Supply chain put off ECO4 by ‘overly complex’ rules

The government has been warned that its flagship energy efficiency programme is falling off “a cliff edge” because it is too complex.

Energy firms, policy thinktanks, fuel poverty charities and trade associations have all called for the Energy Companies Obligation 4 (ECO4) scheme to be simplified.

Official figures show that eight months after the launch of the ECO4 scheme in April 2022, just 34,000 measures had been installed, which equates to just 3% of the 800,000 upgrades due to be delivered by the four-year long industry supported programme.

The rate of delivery has subsequently risen to an average of 22,000 measures per month in the second quarter of this year, however it is still on course to miss its target.

Calls to reform the scheme have been issued in a series of submissions to the House of Commons’ ‘Heating Our Homes’ inquiry.

The thinktank E3G says the number of ECO installations fell “off a cliff-edge” after the latest iteration of the scheme was launched.

EDF’s response says ECO4 is “much more complex” than previous phases of the scheme, which has been the main source of energy efficiency installations since its launch in 2013.

The supplier adds: “This makes the scheme harder to understand, places more demands on consumers and makes identifying eligible properties that meet the minimum requirement more difficult and more costly than in previous iterations of ECO.”

EDF says it is “vital” for the government to simplify retrofit schemes, including ECO4, removing “unnecessary complexity where possible” and provide the certainty and clarity needed to encourage investment and consumer uptake.

The company’s concerns are backed up by Energy UK, which says suppliers have encountered challenges with ECO4.

The energy umbrella body calls for the scheme to be reviewed and amended, including a relaxation of the minimum requirements for ECO4 measures.

The Association for Decentralised Energy also calls for ECO4’s minimum requirements to relaxed because installers are “having to turn away many fuel poor households who do meet the strict set of requirements”.

The overly complex nature of the scheme’s requirements has also disincentivised many SME installers from engaging with ECO4 and choosing other sources of work, it says.

ECO4’s rollout was initially delayed by the government not tabling the regulations, providing powers to introduce the scheme, until the summer following its official start date in April 2022.

Other problems, when the scheme was eventually implemented, included cost assumptions for upgrades which failed to take into account soaring construction industry inflation.

In its response, National Energy Action says early delays in the introduction of ECO4 have eroded industry confidence in the scheme meaning that installers initially planning to deliver the scheme have turned elsewhere and are reluctant to return.