The Energy Company Obligation (ECO) was introduced by Government to replace the existing Carbon Emissions Reduction Target and Community Energy Saving Programme (CESP) and consists of two distinct sections, the Carbon Saving Obligation and the Affordable Warmth Obligation. Under ECO, energy companies will be obligated to help support around 230,000 low-income households save energy. The Department of Energy and Climate Change (DECC) hopes that the scheme will generate around 84 mtCO2 of non-traded, lifetime carbon savings.

The department has released on consultation on the implementation of ‘in-use’ factors for the ECO scheme after agreeing on implementing them in the Green Deal. In-use factors are designed to bridge the gap between laboratory performance and in-situ performance. As a result, in-use factors will have the effect of lowering the amount of finance that is available to consumers by a predetermined percentage per measure. Therefore, consumer confidence in saving estimates from any Green Deal measures under the Golden Rule will remain high.  

DECC is gathering views on the implication of in-use factors for ECO because it believes that doing so will ensure greater consistency with the Green Deal. As many of the measures will be delivered under both ECO and Green Deal, the department maintains that consistency across the board simplifies delivery and reduces costs.  

The consultation explains: “Crucially, the inclusion of in-use factors is consistent with the modelling that underlies the targets which are proposed to be set for the obligated companies under the ECO.

“Indeed, a decision not to incorporate in-use factors would mean that we could expect the proposed legal targets to be achieved through the delivery of far fewer measures, in particular insulation measures such as loft, cavity and solid wall insulation, than the Impact Assessment set out. This would not reflect the policy intention, and would not achieve the real carbon savings and other benefits that Government believes ECO should deliver.”

DECC states that if, after consultation, industry maintains that in-use factors should not be incorporated into the ECO scoring mechanism, then DECC would have to revisit the scheme’s overall carbon targets and revise them upwards to reflect real-world performance.

Responses to the consultation must be received by September 14. The full consultation document can be found here.