Home upgrade scheme at risk of missing target by decades

The government’s flagship home insultation scheme ECO4 needs urgently reforming or the UK will miss its target to insulate all fuel poor homes by 2030.

That is according to environmental thinktank E3G which warns that the 2030 target will not be achieved until 2096 if the current rate of delivery is maintained.

The group is calling for six specific reforms to improve the energy efficiency scheme. They include:

1. The role of the supplier obligation, how ECO’s delivery can maximise the strengths of this route to retrofit
2. Depth of retrofit, reducing the number of measures delivered per home to spread the benefits evenly among fuel poor homes
3. Household eligibility, ensuring the right eligibility requirements are set so the obligation can support a range of fuel poor homes
4. Compliance and customer assurance, ensuring quality standards are aligned with the depth of retrofit and failures are remediated
5. Building types and geographies, ensuring the obligation works fairly across flats and houses, as well as in rural and urban areas
6. The role of local authorities in ECO should be evaluated to ensure they can make a full contribution to delivery of the obligation

ECO4, which is worth £4 billion over four years from April 2022, is focused on providing support to low-income and vulnerable households living in the least efficient properties and is due to deliver improvements to 450,000 homes.

However, E3G’s review of the scheme warns that while previous rounds were successful, changes made for the latest iteration “have led to a major fall in the number of households benefiting from the scheme”.

“There is an opportunity to reform the programme to ensure it can play a central role in meeting the UK’s statutory target to end fuel poverty by 2030,” the report adds.

“ECO’s ability to act as a vehicle to deliver home upgrades has proved successful in the past, with decades of knowledge and experience delivering through this route.

“However, the case for reform is clear. To realign objectives and delivery with the UK’s fuel poverty and energy efficiency objectives, E3G recommend a full review of ECO is undertaken, which would examine the underlying principles and supporting architecture.”

One of the main changes to the scheme was to shift toward funding “deeper retrofits” which effectively means treating fewer homes with more measures.

E3G’s assessment adds: “Deep retrofit produces a larger improvement on a home’s energy efficiency rating but is more expensive to undertake.

“With a limited budget, this means fewer homes are treated and narrows the pool of homes where deep works are feasible.”

“Average investment per home under ECO4 has averaged £26,000, compared to £3,500 under ECO3, an increase of 640%. In the most recent quarter of ECO4, average investment was £33,000 per home.

“When the budget available to help fuel poor homes is limited, and fuel poverty levels remain high in England, the current magnitude of spending per home is not sustainable.

“Adjusting the depth of retrofit and whole house approach will be crucial to reinvigorating ECO’s scale.”

Energy minister Graham Stuart has already pledged to review the scheme after concerns were raised by opposition MPs and energy suppliers last year.