Suppliers with more 200,000 customer accounts will be required to install energy efficiency measures in fuel-poor homes from the beginning of April 2019, the government has revealed.
The threshold for the Energy Company Obligation (Eco) scheme, which currently stands at 250,000 accounts, will then be lowered to 150,000 from the start of April 2020. The taper mechanism that prevents suppliers from facing a “cliff edge” as they hit the threshold will be adjusted accordingly.
The Department for Business, Energy and Industrial Strategy (BEIS) made the announcement in its response to a consultation on the third iteration of the scheme (Eco3) running to March 2022.
The government has decided to proceed with plans to target Eco3 solely at low-income, fuel-poor and vulnerable households. It conceded that emissions reductions will be lower than if the scheme had retained a broader scope but said other policies are in place to drive decarbonisation.
The proposed target for lifetime bill savings secured through Eco3 has been raised from £7,735 million to £8,253 million.
Suppliers will be allowed to meet up to 25 per cent of their obligation by installing energy efficiency measures in households that have been deemed eligible by local authorities despite falling outside the main criteria, and up to 10 per cent by installing innovative new products.
They will be able to replace up to 35,000 broken heating systems each year and inefficient boilers will be allowed to be upgraded outside of the cap if they are installed alongside insulation.
However, suppliers will also be required to meet at least 15 per cent of their obligation by fitting energy efficiency measures in rural homes. Together they will need to insulate a minimum of 17,000 solid walled homes each year, or achieve equivalent savings for solid walled homes using renewable heating technologies.
BEIS said suppliers which have exceeded their obligation for the current scheme will be able to carry over the surplus to Eco3. It will also allow the early delivery of Eco3 measures during any gap in regulations.
The department also considered letting suppliers who fail to fulfil their current obligation to complete the remaining work during Eco3. However, it has now decided against implementing a “carry under” mechanism on the basis it could encourage non-compliance. It said most suppliers are on track to meet their targets.
Last month energy and clean growth minister Claire Perry announced that the obligation threshold for offering the Warm Home Discount would be lowered from 250,000 accounts currently to 150,000 from 2020/21.