ECO4: What to Expect In this ECO 4 Scheme

The Government has released an ECO4 consultation

The long-awaited publication of the Government’s response to the ECO4 consultation is welcomed by Ecogenius. We look at the essential points for us and our partners in this briefing. So it’s fantastic news that we’ll be getting ECO4 in the form that was promised. A £1 billion-per-year initiative that will last until 2026. The scheme will continue to target low-income, vulnerable, and fuel-poor households, as it did with ECO3.

When installing heating measures, use a ‘fabric first’ strategy with minimal insulation preconditioning. Up to 50% of ECO4 will be delivered through new Flex arrangements, which will be extremely helpful to our collaboration with suppliers, local governments, and other local organizations. Proposals suggest that families in EPC categories A, B, and C will no longer be eligible for ECO4, a step designed to help the government meet its fuel poverty targets. Work on participating properties must meet a minimum improvement criterion, as determined by the SAP score on EPCs (Energy Performance Certificate).

Their EPC (Energy Performance Certificate) rating at the start will define the modifications required. Major changes to eligibility are also in the works, including modifications to qualifying benefits and a re – organization of flexible eligibility (LA Flex).

EPC Eligibility

Only properties with a D, E, F, or G will be eligible for the program, which aligns with national plans to upgrade as many homes as possible to EPC band C by 2035.

Additional requirements for how much energy-efficiency ratings must be enhanced by the measures being installed are anticipated to be introduced in ECO4.

• A property currently has an Energy Performance Certificate (EPC) band of F or G, funding will be required to raise the rating to at least a D.
• A property currently has an Energy Performance Certificate (EPC) band of D or E, the subsidies must be used to raise the rating to at least a C. The government also proposes that a certain number of residences in bands E, F, and G be updated.

Householder eligibility

Households receiving means-tested benefits will be eligible for assistance to help those with the lowest incomes, as planned. Where more expensive actions are required to renovate the home, private rental renters will profit.

Benefits

The government has decided to eliminate non-means-tested benefits eligibility. To qualify, persons receiving disability benefits must now also get a means-tested payment.

• Housing Benefit and Pension Credit Savings Credit have been added to the list.
• Income limits for children’s benefits have been raised.
• ECO will be available to households who have received a Warm Homes Discount refund.

ECO4 Flexible eligibility

Statement of Intent:

For each household referred, Ofgem will introduce and create a new system allowing LAs and devolved administrations to notify Ofgem with the declaration number, household address, and route the household has been matched under. Ofgem will be able to compare the declarations issued by the LA or DA with the informed declarations they receive from suppliers as a result of this. Scottish and Welsh governments will be allowed to join in ECO4 Flex and refer low-income households.

Four additional flex routes will be introduced by the government

Four new pathways for assessing household eligibility have been established, one of which now involves suppliers as part of the Supplier Flex program. Under the new LA & Supplier Flex program, activities in referred homes must complete 50% of a supplier’s commitment. A single local government can use all four routes, although suppliers can only use route 2.

Route 1:  Household income

• Households must earn less than £31,000.
• Housing costs are not taken into account in the modifications.

Route 2: Proxy targeting

A home in EPC bands E, F, or G must meet any two of the following qualifying conditions:

• A measure of deprivation is the LSOA 1-3 (Lower Super Output Area )
• A homeowner receives a council tax rebate – (excludes single person rebates)
• A householder is at danger of living in a cold home, according to the NICE Guidance.
• A resident is directed to a local government-run program that helps low-income and vulnerable families.
• Receives free school meals and has been referred to the local authority for assistance by Citizens Advice, their energy supplier, or their mortgage lender because they are struggling with long-term debt on utility bills and mortgage payments.

Route 3 – NHS referrals

• This would help persons suffering from respiratory, cardiovascular, limited mobility, or immune-suppressed illnesses, which are all likely to be exacerbated by living in a chilly environment.
• Long-term health conditions such as diabetes and mental health have been omitted from this strategy due to their varied severity.

Route 4 – bespoke targeting

• A distributor or a local government could submit a strategy for addressing a large number of persons living in fuel poverty.
• This may involve things like particularly targeted referrals, advertising, or data use – the proposal would be presented to and reviewed by a BEIS panel, and if approved, projects completed in homes targeted with that strategy would get a bonus score.
• There is a 10% boost on this route.

In-fill

• The EWI in-fill policy will be maintained, but it will be extended to flats at a 1:1 ratio, which means that if half of the flats qualify, the other half will also benefit from the renovations.
• Houses have a 1:3 ratio, although this can now apply to properties with the same street address.
• Cavity wall insulation is now part of the in-fill approach in ECO4.

Band E-G only for private renters

• Solid wall insulation, first-time central heating, a renewable heating system, or district heating are all required. After then, any ECO measure (excluding repairs or replacements of damaged heating, as in ECO3) can be received as long as at least one necessary measure is included.

Dimensions

Fabric first approach

• The government has agreed to implement the following minimum insulation requirements for all residences receiving any type of heating measure, including heating controls.
• Before any heating measures can be implemented in a Band D property, at least one primary insulation measure must be installed.
• All exterior facing cavity walls and loft (including rafters) or roof (including flat, pitched, and room-in-roof) insulation must be put first in all band E, F, and G homes receiving any heating measure, as well as band D homes receiving FTCH.

Oil/LPG

• All new replacement oil and LPG heating systems are not included in ECO4.
• Allows the repair of broken oil and LPG heating systems as a last resort where none of the qualified heating measures for off-gas dwellings are reasonably practicable to deploy, subject to the Broken Heating Repair Cap.

Gas connections

• Gas from the mains and gas from a hybrid mains only a tiny number of households linked to the gas grid are eligible for FTCH (on-gas homes).
• Where the eligibility rules are met, homes with gas back boilers and Agas with one radiator will be considered eligible for FTCH.
• Before applying for FTCH, all residences must have cavity wall and loft/roof insulation installed.

Distributions of funds and presumed scores

The following criteria will be used to modify the grading methodology:

• The difference between the property’s starting SAP rating (pre-retrofit) and the property’s ending SAP rating in terms of average annual bill expense (post-retrofit).
• The overall floor area of a building
• As part of PAS 2035, this must be demonstrated by a valid pre-installation EPC or a pre-installation SAP evaluation.

PAS

ECO4 projects are required to be completed in line with the most recent PAS2035 standards and processes, including installation in compliance with the most recent PAS2030 and MCS requirements where applicable.

Innovation

The Innovative Measures route will now have two levels of uplift, according to the Innovation Government. For submissions that offer a plausible explanation of how the measure is better than its standard counterparts that are widely available on the market, a 25% uplift will be awarded.

A new 45% premium for measurements that show significant improvement across a variety of categories (including, but not limited to, expected bill savings, supplier cost savings, environmental impact, or other benefits).

Layout of the scheme

The government has opted to keep yearly obligation phases, with Phase 1 starting at the beginning of the plan and extending until March 31, 2023, followed by three annual phases beginning 1^st April