West Midlands Green Deal Cashback Scheme Approved Provider

ECO – Energy Companies Obligation

What does it stand for?
ECO = Energy Companies Obligation (gas and electricity).

What will it do?
The Energy Company Obligation (ECO) focuses on providing energy efficiency measures to low income and vulnerable consumers and those living in what is described as “hard to treat” properties, such as period homes.

Who is it funded by?
ECO is funded by large energy suppliers (with more than 250,000 customers).
They are predicted to invest £1.3 billion a year which they expect to recoup through energy bills.
The energy suppliers obligated under the scheme will determine how much subsidy they provide to each consumer. This may depend on the individual customers’ circumstances and the amount of Green Deal finance being used.

What is its main aim?
To help cut household energy bills by up to a third. Combining with the Green Deal it has the twin aims of reducing domestic carbon emissions and alleviating fuel poverty.
It will help with more expensive measures by focusing on homes where people can’t currently afford to heat properties properly, and for whom the energy efficiency measures would mean a warmer house rather than energy bill savings.

How long will it run for?
It was launched in January 2013 and is expected to run up until March 2015.

About ECO

It is estimated that 14 million homes in the UK have inadequate insulation.
ECO has been set up to support the installation of energy efficiency measures in properties across the country.
It is targeted at low income households and properties that are harder to treat with schemes like cavity walls and loft insulation due to various complications, including age and height if multiple storeys.

Launched in January 2013 (runs to March 2015), ECO is working alongside the Government’s Green Deal energy efficiency initiative.
When explaining its reasoning behind launching the schemes the Government stated that: “Rising energy prices are affecting many households.
“The Government can’t control unpredictable global energy prices but we can help households keep their energy bills as low as possible, support those most in need and take action to help secure energy supplies in the long term.”

Although based on the same principle, this is how the two schemes, ECO and Green Deal, differ.
The Green Deal (click here……….for more) is designed to help businesses and homeowners install more green technologies in their homes and properties.
Such green measures include insulation, heating upgrades, renewable energy products like solar/heat pumps as well as double glazed windows and doors.
The Green Deal will allow bill payers to take out a loan to cover the cost of the improvements which is then paid back through energy bills.
The scheme’s “Golden Rule” guarantees that savings made on energy bills will exceed the loan repayments.

But in cases where the Golden Rule doesn’t work – where monthly repayments are less than or the same as the energy bill savings that property owners make as a result of energy efficiency improvements – ECO steps in to support them.

ECO’s two main areas of focus are:

* Properties needing cost-effective measures but don’t meet the Golden Rule – for example, solid wall insulation (see….weblink….);
*And people on lower incomes and vulnerable consumers.

ECO’s 3 Main Obligations are:

1 – Carbon Saving Community Obligation:
This provides insulation measures to households in specified areas of low income. It also makes sure that 15% of each supplier’s obligation is used to upgrade more hard-to-reach low-income households in rural areas.
Through ECO the Government aims to help 230,000 low-income households or those in low-income areas.

2 – Affordable Warmth Obligation:
This provides heating and insulation measures to consumers living in private tenure properties that receive particular means-tested benefits. This obligation supports low-income consumers that are vulnerable to the impact of living in cold homes, including the elderly, disabled and families.

3 – Carbon Saving Obligation:
This covers the installation of measures like solid wall and hard-to-treat cavity wall insulation, which ordinarily can’t be financed solely through Green Deal.
This is not means-tested. The aim is to provide enough support to make these relatively expensive measures cost-effective.
It is said that this will be the key for most users of the Green Deal.
It is expected to take up 75% of the funding. It will pay for insulation in those properties with difficult cavity walls or solid walls. It is accessed in exactly the same way as the Green Deal. 

How much is set to be dished out under ECO?

The ECO initiative is estimated to be worth around £1.3 billion every year over the period that it will run.
This cost is expected to be recouped through energy bills.
The ECO Affordable Warmth and Carbon Saving Community obligations will be expected to provide support worth around £540 million a year to low-income households.
While the ECO Carbon Saving Obligation will be worth around £760 million per year.

Green Deal and ECO

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.

More information about ECO is available at:
The Energy Saving Advice Service provides free and impartial information about eligibility, access to ECO and the other types of support available. Telephone 0300 123 1234.

For more information visit www.gov.uk

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Railway Lodge
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