The government have announced that after consultation they will extend the Energy Company Obligation (ECO) by 18 months. This will undoubtedly be good news for those working in the insulation industry, who have been tirelessly putting evidence forward as to why the scheme should be prolonged for another year.
The Department for Business, Energy and Industrial Strategy (formerly the Department of Energy and Climate Change) began the consultation on 29th June 2016 and it ran until 17th August 2016. The purpose of this was to decide on the simplest and most effective use of the funds was. 236 industry professionals submitted formal responses, which were given full consideration in the development of the Government response as well as for the purpose of further developing proposals for the longer term scheme.
The majority of responses were supportive of most of the proposals. Stakeholders generally agreed with focusing the scheme more on installations which made the most impact on reducing fuel poverty (more insulation, fewer replacement gas boilers), although views were split on the level of replacement boilers and solid wall insulation.
There were concerns about the scale of change for a one-year scheme, with suggestions on how to mitigate this. There was broad support for the overarching simplification of delivery and administration of the scheme.
Key policy decisions made include:
- An 18 month extension to the ECO scheme (April 2017 – September 2018).
- Introduction of a more simplified and targeted scheme. The Affordable Warmth Group will be increased to around 4.7m rather than 4m (in consultation) households. This will include more households who are in fuel poverty, and those on lower incomes, who may be struggling to meet heating and other bills;
- eligibility for certain measures under Affordable Warmth will be extended to social housing in EPC bands E, F or G;
- Local authorities will have a role in determining eligible homes, following the introduction of the ‘flexible eligibility’ mechanism, which suppliers can use for up to 10% of their Affordable Warmth obligation;
- the requirement to deliver a minimum level of solid wall insulation will be increased from the proposed equivalent (in consultation) of 17,000 measures per year to 21,000 per year;
- rural delivery will be protected as 15% of Carbon Emission Reduction Obligation will be delivered in rural areas.
- administration will be simplified. ‘Deemed scores’ will be introduced in place of the current Standard Assessment Procedure (SAP) methodology.