July 2014- Changes to ECO and Green Deal incentives

In December 2013, the government announced changes to the Green Deal and Energy Companies Obligation (ECO) which are summarised in our update post. They then opened a consultation in March 2014. The results of the consultation were published on 22nd July 2014. As expected, the majority of the proposed changes will now go ahead with a few minor changes to the original ideas.

The key updates from the consultation results include:

  • The timings and obligations for the different strands of ECO have been altered (see our previous update post for details)
  • Easy to treat measures (LI and CWI) are now available for all households without a focus on lower income homes (although DECC may incentivise this later)
  • CSCO now applies to all households in the lowest 25% of low income areas, along with those in the lowest 25% of rural areas.
  • There will be a 1.35 x lifetime savings uplift for all insulation measures installed under HHCRO in non-gas fuelled households and 1.45 x uplift for all non-gas ‘qualifying boilers’ which are replaced or repaired. Additionally, there will be a 0.8 x lifetime savings deflator for replacement gas boilers
  • Solid Wall Insulation may no longer be required prior to installing a district heating system in some cases e.g. tower blocks which would be too expensive
  • Qualifying (broken, faulty or very inefficient) electric storage heaters have become an eligible HHCRO measure
  • Energy Companies will have a minimum requirement to save 4MtCO2 through CERO solid wall insulation (including non-brick walls but excluding park homes)
  • Households can apply for RHI only if they have contributed something towards the cost of the measures
  • There is no requirement for the blending of ECO and Green Deal and no regulation surrounding contributions towards the cost of measures by Affordable Warmth households

  • Along with the changes to the Energy Companies Obligation, DECC also released an update for the Green Deal Home Improvement Fund (GDHIF). Over £50 million worth of vouchers have so far been applied for, so DECC have changed the fund to ensure it lasts longer.

    The key changes to the Green Deal Home Improvement Fund:

  • A reduction in the maximum amount available for Solid Wall Insulation from £6000 to £4000
  • A reduction in the percentage of the install cost which can be covered by a voucher for Solid Wall Insulation from 75% to 67%
  • The removal of Flue Gas Heat Recovery Units from the list of eligible measures

    What this means for households:

  • Many more households will now be eligible for subsidised or free insulation through CSCO (see our CSCO page for more information
  • It will be easier to install insulation and replace heating systems in non-gas heated properties, and harder to replace gas boilers
  • It is likely that households will struggle to gain HHCRO funding in the short term, as the Energy Companies are a long way through their obligations, the deadlines for which have been extended
  • The installation of solid wall insulation will now be harder to fund due to the reduction in GDHIF incentives
  • GDHIF may now be an option for less homes, as flue gas heat recovery units seemed popular alongside boiler replacements for properties which already had CWI

  • Useful links:

    Cutting the cost of keeping warm to tackle fuel poverty (Government Press Release - 22/7/14)
    Green Deal Home Improvement Fund reaches £50 million milestone in six weeks (Government Press Release - 22/7/14)
    The Future of the Energy Company Obligation (ECO Consultation - response published 22/7/14)