The Future of ECO – Briefing note on the Government’s Final Decision

Executive Summary

The Department of Energy and Climate Change (DECC) has announced today the Government’s final decision on the Consultation for the Future of the Energy Company Obligation (ECO).

The Consultation on the Future of ECO followed on from the December Announcement in 2013 which proposed cuts and reform to the Carbon Emissions Reduction Order element of ECO in
return for the Suppliers passing on £30-35 energy bill reductions to their consumers. The six week Consultation outlined the December Announcement changes in more detail and also
included several other changes, notably around the Rural Sub-Obligation, off-gas households, and the Affordable Warmth (AW) obligation. The Government’s final decisions are consistent
with the December Announcement, which had been expected, although the outcome does refer to significant opposition from respondents to many proposals.

Outside of the key decisions, there were some changes which will impact individual technologies. For example, DECC are proposing the introduction of one year installation warranties for boilers coupled with a “deflator value” for the scoring of gas “qualifying boilers” which aims to reduce the number of replacements in Home Heating Cost Reduction Obligation (HHCRO). One significant change from the Government’s Consultation, in terms of the Sustainable Energy Association’s Consultation Response, has been the decision to include renewables in the scoring uplifts for the off-gas sector to give Suppliers the option to install these technologies and bring the ECO policy more in line with the Renewable Heat Incentive. Finally, it is worth noting that changes to the Green Deal Home Improvement Fund voucher payments were also announced.

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