The results of Department of Energy and Climate Change (DECC) consultation on in-use factors for Energy Companies Obligation (ECO) have been published (25 January 2013).

The ECO has been set up to supplement and support the Green Deal (GD), in order to subsidise harder-to-treat homes (HTH) and properties that don’t meet the Green Deal’s Golden Rule.

The ECO’s primary objective is to help and create better and more comfortable homes – not necessarily lower bills for low-income and vulnerable households. It replaces the previous Carbon Emissions Reduction Target (CERT) and Community Energy Savings Programme (CESP) funding, which came to an end in December 2012.

ECO Legal Obligations

ECO is a legal obligation on energy companies to meet three targets:

  • Carbon Emissions Reduction Obligation; this will mainly promote Solid Wall Insulation (SWI) and hard-to-treat cavity wall insulation. It can also include connections to district heating systems.
  • Carbon Saving Community Obligation; Similar to the above, but aimed at low-income and vulnerable households. At least 15% of this is to be spent in rural areas.
  • Affordable Warmth (Home Heating Cost Reduction) Obligation; this aims to achieve savings in energy bills as a result of ‘heat qualifying actions’, for those receiving benefits or tax credits.

Through the above, energy companies are obliged to help over 230,000 low-income households.

Some concerns had been raised about the actual performance of most energy saving measures ‘in the field’ – namely they do not match up to what is claimed by manufacturers laboratory tests.

 ‘In-use’ Factors

Therefore it was proposed that ‘in-use factors’ should be assigned to the various measures when determining their value at the Green Deal Assessment stage.  A recent government consultation considered whether these in-use factors should be applied to the ECO as well.  It was proposed that they should be applied to the two Carbon Savings elements, but not the Affordable Warmth Obligation.  The results of the consultation are as follows:

  • Respondents were, with few exceptions, in favour of applying in-use factors as proposed.
  • The in-use factors will be fixed until the end of the ECO period in March 2015, which will provide economic certainty during this period.
  • The official start date for ECO would be moved from Oct 2012 to 1 Jan 2013, which takes account of the delay caused by this consultation, and also avoids parallel accounting periods alongside CERT and CESP. However, schemes installed since October 2012 will remain eligible for ECO.

The list of in-use factors to be applied under ECO are shown in the table below:

Measure In-use factor
Cavity wall insulation (including insulation of hard to treat cavities) 35%
Connection to a district heating system 10%
Draught proofing 15%
External solid wall insulation for a mobile home 25%
Flat roof insulation 15%
High performance external doors and passageway, walkthrough doors 15%
Loft or rafter insulation (including loft hatch insulation) 35%
Pipework insulation 15%
Room in roof insulation 25%
Secondary or replacement glazing 15%
Solid wall insulation for a solid brick wall built before—(a) 1967, if situated in England or Wales;(a) 1965, if situated in Scotland 33%
Solid wall insulation for—(a) a solid wall which is not built of brick;(b) a solid brick wall built in—(i) 1967 or later, if situated in England or Wales;(ii) 1965 or later, if situated in Scotland 25%