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BEIS publishes ECO 3 consultation response

Government decides to include oil burners in latest iteration of the programme, while also stepping up reliance on local authorities to determine vulnerable homes

A third iteration of the Energy Company Obligation (ECO 3) will focus entirely on tackling fuel poverty in low income and vulnerable homes, the Department for Business, Energy and Industrial Strategy (BEIS) has said in response to a recent consultation.

The latest amendments to the ECO scheme, which seeks to improve energy efficiency in homes across the UK, will come into effect from this year and run until 2022.

Commitments to gradually reduce the threshold whereby energy suppliers are required to participate in the scheme from 250,000 domestic customers to 200,000 by 2019-2020 will be among the key changes to ECO 3. A further reduction of the threshold to organisations with 150,000 customers will then come into effect from 2020/2021.

An estimated 6.6m households are expected to be eligible for support through the scheme as a result of the changes, according to BEIS. The response document said that there would also be a significant role for councils within the revised ECO with 25 per cent of the obligation delivered through a ‘local authority flexible eligibility mechanism’. This is expected to improve reliance on using local authority expertise to identify vulnerable households in need of support through the programme.

Ground source heat pumps will also be eligible for support through the revised obligation, even in cases where their use is also subsidised through other initiatives such as the Renewable Heat Incentive (RHI).

The response started, “Other technologies will not be eligible if they receive the RHI, reflecting the higher up-front cost and long-term benefits of ground source heat pumps.”

BEIS said that it had received a mixed response during its ECO consultation concerning the potential role of new heating oil boilers. These appliances will now be included in the scheme as part of the annual broken heating system cap of 35,000 systems

The response said, “This will help low income rural households replace broken oil boilers rather than having to rely on higher cost alternatives.”

Heating systems that are deemed to be inefficient will be permitted to be upgraded through the revised ECO outside of the broken heating cap if installed with insulation.

BESI said, “To maximise bill savings and reduce the risk of fraud and gaming noted by respondents, we will only permit certain insulation measures, excluding loft insulation.”

Industry trepidation

Heating and Hotwater Industry Council (HHIC) director Stewart Clements said that industry had been waiting for the government’s ECO response with “trepidation” since the consultation closed in May.

However, Mr Clements welcomed what he said was a “pragmatic approach” to oil boilers in fuel poor homes and the potential impact on wider government policy as a result.

He said, “We will be interested to see if this has an impact on the Clean Growth Strategy as the response appears to imply that oil boilers were being phased out.”

Mr Clements also praised the decision to launch the new ECO scheme without currently requiring compliance with the Each Home Counts initiative.

He said, “We are particularly pleased that the government have accepted the HHIC view that it is too early to insist that all new installations are accredited by the Each Home Counts review, especially as it is not actually up and running, nor have the requirements been agreed.”

“We look forward to working with BEIS and the industry on delivering this new ECO scheme.”

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