The ECO4 scheme is the fourth part of the government’s Energy Company Obligation and likely the final entry into the scheme. It helps qualifying households receive funding for home improvements that promote energy efficiency, such as insulation, heat pumps, and central heating systems.

The ECO4 scheme UK is designed to increase energy efficiency measures in the most vulnerable energy-efficient homes, typically to support low-income households. Its primary objective is to target vulnerable families living in fuel poverty and improve their homes' energy efficiency ratings. ECO4 started in April 2022 and continued until March 2026.

Here, we’ll discuss the recent policy changes in the ECO4 scheme so that you can prepare to submit your application for free heating grants if you are eligible.

What are the Key Goals of the ECO4 Scheme?

One of the main goals of the ECO4 scheme is to support families in making energy-efficient improvements that will reduce carbon emissions in private homes across the UK. This will help the government reach the net-zero pollution goal by 2050. To do this, the scheme entrusts the top energy companies and providers that serve our homes to provide handouts to qualified families. 

What Energy Efficiency Measures Can ECO4 Cover?

• Insulation – loft, cavity wall, etc.
• Renewable Heating Systems – such as an air source heat pump instead of electric storage heaters
• Replacing Inefficient Boilers
• First Time Central Heating Grant

Policy Changes in the ECO4 Scheme

This final rendition of the ECO scheme series brought several changes into effect, which we will detail below. With so much outdated information, you must ensure you’re reading about the ECO4 scheme and not any of its predecessors as it stands in 2024.

Changes to ECO4

The Removal and Addition of Eligible Benefits

Some disability-related benefits have been removed from the eligibility criteria to create a greater emphasis on household income and better target households falling below the new minimum energy efficiency requirements. This means that rather than simply claiming a benefit, there’s a more explicit focus on low-income homes and ensuring those struggling to heat their homes and pay their energy bills can access this funding. 

• Housing Benefits and Pension Credit Savings Credit will replace Disability benefits removed from the criteria.
• If a household member claims an income-related benefit and its combined annual income is less than £31,000, they could be eligible for free insulation grants through ECO4. 

ECO4 Eligible Benefits

• Income-based Jobseekers Allowance
• Income-related Employment and Support Allowance (ESA)
• Income Support (IS)
• Pension Credit Guarantee Credit
• Working Tax Credit (WTC)
• Child Tax Credits (CTC)
• Universal Credit (UC)
• Housing Benefit (new eligible benefit for ECO4)
• Pension Credit Savings Credit (new eligible benefit for ECO4)
• Child Benefit (only where the income threshold is not met)

Benefits that won’t Qualify for ECO4 Grants

• Disability Living Allowance (DLA)
• Personal Independence Payment (PIP)
• Severe Disablement Allowance
• Industrial Injuries Disablement Benefit
• War Pensions Mobility Supplement
• Constant Attendance Allowance

Local Authority Flexible Energy Rules (LA Flex)

Enhancement of the percentage of measures that can be installed under Local Authority Flexible Energy.

When the ECO3 version of the scheme ran, energy companies could use 25% of their obligation through the Local Authority Flexible Energy rules (sometimes called LA Flex). This meant councils and local authorities could have their grant criteria in place. They did this by submitting a statement of intent for flexible energy, and the rules could help households that were not claiming any benefits access the funding.

This changed with ECO4. Companies can now use up to 50% of their obligation through the Local Authority Flexible Energy (now double the amount previously permitted).

Energy Performance Certificate (EPC) Requirements

After installing the new upgrades through the ECO4, there are extra requirements for minimum enhancement in energy efficiency ratings. For example, the grants will need to improve the rating to at least band D in homes that have an existing EPC band of F or G. The funding grants are required to enhance the rating to a minimum of band C, whereas if a house has an existing band of D or E.

The reasoning behind these changes is to increase the number of grants and energy-efficient savings households can make with the new improvements. Also, the government said that a minimum number of homes in bands E, F, and G will be upgraded to ensure the most inefficient properties are remembered and noticed.

Under ECO4, these energy-inefficient properties will be targeted to improve their energy efficiency through various methods, including cavity wall insulation, loft insulation measures, and more!

Removal of Boilers From the Scheme 

Under the ECO3 scheme, 134,000 boilers were installed, but under ECO4, there is a restriction of only 5,000 boiler grants available to be applied for by potential customers. Regarding the types of boilers, there are extra rules to qualify for the scheme. This means fewer households will be rewarded with boiler grants under the ECO4 scheme. Those looking to benefit from the ECO4 scheme would determine how insulation can help turn your property into one of the most energy-efficient properties on your street rather than improving your boiler. While boilers have been removed, companies offer support via other grants and schemes.

Foster to ECO with the Great British Insulation Scheme

The government launched the Great British Insulation Scheme (GBIS), previously known as ECO+, to bolster the ECO Scheme in September 2023. This £1 billion insulation scheme runs equally with the ECO4 instead of replacing it. It aims to help households in lower council tax bands with energy-inefficient homes get support for upgrades such as roof, loft, or cavity wall insulation.

The scheme is expected to extend support to a broader range of households than existing government-funded schemes like ECO4 since eligibility is not just based on income or receipt of benefits but instead based on the criteria below:

• Low council tax band (A-D in England and A-E in Scotland and Wales)
• Energy Performance Certificate (EPC rating) of D or below

Summary

Hence, the homeowner and private tenants can benefit from knowing which benefits would give access to available funds, especially if fuel poverty and energy inefficiency with insulation, heating systems, and energy-inefficient boilers are problems.

If you previously considered an application for ECO3 but were disqualified because you claimed benefits that didn’t provide entry to the plan. It is still worth considering since the reward conditions for the ECO4 plan have changed.

If you have not previously qualified, you aren’t getting any rewards. The ECO4 plan could provide a new way to improve your home's energy efficiency grade. This recent policy aims specifically to help homes that don’t claim benefits receive funds.