Amending the ECO4 Order to allow cost recovery via grant funding
This consultation is open for responses
Respond to this consultationSummary
DESNZ proposes amending ECO4 legislation to allow government grants to fund energy efficiency measures that count toward supplier obligations. Energy suppliers have overspent their anticipated budgets, prompting government to offer Exchequer funding to prevent bill increases. The consultation closes 5 January 2025.
Why it matters
This is redistributive policy — treating symptoms of expensive energy rather than addressing supply or market structure. As such, it shifts costs from energy bills to general taxation without changing the underlying obligation mechanism.
Key facts
- •ECO4 currently prohibits grant-funded measures from counting toward supplier obligations
- •Suppliers have exceeded anticipated spending in impact assessments
- •Government proposes Exchequer funding to prevent bill increases
Timeline
Areas affected
Related programmes
Memo
Obligated energy suppliers have spent more than was anticipated in the impact assessment. To protect against a bill increase, government plans to pay the suppliers through Exchequer funding. The Energy Company Obligation (ECO4) legislation currently states that measures cannot qualify against an energy suppliers’ obligation if they are grant-funded. This consultation proposes amending the ECO4 legislation to specify the government grants from which money is not to be received. This would allow grants from public funds to be made by the government specifically for the purposes of funding ECO4 measures (rather than these other named schemes). This consultation is open to all but of particular relevance to: * energy suppliers * energy efficiency and heating measure installers * local authorities * consumer groups * academic groups