Energy company obligation

Energy company obligation

If you have been reading or listening to the news lately, there is a good chance you’ve heard the phrase ‘energy company obligation’ being bandied about.

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So, what exactly is the energy company obligation scheme (or “ECO”), why does it matter and how could it benefit you?

What is the energy company obligation scheme (ECO)?

The energy companies obligation was finally introduced in 2013, and replaces two other schemes: the carbon emissions reduction target, or CERT; and the community energy savings program, or CESP.

Like CERT and CESP before it, the energy company obligation legally requires the energy companies to help improve the energy efficiency of some of their customers’ homes across the UK, thereby cutting energy bills.

The ECO scheme is aimed at particular types of properties. These properties are:

  • low-income and vulnerable properties
  • homes in low-income neighbourhoods
  • properties that wouldn’t financially benefit from the Green Deal

The government estimates that the ECO deal will help thousands of households across the country with their energy efficiency, with up to 230,000 households on lower incomes benefiting, as well as others eligible for other components of the scheme.

The ECO deal components

The energy company obligation, or ECO deal, consists of three main elements: the affordable warmth obligation; the carbon saving obligation; and the carbon saving communities obligation.

The affordable warmth obligation is a requirement for energy companies to offer heating and insulation upgrades for low-income homes — although it should be noted that social housing is not included in this.

It includes upgrades that will result in savings on heating, such as boiler repair or replacement, and insulation.

The carbon saving obligation is there to provide insulation support to properties undertaking solid-wall insulation, where it is difficult and expensive to insulate without financial assistance, and cavity-wall insulation for properties built after the 1930s.

Solid walls, which are generally found on older properties, require cladding on either the inside of the wall, the outside, or both.

Finally, the carbon saving communities obligation is an initiative targeted at improving the insulation and connection systems in low-income areas. It also requires the energy companies to dedicate 15% of these ECO grants to helping low-income homes in rural areas.

Is the energy company obligation part of the Green Deal?

The energy companies obligation scheme is a government initiative that sits alongside the flagship Green Deal scheme.

The Green Deal is a way for households to better finance energy efficiency upgrades that might otherwise be seen as prohibitively expensive. So, for example, if you want to install solar panels on your roof but are put off by the cost, the Green Deal provides a loan for the money.

The concept of the Green Deal is that your repayments are incorporated into the energy bills of the property, so they are tied to the house, not you. Furthermore, if your energy efficiency upgrades mean lower bills, you’ll end up paying the same or less on your energy bills.

However, the government has also required the energy companies to help fund energy-efficiency measure for certain properties, known as the energy companies obligations.

Do I qualify for ECO funding?

There are a number of steps to determine whether you qualify for any element of ECO funding.

If you in are a lower-income property and want to be considered for the means-tested ECO grants, you should call the Energy Saving Advice Service on 0300 123 1234.

If you are considering either cavity wall insulation or solid wall insulation then you may be able to receive financial assistance under the eco scheme.

This is due to the fact that, unlike cheaper measures like loft insulation, the payback from wall insulation will take longer to filter through, and your energy bills would most likely go up in the short term.

Whatever measures you are undertaking, you should consult with your Green Deal assessor to see if you qualify for ECO funding.

Full eligibility criteria

You should always consult your Green Deal assessor or energy company first, but here are the basic requirements for ECO funding:

  • You either own or rent the property and have the landlord’s permission to undertake work
  • You are receive pension credit or child tax credit and your income is £15,860 or less

You receive one of the following credits AND fulfil one of the extra requirements listed below:

  • Working tax credit and your income is £15,860 or less; income support; income-based jobseeker’s allowance; or income-related employment and support allowance
  • The extra requirements are: you receive the disability, pensioner, or disabled child premium; you take care of a child under the age of 16 or under the age of 20 if they are in education or training; or for working tax credit, you are 60 or over.

How else can I save energy?

Even if you don't qualify for ECO funding there are still plenty of easy steps you can take to improve the energy-efficiency of your home.

Little steps like making sure all your light-bulbs are energy-saving bulbs is a great start, as well as draught-proofing around the home.

Look for any areas around windows and doors, or even fireplaces and letterboxes that might be letting in cold air, and letting your expensive heated air escape. Fixing draught-proofing is cheap and easy to do, just visit your local hardware store and look for draught proofing foam and strips.

You can also save energy by changing your habits. Besides closing curtains at night and closing doors on unheated rooms, try turning your thermostat down by just one degree. This simple change can save you money on heating year after year, and while in the short run you may put on a jumper you might not even notice the difference after a week.

Big savings are to be made with your white goods. When it comes to replacing a fridge, freezer, washing machine or washer/dryer look for energy efficient models. Most shops will now provide a usage figure and energy efficiency rating when they sell new white goods.

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