Ofgem consult on ECO4 scoring methodology
The Energy Company Obligation (ECO) scheme administrator, Ofgem, has recently released a consultation which sets out their proposal for scoring energy suppliers’ progress towards fulfilling their obligations within ECO4.
In July last year, the government released an overarching consultation document for the next phase of ECO: ‘Design of the Energy Company Obligation ECO4: 2022-2026. It provided some in depth proposals and insight in to what the next phase of ECO (due to run between April 2022 and 31st March 2026) could look like.
What is ECO?
ECO is a government scheme that requires the biggest energy companies to deliver energy efficiency measures to households in England, Scotland and Wales. The aim of the scheme is to help cut carbon emissions and reduce fuel poverty.
Homeowners who qualify for ECO funding could receive a number of measures to help improve the energy efficiency of their property- most commonly this would be a replacement boiler or insulation.
As part of their role within the ECO scheme, Ofgem are responsible for publishing a scoring methodology, in accordance with core requirements set by government. Given the proposals made by government within their earlier consultation, Ofgem are needing to make significant changes to the scoring methodology currently used within ECO3.
Why are Ofgem proposing changes to the scoring methodology?
ECO4 will be moving to a whole-house approach, based around multi-measure projects. The scoring methodology used within the current phase of ECO adopts a measure-led approach, geared towards identifying single measures in isolation. Hence why a change is needed.
Ofgem are consulting on proposals for the scoring methodology in two parts. Part 1 closed on 4 October 2021. It set out over-arching plans for the methodology and included draft ‘full project scores’ based on the improvement in a home’s SAP rating. This second consultation provides further details on this proposal, and includes ‘partial project scores’ for the installation of individual energy efficiency measures.
The main points within the consultation include:
- ECO4 will move to a whole-house, multi-measure approach, where full project scores (FPS) are awarded in respect of packages of measures installed in eligible premises where the relevant minimum requirement is met.
- Scores must be based on the difference in expected annual energy costs between the starting and finishing SAP rating of the premises
- BEIS also propose a minimum requirement for the SAP band improvement achieved by premises treated under ECO4.
- “Band G and F premises should be improved to at least Band D,”
- “and band E and D premises should be improved to at least a band C”
- A deflator will be applied to partial project scores, which is anticipated to reduce partial project scores by 30 to 40%. This is intended to help maintain an incentive to meet the minimum requirement and obtain a full project score and whole building approach.
- Options for determining the finishing SAP rating at the end of the project, with the preferred option to obtain a post retrofit SAP/RdSAP assessment.
Elmhurst welcomes the release of the consultation and, despite the tight timescales, will seek the input from Elmhurst members before submitting a full and considered response.
Response deadline: 21st January 2022