Today I want to talk about a Government obligation focused on the energy efficiency improvement of UK homes: The Energy Company Obligation (ECO). The ECO is a UK Government legal obligation that mandates all major energy suppliers to install energy efficiency and heating measures in domestic households. It replaces the previous Carbon Emissions Reduction Target (CERT) and Carbon Saving Communities Programme (CESP) and Government’s tax funded Warm Front scheme. It was launched in the UK in January 2013 as the Government’s flagship initiative.
Being the largest and possibly the most challenging obligation to date, ECO is not like previous obligations which were able to be achieved across all households; instead it to a large degree focuses on providing full subsidy to lower income and vulnerable households, whilst continuing to subsidise other forms of private investment to tackle the efficiency of properties where the home owner is not classified as vulnerable.
The ECO targets are split amongst the obligated suppliers depending on their relative share of the gas and electricity supplied (kWh) to domestic customers. If we fail to achieve any of these targets, we could face a fine of up to 10% of our annual turnover.
Photo: before and after the insulation
Having spent 18 months working with Government and the other energy companies developing the new ECO policy and ScottishPower’s Delivery Strategy, I was appointed as UK Business Development Manager within the Government Obligations Team in September 2012. Since then, focus has been on implementing the policy to allow ScottishPower to make strong progress to obligation delivery.
The program has a lot of benefits for the customer. It allows the customer to reduce electricity and gas bills, implementing different heating and insulation efficiency measures. There are many different types of qualifying measures we can install In 2013 we engaged our supply chain in the installation of measures we have previously never installed through past Obligations and the results have been extremely positive for the customer. Depending on the type of property and the property features we can classify them in:
- SWI (Solid Wall Insulation): External Solid Wall Insulation or Internal Solid Wall Insulation. External Solid Wall Insulation requires planning permission and Building Control, meaning
![Newton Heath Photo - Pre & WIP]()
there is lengthy lead in times for project set up and development prior to delivery on the ground. - HTTCWI (Hard To Treat Cavity Wall Insulation): it is used to reduce heat loss through a cavity wall by filling the air space with material that inhibits heat transfer. Aimed mainly at irregular and narrow cavities among UK households. The measure is more complex and expensive than the CWI.
- CWI (Cavity Wall Insulation): cheaper as the above one because the insulation jobs are more simple and of standard cavity construction.
- Loft Insulation: roof insulation.
- Heating measures: heating system exchange including boiler replacement.
- Other measures: glazing, leak sealing and other energy efficiency measures.
there is lengthy lead in times for project set up and development prior to delivery on the ground.We have a dedicated development team across the UK with good technical skills and experience in developing energy efficiency projects with a deep understanding of the needs of local authorities and social housing partners.
The Development Team is home based and split into four geographical regions. We have resources within each region that understand the demographics and housing construction types in order to be able to work closely with our partners and develop suitable projects. Whilst I have been involved in the delivery of previous obligations of this nature, every day of 2013 felt like a ‘School Day’ – understanding how the property specific scoring worked and how this would affect the funding levels we could offer partners as projects under ECO are a lot more technical and complicated.
As local authorities are contributing significantly towards projects they need to go through formal procurement processes, which involves us working long hours and late nights completing tenders and pitches for the projects. We do feel that one of our strengths was that because we had actually started delivering projects as early as January 2013, we were very quickly able to use the learning´s from these projects within our development discussions for the next projects.
However, the hard work has paid off – one of the things Government has started to do is produce regular reports on the progress suppliers have made towards their obligations. We can see from these reports that we have delivered over 25% of the total solid wall insulation to date, well above our market share and we have delivered 15% of the total ECO measures installed to date.
To date, we have funded the installation of 100k energy efficiency measures and over 40k vulnerable households benefit from fully funded energy efficiency measures through these efforts. We worked with a significant number of local authorities and social housing providers across the UK and also worked closely with over 50 contractor partners to deliver energy efficiency improvements to UK homes.
Initially the program was very complex and expensive, operating under strict regulatory guidance. Given the recent social and political pressure on consumer energy bills, the UK Government has recently consulted again on a series of significant changes to the ECO programme aimed at lowering the overall cost of the programme and the resulting impact on our customers’ bills. These announced changes extend the programme out to 2017 and bring a new set of challenges that will require a step change in our strategy, but the team is looking forward to helping ensure that ScottishPower can deliver on any new requirements.
Author: Heather Watts