Energy Company Obligation 4 (ECO4)
Page type: primary-anchored (mirrors Electricity and Gas (Energy Company Obligation) Order 2022, SI 2022/875)
Source file: eco4.md
Last updated: 2026-04-05
What this instrument does
ECO4 is a statutory obligation on large energy suppliers to fund the installation of energy efficiency measures (insulation, heating systems, and related improvements) in the homes of low-income, fuel-poor, and vulnerable households. Unlike the Warm Home Discount (which provides a bill discount) or Climate Change Agreements (which target industrial energy use), ECO4 funds physical improvements to domestic properties.
The scheme has been running in various forms since 2013, delivering approximately 4.1 million measures in 2.5 million households. ECO4 specifically runs from 27 July 2022 to 31 December 2026 (extended by 9 months from the original March 2026 end date). Its total value is approximately GBP 4 billion.
The legal basis is the Gas Act 1986 (s.33BD), the Electricity Act 1989 (s.41B), and the Utilities Act 2000 (s.103A).
The obligation
Overall target (Art 3)
The overall Home Heating Cost Reduction Obligation (HHCRO) is GBP 224.3 million in annual cost savings. This is not a spending target -- it is measured in modelled annual bill savings generated by the measures installed.
Who must deliver (Art 4)
Only large suppliers are obligated:
| Criterion | Threshold |
|---|---|
| Domestic customers | >= 150,000 |
| Electricity supplied | >= 300 GWh/year |
| Gas supplied | >= 700 GWh/year |
A supplier that meets the customer threshold AND either supply threshold is a "participant". Suppliers that were participants in the preceding phase continue automatically.
This is a much higher bar than the WHD (1,000 customers) -- only the major suppliers are caught.
How the obligation is split (Arts 6-9)
Ofgem determines each participant's share based on their proportion of the domestic gas and electricity market. Alongside the main HHCRO, Ofgem sets two minimum requirements for each participant: - Solid wall minimum -- a minimum proportion of obligation met through solid wall insulation - EFG minimum -- a minimum proportion met through measures in EPC band E, F or G homes
These minimums prevent suppliers from cherry-picking easy, cheap measures and force delivery in the hardest-to-treat, worst-performing homes.
Who benefits
Help to Heat group (Schedule 1)
The primary eligibility route is receiving one of ten qualifying benefits:
- Child Benefit (with income caps: single GBP 19,900-34,500; couple GBP 27,500-42,000 depending on number of children)
- Child Tax Credit
- Guarantee Credit (Pension Credit)
- Housing Benefit
- Income-based Jobseeker's Allowance
- Income-related Employment and Support Allowance
- Income Support
- Savings Credit (Pension Credit)
- Universal Credit
- Working Tax Credit
Other eligibility routes (Arts 17-21)
| Route | Criterion |
|---|---|
| Local authority referral (Art 17) | Household income below GBP 31,000 |
| Premises declaration (Art 18) | Local authority certifies premises meet criteria |
| Health referral (Art 19) | Referral from NHS or equivalent provider |
| Supplier declaration (Art 20) | Customer in debt, on discretionary credit, or self-disconnecting |
| SoS approval (Art 21) | Secretary of State approves additional routes |
Eligible premises
Measures can be installed at owner-occupied, private rented, and social housing in EPC bands D through G (with different conditions by tenure type and band). The combination of eligibility routes is broader than WHD.
What gets installed
Qualifying measures (Part 5)
Insulation (loft, cavity wall, solid wall, floor, room-in-roof), heating systems (boilers, heat pumps, storage heaters), and other approved measures including innovation measures and data light measures.
Heating requirements (Arts 24-30)
Heating measures in EPC E/F/G homes must be accompanied by insulation (the "minimum insulation requirement"), preventing heating upgrades without fabric improvements.
For off-gas premises, Article 30 establishes a heating hierarchy that prioritises heat pumps and renewable heating. This makes ECO4 a practical vehicle for electrification of heat in rural areas.
Installation standards (Art 31)
All installations must be by TrustMark-registered installers with a certificate of lodgement. Smart meter advice must also be offered. This is the consumer protection gateway.
Scoring system (Part 10)
The obligation is measured in annual cost savings (GBP/year). Each installed measure generates a score based on its modelled impact:
- Full project scores (Arts 49-65): for complete ECO4 projects meeting minimum energy efficiency improvement requirements. Calculated from modelled annual cost savings with uplifts for innovation, building fabric repair, and penalties for late completion.
- Partial project scores (Arts 66-76): for individual measures that don't form a full project.
- In-fill scores (Art 77): for measures at adjacent properties.
A participant's obligation is achieved when its aggregate scores reach its HHCRO.
Phases
| Phase | Period |
|---|---|
| Phase 1 | 27 Jul 2022 -- 31 Mar 2023 |
| Phase 2 | 1 Apr 2023 -- 31 Mar 2024 |
| Phase 3 | 1 Apr 2024 -- 31 Mar 2025 |
| Phase 4 | 1 Apr 2025 -- 31 Dec 2026 |
Ofgem determines each participant's obligation per phase and notifies by 7 March before the phase starts (6 weeks for Phase 1).
Relationship with GBIS (ECO4A)
The Great British Insulation Scheme (GBIS, also known as ECO4A) was established alongside ECO4 by SI 2023/873. The two schemes run concurrently. Article 82A allows ECO4 delivery to count toward GBIS obligations at a conversion rate of 1.251 (i.e. GBP 1 of ECO4 annual cost savings = GBP 1.251 of GBIS credit). This gives suppliers flexibility in how they meet their combined obligations.
Trading and transfers (Part 12)
Participants may: - Trade obligations (Art 81): transfer part of their HHCRO to another participant - Transfer measures (Art 80): reassign completed measures between participants
This creates a market mechanism allowing efficient delivery across suppliers.
Delivery progress
By February 2025, approximately 216,000 ECO4 projects had been submitted to Ofgem. The 9-month extension (SI 2025/941) reflects delivery challenges -- the government consulted on this extension in August 2025, receiving 215 responses, and confirmed it in January 2026.
Legal architecture
Gas Act 1986, s.33BD + Electricity Act 1989, s.41B + Utilities Act 2000, s.103A
--> ECO4 Order (SI 2022/875)
--> HHCRO: GBP 224.3m annual cost savings
--> Administered by Ofgem (GEMA)
--> Eligible households via Schedule 1 benefits + other routes
--> Measures scored and notified
--> ECO4A / GBIS (SI 2023/873)
--> Concurrent scheme; cross-scheme flexibility via Art 82A
--> Amendment Order (SI 2025/941)
--> Extended to 31 December 2026
--> TrustMark (installation quality)
Cross-references
| Instrument | Relationship |
|---|---|
| Gas Act 1986 | Enabling power (gas suppliers) |
| Electricity Act 1989 | Enabling power (electricity suppliers) |
| Utilities Act 2000 | Overall target specification power |
| ECO4A / GBIS (SI 2023/873) | Concurrent scheme; cross-scheme conversion |
| TrustMark | Installation quality standard |
| Warm Home Discount | Separate fuel poverty scheme (bill discounts vs physical measures) |
| Supply licence | Supplier licence conditions interact with ECO obligations |
Defined terms
See the canonical source file for the full defined terms register.
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