Britain's energy savings obligation comes to an end
For several phases, the United Kingdom has placed an energy savings obligation on its suppliers. It is now turning the page: the Energy Company Obligation (ECO) will end when its current phase, ECO4, closes.
According to Ofgem's page on the ECO, ECO4 applies to measures installed since 1 April 2022 and runs until 31 December 2026, after a nine-month extension. The British energy regulator, Ofgem, administers the scheme on behalf of the energy ministry, the Department for Energy Security and Net Zero (DESNZ).
The government confirmed the end of the scheme in the Warm Homes Plan, its home renovation programme. The effort now shifts to direct public funding, carried by the state budget.
For IHD, which follows energy savings obligations in several countries, this shift is a strong signal. Our overview of energy savings obligations in Europe places the United Kingdom among the other schemes.
How the ECO worked
The ECO is an energy efficiency scheme specific to Great Britain, designed to tackle fuel poverty and reduce carbon emissions. Ofgem traces its successive phases, from ECO1 to ECO3, before the current ECO4, which came into force in July 2022.
Under ECO4, the obligation takes the form of the Home Heating Cost Reduction Obligation (HHCRO). It falls on medium and large energy suppliers, who must fund works that improve the ability of low-income, fuel-poor or vulnerable households to heat their homes: insulation, replacement of the heating system.
| Actor | Role in ECO4, according to Ofgem |
|---|---|
| DESNZ (ministry) | Sets the policy and legislation for ECO4 |
| Ofgem (regulator) | Calculates supplier obligations, monitors their results, audits their reports and fights fraud |
| Medium and large energy suppliers | Carry the obligation, shared according to their share of the domestic gas and electricity market |
| TrustMark | Oversees the technical quality of works and consumer protection |
This set-up is close to that of the French energy savings certificates: an obligation set by the state, shared between suppliers according to their market weight, and met by funding works in households. Our guide to energy savings certificates explains the French scheme in detail.
Four phases in a decade
Over the phases, the ECO narrowed its purpose. According to the history published by Ofgem, it began by targeting both carbon savings and lower heating bills for low-income households, before focusing on the second goal alone.
| Phase | Period, according to Ofgem | Obligations and targets |
|---|---|---|
| ECO1 | First phase | Three obligations (CERO, CSCO, HHCRO): 12.4 Mt of CO2 for the CERO, 6 Mt of CO2 for the CSCO and £3.7 billion for the HHCRO |
| ECO2 | From 1 April 2015 to 31 March 2017 | 19.7 Mt of CO2 for the CERO, 6 Mt of CO2 for the CSCO and £6.46 billion for the HHCRO |
| ECO2t | Extension to 30 September 2018 | 7.3 Mt of CO2 for the CERO and £2.76 billion for the HHCRO |
| ECO3 | From 3 December 2018 to 31 March 2022 | A single obligation, the HHCRO, with a target of £8.253 billion of savings |
| ECO4 | Measures installed from 1 April 2022 to 31 December 2026 | HHCRO, targeted at low-income, fuel-poor and vulnerable households |
The three acronyms stand for three separate obligations. The CERO, Carbon Emissions Reduction Obligation, covered the reduction of carbon emissions. The CSCO, Carbon Saving Community Obligation, targeted carbon savings at community level, with a sub-obligation reserved for rural areas. The HHCRO, Home Heating Cost Reduction Obligation, aims to lower households' heating costs.
Under ECO1, again according to Ofgem, suppliers exceeded their targets: 18.33 Mt of CO2 under the CERO, 9.87 Mt under the CSCO and £5.16 billion under the HHCRO. These results show that a supplier obligation can deliver volume. What the British government now questions is the quality of the works, not the scheme's ability to fund projects.
Why the government is ending it
The reason is written in black and white. In the Warm Homes Plan, the British government explains that it has tightened consumer protection rules, and announces the end of the ECO in blunt terms:
« the Energy Company Obligation (ECO), which was the source of the majority of poor-quality installations, will be coming to an end »
The same document commits to working with the industry so that defects attributed to the ECO are put right at no cost to households. Ofgem, for its part, points out that the ministry published a statement on 23 January 2025 on potential problems affecting installations made under the ECO and the Great British Insulation Scheme.
The Warm Homes Plan: £15 billion of public money
The Warm Homes Plan, updated by the government on 18 March 2026, provides £15 billion of public investment to renovate up to 5 million homes and lift up to one million families out of fuel poverty by 2030.
| Warm Homes Plan item | Amount (£ million) |
|---|---|
| Grants for low-income homes | 4 422 |
| Boiler Upgrade Scheme | 2 687 |
| Heat networks | 1 063 |
| Warm Homes Fund | 5 300 |
| of which loans for individuals | 2 000 |
| of which low-income households | 600 |
| Other programmes | 428 |
| Total, including devolved nation allocations | 15 000 |
According to the same table, £5 022 million is earmarked for low-income households. The plan first uses two existing programmes, the Warm Homes Social Housing Fund and the Warm Homes Local Grant, before merging them into a single scheme for low-income households.
The government also announces the creation of a Warm Homes Agency, responsible for coordinating and overseeing the rollout of millions of renovations. It will take over functions now spread across several bodies.
The other levers: heat pump grant and landlord obligation
The Boiler Upgrade Scheme is the British grant for replacing a boiler with a heat pump. According to the DESNZ press release of 26 June 2026, its amount rises from £7 500 to £9000 from 21 July, an increase of 20%. The measure targets households heated by oil in England and Wales first, and 200 000 eligible homes have received direct information.
The Warm Homes Plan adds a performance obligation for the private rented sector. Landlords will have to bring their homes up to energy performance certificate (EPC) band C, on two metrics, by October 2030, unless exempt. Their spending will be capped at £10 000 per home, with an average cost expected at around half that.
Finally, the plan restates the quality framework for state-funded works. Installers of energy efficiency measures must be PAS 2030 certified, installations must comply with PAS 2035 and companies must be registered with TrustMark. For heat pumps and solar, MCS certification is required.
What this means for you
For a French CEE player
The United Kingdom shows that a supplier obligation can be abandoned when the quality of works is not under control. This precedent is a reminder that the compliance of files determines the very lifespan of a scheme.
For a manufacturer or installer targeting the British market
Demand will no longer go through energy suppliers, but through public programmes and the obligation placed on private landlords. Access to this funding requires British certifications: PAS 2030, PAS 2035, TrustMark and MCS.
For an engineering consultancy
State-funded works in the United Kingdom remain governed by PAS 2035. In this process, according to the Warm Homes Plan, the retrofit designer must make sure that each product chosen is suitable and complies with building regulations. Design work does not disappear with the ECO: it remains at the heart of public funding.
For a landlord or property investor in the United Kingdom
The October 2030 deadline for band C creates a demand for works that is independent of any grant. The cap of £10 000 per home forces you to choose the most effective interventions for each property.
What we recommend
Follow the exit timetable. ECO4 ends on 31 December 2026: any project still funded by the ECO must be completed by then.
Look at public programmes rather than suppliers. The Warm Homes Plan, the Boiler Upgrade Scheme and the landlord obligation are becoming the real drivers of the British market.
Draw the lesson for European schemes. The quality of works and the rigour of files are not administrative details: they are what guarantees the durability of a funding mechanism.
Our engineering consultancy follows energy savings schemes in several countries and supports projects through to their monetisation. Discover the markets we follow or write to us to review a project.
