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The Energy Company Obligation (ECO) is a British Government programme. It is designed to offset emissions created by energy company power stations. The first obligation period ran from 1 January 2013 to 31 March 2015. The second obligation period, known as ECO2, ran from 1 April 2015 to 31 March 2017. The third obligation period, known as ECO3, ran from 3 December 2018 until 31 March 2022. The fourth iteration, ECO4, commenced on 1 April 2022 and will run until 31 March 2026.
The ECO scheme works by placing an obligation on large and medium energy suppliers in England, Scotland and Wales to achieve a minimum level of energy bill savings in homes through energy efficiency installations. ECO is funded from consumer bills and aimed at low-income households in homes with poor energy efficiency ratings. Suppliers are allocated targets based on their overall share of the domestic gas and electricity market.[7] Penalties are imposed if they fail to achieve their target.[8]
Each obligation period is administered separately with its own end date. The threat of penalties if targets are not met leads to pressure to complete installations by a specified date, with corners cut and poor workmanship the result[9].
The range of measures available through the scheme include heating upgrades, solar panels, wall and roof insulation. The provision of these measures is supposedly designed to help vulnerable families reduce their energy bills. The scheme is also seen as a way of helping the government reach its net zero target by 2050.
ECO3 target reached
Ofgem's ECO3 final determination report provides details on the overall performance of the scheme and conclusions regarding of energy suppliers’ achievement against their obligations. The overall target for all participant suppliers was an estimated lifetime bill savings of £8.253 billion. The ECO3 final report confirms that this target was exceeded, with a total estimated lifetime bill savings of £8.457 billion achieved.
The other highlights of the findings were as follows:
"All but one active supplier successfully met their HHCRO obligation and sub-obligation lifetime bill saving targets.
1.03 million energy saving measures were installed over the course of ECO3. This included:
Broken down or energy inefficient boilers being replaced in 251,741 households with energy efficient condensing boilers or low carbon heating alternatives
Cavity wall insulation installed in 152,938 households
Underfloor insulation installed in 133,173 households
Loft insulation installed in 88,588 households
It is estimated that measures installed since the first ECO scheme was introduced in 2013 will provide lifetime carbon savings of around 58.2 MtCO2e. This is equivalent to the amount of carbon absorbed by 264 million mature trees over 10 years."[10]
The latest iteration of the Energy Company Obligation (ECO4) began on 27 July 2022 and will run until 31 March 2026. ECO4 goal is to improving the least energy efficient properties and targets homes with an energy rating between D and G. It also aims to provide a more complete retrofit of properties to ensure maximum carbon emission savings. A minimum project scoring methodology is in place to ensure a multi-measure, whole house approach to each property. This is designed to encourage the installation of a variety of measures per household, including insulation, solar panels and renewable heating systems.
The eligibility criteria for ECO4 has seen the removal of disability benefits which qualified under the ECO3 component of the scheme. The ECO4 focuses solely on households that receive income based benefits, some tax credits and pension credits. This change was introduced to ensure that the scheme targets those households most in need of energy efficiency support, particularly those at risk of fuel poverty. However, there have been concerns that the removal of disability benefits from the eligibility criteria may leave some vulnerable households unsupported.
Local authorities can sign declarations for eligible households that apply through Flexible Energy under the programme, but the works are carried out by private companies, with funding from energy suppliers. Householders are recommended to check that installers are registered on the TrustMark website.[11]
According to Ofgem's statistics as of 7 May 2024 there have been a total of 100,708 Energy Company Obligation 4 projects submitted.[12] This highlights the scale of the programme in improving energy efficiency in homes across the UK. The scheme aims to provide long-term energy savings while contributing to the UK’s carbon reduction targets.
The statistics on energy supplier performance at 7 May 2024 can be viewed on the Energy Saving Genie website.[13]
Parliamentary Investigation
On 23 January 2025 the Government announced that it had identified widespread poor-quality installation of solid wall insulation under ECO4, suspended 39 companies from installing it and was requiring installers to rectify defects at their own expense.[14] On 10 July 2025 the Public Accounts Committee opened an investigation into Faulty energy efficiency installations.[15] On 14 October 2025 the National Audit Office published a report into Energy efficiency installations under the ECO, identifying poor-quality installations, their likely causes and suspected fraud.[7]
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