavity wall insulation, efficient central heating systems and double glazing. Green Deal Solutions will check if you are eligible, process the paperwork for you and install the energy measures you have successfully been awarded funding for.
£1.3bn per year of funding in the UK must be provided by the energy companies towards energy efficiency measures.
- 75% of this funding is for the Carbon Saving Obligation.
- 25% is for the Affordable Warmth Scheme.
- £540m or more is targeted at energy efficiency improvements for the most vulnerable households who may be experiencing fuel poverty.
The big 6 energy suppliers are obligated in law under the ECO to upgrade the energy efficiency of households following three specific targets:
Carbon Emissions Reduction Obligation
CERO’s target is to cut 20.9 million lifetime tonnes of carbon dioxide in housing
Private householders and social housing residents are eligible for funding. Measures that cannot be fully funded through the Green Deal as the ‘Golden Rule’ is not met will be one main focus. In particular, CERO targets hard to treat homes that are ineligible for full funding. Hard to treat properties generally benefit from measures like solid wall insulation and hard-to-treat cavity wall insulation. These are the main areas promoted under this target.
Connections to district heating systems and other insulation measures are eligible as well. They would need to be promoted as part of an overall package which includes solid wall insulation and/or hard-to-treat cavity wall insulation.
Carbon Saving Community Obligation
CSCO’s target is to reduce carbon dioxide emissions by 6.8 million lifetime tonnes in the community.
The most vulnerable homes in the UK’s top 15% of deprived communities are eligible under this scheme.
The Carbon Saving Community Obligation Scheme focuses on the provision of insulation measures, plus connections to district heating systems, for domestic energy users who live in an area of low income. The Carbon Saving Community Obligation Scheme’s sub-target requires that at least 15% of each supplier’s obligations has to be achieved by promoting measures to low income and vulnerable households who live in rural areas.
Home Heating Cost Reduction Obligation – Affordable Warmth
HHCRO’s target is to establish £4.2bn of lifetime cost savings for the ‘Affordable Warmth Group’.
Home Heating Cost Reduction Obligation requires energy suppliers to provide measures that improve the capability of low income and for vulnerable households to be able to heat their homes at a budget they can afford. A qualifying measure for heating is an installation action that will result in a heating saving. This includes the replacement or the repair of a boiler system that qualifies under the scheme.
Fuel poverty is defined where residents spend more than 10% of their income on fuel. HHCRO has budgeted 325m of overall ECO funding to improve the ability and affordability of low income and vulnerable households to heat their homes. This funding is provided by the energy suppliers.
Eligibility is restricted under HHCRO to people living in private sector housing i.e. private sector tenants and owner-occupiers, and to those in receipt of certain benefits and tax credits. These include:
- Pension Credit;
- Child Tax Credit earning under the ‘free school meals’ income threshold currently set at £16,010 per annum …
… or for families in receipt of either
- Income Support;
- Income Related Employment and Support Allowance;
- Income-based Job Seeker’s Allowance, with at least one of the following components:
- Parental responsibility for a child under the age of 5 living in the home;
- Child Tax Credit which includes a disability or severe disability element;
- a disabled child premium;
- a disability premium
- enhanced disability premium or severe disability premium;
- a pension premium;
- higher pension premium or enhanced pensioner premium
Ofgem will administrator the ECO until 31 March 2015. It annually allocates a proportion of the overall targets to qualifying suppliers. This is determined by the supplier’s share of the gas and electricity market that they supply. Obligated suppliers under the scheme are classed as either single suppliers or suppliers that are part of a group that have more than
- 250,000 domestic customers and …
- who provide over 400 gigawatt of electricity, or …
- over 2,000 gigawatt of gas.
Suppliers gain credits towards their overall obligations after they complete each eligible energy efficient measure installed at a domestic property.
Other Ofgem duties also include:
- Monitoring supplier progress
- Reporting to the Secretary of State for Energy and Climate Change
- Fraud, audit and compliance
- Final determination on whether a supplier has achieved its obligations