Energy Company Obligation

The Energy Companies Obligation (ECO) was introduced in January 2013 to reduce the UK's energy consumption and support people living in fuel poverty. It will run until 2017, supporting the installation of energy efficiency measures in low-income households and areas, and in properties that are harder to treat. The ECO replaces two previous schemes, the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP). ECO places legal obligations on the larger energy suppliers to deliver energy efficiency measures to domestic energy users. It operates alongside the Green Deal (see separate entry), which is designed to help people make energy efficiency improvements to buildings by allowing them to pay the costs through their energy bills rather than upfront. The Green Deal and the ECO will help reduce carbon emissions from the UK's domestic building stock, which is an essential part of the UK's plan to meet its statutory domestic carbon emission reduction targets by 2050.The ECO is intended to work alongside the Green Deal to provide additional support in the domestic sector, with a particular focus on vulnerable consumer groups and hard-to-treat homes. Under the rules of ECO, energy suppliers are obliged to help improve the energy efficiency of their domestic customers' buildings in three distinct areas:1. Carbon Emissions Reduction ObligationUnder the Carbon Emissions Reduction Obligation, energy companies must concentrate efforts on hard-to-treat homes and measures that cannot be fully funded through the Green Deal. Solid wall insulation and hard-to-treat cavity wall insulation are the primary areas for focus under this target. Other insulation measures and connections to district heating systems are also eligible if they are promoted as part of a package that includes solid wall insulation or hard-to-treat cavity wall insulation.2. Community ObligationUnder the Carbon Saving Community Obligation, energy companies must focus on the provision of insulation measures and connections to domestic district heating systems supplying areas of low income. This target has a sub-target, which states that at least 15% of each supplier's Carbon Saving Community Obligation must be achieved by promoting measures to low income and vulnerable households living in rural areas.3. Home Heating Cost Reduction ObligationUnder the Home Heating Cost Reduction Obligation, energy suppliers are required to provide measures that improve the ability of low income and vulnerable households (the "Affordable Warmth Group") to heat their homes. This includes actions that result in heating savings, such as the replacement or repair of a boiler for example.

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