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What is the Energy Company Obligation?

Often known as ECO, is an obligation that has been placed on the big energy suppliers to fund additional energy efficiency projects

The Energy Company Obligation. The aim of this is to help the government in achieving their goals under the Climate Change Act, reducing greenhouse gases by 30% by 2020.

The ECO requires the big energy suppliers to complete these energy efficiency projects where they cannot or will not be funded by domestic customers through the Green Deal scheme. For this reason, the ECO scheme is aimed at the following groups:

  • Those with low incomes
  • Poorer and rural communities
  • Properties with solid walls and hard-to-treat cavity walls

With the help of funding from the big energy companies, these groups will benefit from a reduction in their energy bills and an improved energy efficiency rating. Meanwhile, the government will remain on track to achieve the targets set within the Climate Change Act. 

The energy companies need to meet three parts of the Energy Company Obligation, which are as follows:

Home Heating Cost Reduction Obligation (HHCRO)

Often referred to as the affordable warmth obligation, the HHCRO requires the energy companies involved to provide heating and insulation measures to private tenure consumers who receive certain means-tested benefits. This obligation supports low-income consumers such as the elderly or disabled, helping them to reduce energy bills and protect them from the vulnerability of living in a cold home.

Carbon Savings Communities Obligation (CSCO)

The CSCO requires the larger energy companies to provide solid wall insulation measures to houses in areas of low income, helping these homeowners to increase their energy efficiency and reduce energy bills. Under this obligation, there is a requirement for each energy supplier to use 15% of their ECO budgets to improve the energy efficiency of hard-to-reach low-income households, such as those in rural areas.

Carbon Savings Obligation (CSO)

Finally, the Carbon savings obligation requires the energy companies involved to improve the energy efficiency of buildings with solid walls and hard-to-treat cavities.