ECO uncertainty risks investment in social housing warns Spark Energy

Energy companies may not be able to invest in social housing unless the government clarifies the future of the Energy Company Obligation (ECO) scheme, Spark Energy has warned.

The independent supplier’s chief executive Chris Gauld told Utility Week that he sees the approaching ECO obligation as an opportunity for his company which specialises in the rental market. But uncertainty around the future of the scheme is affecting his ability to attract investment.

The current obligation period will end in April 2017, after which the future of the scheme has yet to be announced.

Gauld said that constant competition to provide the cheapest energy price “isn’t necessarily that healthy for the market.” Instead he wants to use the opportunity ECO provides to distinguish the supplier from the competition by saying to customers “we may not actually be able to save you pence per unit going forward, but we can reduce your energy use.”

But Gauld says: “All these things I say I really want to do, invest, make it a value add, apply ECO measures to our customers, I can’t really raise money in the market to invest in building that capability until I know what the schemes in 2017 are going to be.”

Spark Energy currently has 190,000 meters and expects to hit the ECO threshold of 250,000 meter points by the turn of the year.

“At the moment we are having to focus on the boring plan of outsourcing and administrating it, rather than focusing on the creative value add plan which would do great things for social housing. And that’s a real wasted opportunity.”

Last week Spark Energy announced three new additions to its senior management team in readiness for hitting the ECO obligation threshold.

Gauld says the company has 18 months to decide how it will approach the obligation, but is putting in place a relationship with a third party so that it can administrate the scheme. 

Spark Energy is meeting with the Scottish government next week and calling on the Department for Energy and Climate Change to provide a clear idea of what the scheme will look like from 2017 onwards.

Gauld said: “A clear statement on what the government wants us to do for the next five years would be massively helpful.”

Gauld said the company wants to know what is going to happen by the end of the year, with further details on measures that count and targets in the first six months of 2016.  ECO is part of an ongoing review of energy efficiency policies by the government, the outcome of which is expected in the autumn.  

“If the regulators and government could get round to giving us all a consistent steady environment I think we could do really good things.”

“Don’t give us another two year plan or a one year extension give us a five year view. Then we can invest in it. There is a huge opportunity and companies like mine who are entrepreneurial and nimble and we can raise money, let’s go do it rather than just tick boxes.”