Design of the Energy Company Obligation ECO+: 2023 - 2026 - Which? response

Summary

Improving the insulation of homes is critical to helping consumers reduce high energy bills and make the transition to low carbon heating systems. The Energy Company Obligation (ECO) is a tried and tested mechanism for delivering insulation measures and we support the government’s proposal to use ECO+ to rapidly improve the energy efficiency of homes. This will support householders struggling with very high energy costs and reduce carbon emissions. In developing the proposal we recommend that the government consider the following areas:

1. Household eligibility. We agree with the government’s aim of achieving rapid improvements in energy efficiency through the deployment of simple insulation measures. However we are concerned that the scheme may not reach as many low income and fuel poor households as it could whilst also supporting some higher income households who are likely to be able to pay for these measures themselves. We therefore encourage the government to consider higher annual targets for the low income group and setting a target for fuel poor households as this will drive a greater focus on households that are in most need of support.
2. Self referral. We recognise that creating a self referral system could help to reduce search costs. However, given the disparity between the level of potential demand and the level of funding, there is a risk that such a system could result in unrealistic expectations and disappointment. Any decision to go ahead with self referral should be based on an honest assessment of the scheme's ability to meet the level of demand and ensure a positive consumer journey for all applicants.
3. Eligible measures. The ECO+ scheme is primarily focused on the delivery of simple insulation measures such as loft and cavity wall insulation. Whilst there are clear arguments for this approach, the scheme should do what it can to support a whole house approach by providing every household involved in the scheme with an Energy Performance Certificate with information about the additional measures that they can take to improve the energy efficiency of their home. The flexibility for some households to make a contribution towards more expensive measures is welcome but in practice we question how attractive this will before householders and energy suppliers.
4. Paying for ECO+. The Energy Company Obligation is currently paid for through the Energy Price Guarantee. This is due to be reviewed in April 2023. The levy on bills is relatively small and this form of funding has contributed to the stability of ECO, however a levy on bills is a regressive way to pay for the insulation of UK homes. More progressive ways of funding insulation improvements should be used to fund the expansion of support that is likely to be required to meet the government’s targets in this area.