The Energy Company Obligation (ECO) scheme can help you improve your home’s energy efficiency if you own your home or rent from a private landlord and claim certain benefits. Read on to learn more about the ECO grant scheme.
Millions of households in the UK can’t afford to heat their homes to a comfortable and healthy level.
Government data shows that 3.17 million households were in fuel poverty in 2023, driven by low energy efficiency, low incomes, and high prices.
The Energy Company Obligation (ECO) aims to improve the least energy-efficient housing stock occupied by low-income and vulnerable households.
This will help improve many fuel-poor homes as reasonably as possible to reduce carbon emissions and make progress towards achieving net zero.
If you qualify, ECO can help cover the costs of insulating your loft or cavity walls or upgrading your heating system, including repairing or replacing an inefficient or broken boiler.
This guide explores everything you need to know about the ECO grant scheme, including how it works, the eligibility criteria, and how to apply. It also reviews other schemes available in the UK.
Quick Takeaways:
- Over 2.3 million homes have benefited from over 3.1 million installations through ECO since 2013.
- ECO4 came into force in July 2022 and will run until 31 March 2026 with an expanded value of £1bn per annum.
- ECO requires suppliers to install measures that make it easier for low-income, fuel-poor, and vulnerable households to heat their homes.
- You can qualify for the ECO grant scheme through ECO4 Flex if you don’t receive qualifying benefits.
- Energy suppliers determine which energy efficiency measures to fund, the level of funding, and the installers or retrofitters they work with.
What is the ECO Grant Scheme?
The Energy Company Obligation (ECO) is a government energy efficiency scheme with a few major goals. These include:
- Improving the energy efficiency of UK households.
- Help reduce fuel poverty.
- Make energy and therefore home heating more affordable.
The scheme is currently in its fourth iteration (ECO4) and requires energy suppliers to install energy efficiency and heating measures in homes in Great Britain.
The measures help households warm their homes while reducing energy bills and carbon emissions.
Over 2.3 million homes have benefited from over 3.1 million installations since 2013.
ECO4 came into force in July 2022 and will run until 31 March 2026 with an expanded value of £1bn per annum.
How Does The ECO Grant Scheme Work?
The ECO grant scheme places a Home Heating Cost Reduction Obligation (HHCRO) on large and medium energy suppliers with over 150,000 domestic customer accounts.
Suppliers must promote measures to make it easier for low-income, fuel-poor, and vulnerable households to heat their homes.
The measures help reduce heating costs for people whose homes they improve, thereby reducing fuel poverty. They include actions that reduce energy usage, such as installing insulation or upgrading a heating system.
Suppliers cover the costs of meeting the scheme obligations, however, they recoup these costs from their customers’ energy bills.
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Who Can Apply for the ECO Grant Scheme?
You can benefit from the ECO grant scheme if your home requires energy efficiency upgrades.
A retrofit assessment will determine the specific measures that will benefit your home.
The government is committed to ensuring low-income households access sustainable, low-carbon warmth as part of a fair transition to net zero.
ECO4 can provide help for energy-saving improvements to your home if you either:
- Claim certain benefits and live in private housing (for example, you own your home or rent from a private landlord)
- Live in social housing
If you’re a homeowner, the house should have an energy efficiency rating of D, E, F, or G to be eligible.
If you rent from a private landlord, the house must have an energy efficiency rating of E, F, or G to be eligible. You must have the owner’s permission to do the work.
If you live in social housing with an energy efficiency rating of E, F, or G you might be eligible for help with insulation or installing a heating system for the first time.
What Types of Benefits Are Accepted?
You can be eligible for the ECO grant scheme if you receive at least one of the following benefits:
- Income-based Jobseekers Allowance (JSA)
- Income-related Employment & Support Allowance (ESA)
- Income Support (IS)
- Pension Credit Guarantee Credit
- Working Tax Credit (WTC)
- Child Tax Credits (CTC)
- Universal Credit (UC)
- Housing Benefit (new eligible benefit under ECO4)
- Pension Credit Savings Credit (new eligible benefit under ECO4)
- Child Benefit*– depending on income threshold
What Are The Income Thresholds?
To be entitled to the ECO grant scheme under Child Benefits, you must also fall within any of the following income thresholds:
If you are claiming as a couple:
| Number of Children | Income Threshold |
| One | £27,300 |
| Two | £32,100 |
| Three | £36,900 |
| Four or More | £41,700 |
If you are a single parent claimant:
| Number of Children | Income Threshold |
| One | £19,800 |
| Two | £24,600 |
| Three | £29,400 |
| Four or More | £34,200 |
Can You Qualify for the ECO Grant Scheme If You Don’t Recieve Benefits?
Fuel poverty statistics show that over 46.1% of fuel-poor households don’t receive benefits. This can present a dilemma when only benefits are used as the main proxy for identifying eligible households.
Fortunately, even if you don’t receive benefits, you can still qualify for the ECO grant scheme through ECO4 Flex.
ECO4 Flex allows local authorities to refer households considered to be in fuel poverty and spending at least 10% of their net income heating the home or those on a low income and are vulnerable to the effects of living in a cold home.
Energy suppliers can also refer households under ECO4 Flex. They can refer households that struggle with persistent fuel debt and are supported by suppliers or are using pre-payment meters and have regularly been unable to stay connected to their fuel supplies due to financial hardship.
The government allows up to 50% of the ECO target to be met under ECO4 Flex. Thus, local authorities can play a vital role in helping target low-income households not receiving one of the qualifying eligible benefits.
How Do You Qualify for the ECO Grant Scheme Through ECO4 Flex?
ECO4 Flex allows you to qualify through the following routes:
- Route 1 (Low household income): An annual household income under £31,000.
- Route 2 (NHS Referrals): This route is for people with health issues exacerbated by living in a cold home. These include cardiovascular, respiratory, and mobility problems and those with immune-suppressed conditions.
- Route 3 (Proxy Targeting): A household in Energy bands E, F, or G and meeting any two of the following criteria:
- The home is in the LSOA 1-3 area.
- The householder receives a Council Tax rebate based on low income only.
- The householder is vulnerable to living in a cold home, as identified in the NICE Guidance.
- The Local Authority scheme, which aims to support vulnerable and low-income households, has referred the householder.
- Household members get free meals in school.
- The household struggles with sustained debt on mortgage payments and utility bills. The mortgage lender, the energy supplier, or Citizens Advice has advised the household to seek support from the local authority.
How Do You Apply for the ECO Grant Scheme?
Usually, your energy supplier will contact you if you are eligible.
However, if they don’t and you think you meet the criteria, you can contact any obligated energy suppliers. They can help you find out how they can help you benefit from the ECO scheme, even if they are not your energy provider.
Some of the obligated energy suppliers include:
- British Gas
- E (Gas and Electricity)Ltd
- Ecotricity
- E.ON UK Solutions
- Octopus Energy
- EDF
- OVO
- Outfox the Market
- Scottish Power
- The Utility Warehouse
- So Energy (Including ESB Energy)
- Utilita Energy Ltd
Can Measures Under the ECO Grant Scheme be Co-funded with Other Schemes or Grants?
No. You cannot blend measures delivered under ECO4 with funding from other government grants and schemes.
These can include the Warm Home Discount (WHD), the Boiler Upgrade Scheme (BUS), the Social Housing Decarbonisation Fund (SHDF), and the Home Upgrade Grant (HUG).
Measures outside ECO4 delivered on the same property must be installed before starting the ECO4 retrofit project or after completing and installing all the measures.
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Will You Pay for the Installation of Any Energy Efficiency Measure?
Whether or not you’ll need to contribute depends on the measure type and the energy supplier.
According to Ofgem, the scheme administrator, energy suppliers may ask you to contribute to the cost of the installation in some cases.
The level of funding you get will depend on the type of measures and several other factors.
Ofgem doesn’t comment on the cost or scale of consumer contributions.
It notes that it’s up to energy suppliers to determine which energy efficiency measures they want to fund, the level of funding they provide, and the retrofit coordinator or installers they choose to work with.
Different installers or companies can provide different levels of support for installing energy efficiency or heating measures.
The administrator encourages shopping around for the best deals to ensure you’re satisfied with any offers if you’re asked to contribute to the cost of the installation.
Can Ofgem Help If You’re Eligible But The Installer Changes Their Mind Over Funding Availability?
Ofgem has a limited ability to help you resolve a complaint
The energy supplier will work with a third-party installer to deliver the obligations.
Although Ofgem administers the ECO grant scheme, it’s not directly involved with installing measures and is not included in the contractual arrangements between energy suppliers and installers.
The administrator doesn’t have any oversight over such arrangements. However, you’re encouraged to provide feedback or any negative experiences to allow them to improve industry standards.
Which Other Grant Schemes Are Available?
If you are not eligible for the Government ECO grant scheme, it’s worth checking if you meet the criteria for other schemes. These include:
The Boiler Upgrade Scheme (BUS)
The BUS scheme provides upfront capital grants to encourage property owners to replace existing fossil fuel heating systems with low-carbon, more efficient heating systems.
It aims to support the installation of heat pumps and biomass boilers in homes and non-domestic buildings in England and Wales.
The scheme operates similarly to the Green Homes Grant Scheme. The government contributes a fixed sum to the upfront costs of low-carbon heating technologies, and you pay for the rest.
The scheme opened for grant applications on 23rd May 2022 and will run up to 2025 with a £450m funding confirmed for the three years.
BUS allows you to access the following:
- Grants of £5,000 for biomass boilers at a flat rate.
- £7,500 off the cost and installation of a ground source heat pump, including water source heat pumps.
- £7,500 off the cost and installation of an air source heat pump.
You’ll also benefit from a 0% VAT rate on purchasing and installing low-carbon heating technologies.
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Who Qualifies for A Boiler Grant Under BUS?
You can qualify for BUS if:
- You own the property you’re applying for, including a second home, business, or rental property.
- Your property is rural and not connected to the gas grid.
- Your property has no outstanding insulation recommendations and has a valid Energy Performance Certificate (EPC). Changes to the grant eligibility rules allow you to qualify even with recommendations from May 2024.
- You have an emissions certificate for your boiler showing you keep polluting emissions to a minimum.
- You have a property with an installation capacity of up to 45kWth.
Do All Properties Qualify for A Grant Under BUS?
No. Grants are not available under the scheme for:
- Properties already supported or funded by the government for a biomass boiler or heat pump.
- Social houses like rentals or accommodations provided at lower market value
- New build properties apart from particular self-builds. If you own a self-build property and wish to be eligible, you must have built it or paid a builder to do the job. You’ll need to provide proof that the property is self-build.
How Do You Apply for A Grant Under BUS?
BUS is an installer-led scheme, meaning you’ll need an installer to apply for the grant on your behalf.
Your installer will advise on the suitable heating system for your property, apply to Ofgem for a grant voucher, and complete the installation according to scheme requirements and industry standards.
Low-carbon heating systems installed, thoroughly checked, and commissioned by the installer on or after 1st April 2022 are eligible for funding under the scheme. The new heating system must:
- Replace an existing fossil fuel heating system like an oil, gas, electric, or LPG boiler.
- Be capable of meeting your home’s whole space hot water and heating requirements.
- Meet specific technical standards like minimum efficiency requirements. The installer will advise you on these.
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The Warm Home Discount (WHD) Scheme
The Warm Home Discount scheme came into effect in 2011 and supports low-income households, those vulnerable to cold-related illnesses, and those living wholly in fuel poverty.
The scheme offers a one-off £150 discount on your electricity bill. The money isn’t paid to you. Instead, your electricity supplier applies the discount to your bill if you’re eligible.
You’ll get the discount automatically, and if your supplier provides you with gas and electricity, it can be applied to your gas bill instead of the electricity bill.
The UK government extended the scheme until March 2026. The scheme requires domestic energy suppliers with over 1,000 customers to provide an annual discount on customer bills.
The scheme is split into scheme years. 2024-25 started on 1 April 2024 and will run until 31 March 2025.
Who Is Eligible for the Warm Home Discount?
The WHD scheme is open in England, Scotland and Wales.
You can qualify if you either:
- Get the Guarantee Credit element of Pension Credit
- Are on a low income and have high energy costs
Your energy supplier must be part of the scheme, and your name or partner’s name must be on the electricity bill.
If you want to learn about the best way to heat your conservatory, you may want to check out our guide on which electric heater is the cheapest to run. It may surprise you that it is not a halogen heater.
Home Energy Scotland Grant and Loan Scheme
The Scottish government funds the Home Energy Scotland Grant and Loan scheme.
It offers grant funding, interest-free loans, or a combination of both to help homeowners and self-builders in Scotland transform their houses into cosy, efficient homes.
The scheme can help cover the costs of improving your home’s energy efficiency or installing a renewable system like a heat pump.
The amount of grant and loan funding available depends on what improvements you want to make.
Who Is Eligible for The Home Energy Scotland Grant and Loan Scheme?
You can apply to the Home Energy Scotland Grant and Loan scheme if your property is in Scotland and:
- You’re a homeowner living in the home you own
- If you’re building your own home, you can use the grant and loan for home renewables or energy storage systems. However, other improvements aren’t available if it’s a self-build.
Businesses, landlords, and property developers aren’t eligible.
How Much Can You Get As A Grant or Loan?
Grant funding available for energy efficiency improvements includes:
- Up to £7,500 to install a new heat pump. It can rise to £9,000 if you qualify for the rural uplift.
- 75% of the energy efficiency improvements cost up to a maximum grant amount of £7,500. You can get up to £9,000 if you qualify for the rural uplift.
- Up to £2,500 for high heat retention storage heaters, if taken as part of a package of measures and where a renewable heat measure, such as an air source heat pump, is unsuitable.
ECO Grant Scheme Conclusion
The Energy Company Obligation (ECO) aims to improve energy efficiency in low-income and vulnerable households. This will help improve many fuel-poor homes as reasonably as possible to reduce carbon emissions and make progress towards achieving net zero.
If you qualify, ECO can help cover the costs of insulating your loft or cavity walls or upgrading your heating system, including repairing or replacing an inefficient or broken boiler.
If you don’t qualify, it’s worth checking out other schemes such as the Boiler Upgrade Scheme, the Warm Home Discount, and the Home Energy Scotland Grant and Loan scheme.
It’s also worth mentioning that finance schemes are also available. These schemes are offered by installation companies and allow you to spread the cost of an energy efficiency measure over several years, enabling you to pay in monthly increments.
Sources and References
- https://assets.publishing.service.gov.uk/media/65ccecba1d939500129466a9/annual-fuel-poverty-statistics-report-2024.pdf
- https://assets.publishing.service.gov.uk/media/6113ec46d3bf7f04482f89d0/eco4-consultation.pdf
- https://www.ofgem.gov.uk/environmental-and-social-schemes/energy-company-obligation-eco/energy-company-obligation-eco-homeowners-and-tenants