ECO4 places an obligation on electricity and gas retail companies to deliver energy efficiency measures to domestic premises. It is up to the energy companies to decide which retrofitting projects to fund through the scheme, which is designed to ackle fuel poverty and help reduce carbon emissions.
Currently, the scheme is set to end on 31 March 2026, but the Department for Energy Security and Net Zero (DESNZ) says an extension is needed to maintain support for households and create stronger consumer protections.
It adds that the proposed extension of six to nine months will give the supply chain the certainty of continued work for the duration of the extension, while it designs a successor scheme for the obligation.
DESNZ also confirmed that under its plans to extend the current obligation, the requirement for suppliers to achieve a total of £224.3m in annual bill savings for domestic properties, known as the home-heating cost reduction obligation, will remain the same.
DESNZ’s consultation documents add: “By extending the end date of ECO4, we can also enable carry-over of ECO4 delivery to any future obligation schemes. Carry-over is an option where surplus annual bill savings (ABS) from ECO4 delivery could count towards an obligated supplier’s future obligation.
“It has existed since the first ECO scheme began in 2013 and can help manage suppliers’ compliance risks and reduce uncertainty for the supply chain. We propose to allow obligated suppliers to carry over up to 20% of their ECO4 obligation.”
Elsewhere, DESNZ says it is bolstering consumer protections by strengthening the audit process via increased audits and improved sharing of data and intelligence amongst parties, alongside supplier oversight of consumer protection and quality of measures.
Additionally, there have been recent changes to strengthen Publicly Available Specification (PAS) 2035/2030 retrofit standards, which are intended to be in effect during the ECO4 extension period.
Louise Shooter, head of heat decarbonisation at Energy UK, said: “The extension announced today is welcome, as without ECO, the government faces a significant gap in the delivery of its Warm Homes Plan and puts in jeopardy its target of upgrading 5 million homes with energy efficiency measures, clean heat and other low-carbon technologies over this Parliament.
“The proposed increase to consumer protections during this period is vitally important – in particular, the proposals for strengthening the audit regime to pick up issues quickly.
“To avoid a hiatus in delivery, the Government must now work relentlessly, in partnership with industry, to quickly design and implement a fit-for-purpose successor scheme to ECO4 that will lift thousands of homes out of fuel poverty with clean heating measures.”
DESNZ’s consultation closes on 25 September 2025.
Revamped, renamed scheme
Sources say the Government is set to rename the scheme as the Warm Homes Obligation and that batteries would be included alongside a greater reliance on solar panels, which are currently eligible for ECO installation if fitted with a heat pump.
Speaking to Utility Week, Rose Chard, a senior advisor at Energy Systems Catapult (ESC), warned that households eligible for ECO4 upgrades are being left behind by the scheme’s focus on profit-driven lead-generation and installations.
ECO4 enables local authorities and suppliers to set their own eligibility criteria, provided households are low-income and vulnerable; it also permits NHS referrals for health-related cases. Yet ESC has warned that the current system is not working as it should.
“We see a lot of the cost of ECO going to try to find the right people and houses, whereas we know that there are many organisations out there that already know the people who might be eligible specifically for ECO support,” said Chard.
She gave the NHS as an example of an organisation that has the capability to deliver for those in need.
“They know about people’s health,” Chard said. “Given that health is a category of eligibility within ECO, why are we not using the existing data and the existing partnerships and conversations that those people are having?”
Adam John for Utility Week
This article first appeared in edie’s sister title, Utility Week
