As part of the plethora of announcements and publications made by the Government under the banner of ‘Powering Up Britain’ on 30 March, the Government response to the ECO Plus consultation was issued. Here, AgilityEco addresses some of the main questions our partners and stakeholders are likely to have on the new scheme.
The questions and answers are brigaded under the following headings:
- General – questions 1-4
- Eligibility and customer contributions – questions 5-11
- Measures, costs, standards and scores – questions 12-16
- Obligated suppliers and targets – question 17
- ECO4 changes – question 18
1. Why the change of name from ECO Plus to the Great British Insulation Scheme?
The Government says this is to help with consumer recognition and also to indicate upfront the main energy efficiency measures that will be available. Heating controls will be the only other eligible measure beyond insulation.
2. Have the plans changed much from the original consultation?
The plans remain broadly the same. We set out below where there have been changes from the consultation. The Government response includes a helpful summary of the main differences between GBIS and ECO4 at Annex 1.
3. When does GBIS begin and how much is it worth?
The scheme has not formally started yet and will not do so until the necessary Regulations have been approved by Parliament. While this won’t happen until later in the year (hopefully by summer), the Government is encouraging obligated energy suppliers to commence activity now in accordance with the detail in its consultation response. It is also hoped that the detailed Ofgem guidance will follow shortly. The scheme will run from 2023 to 2026 with anticipated spend of £1 billion in total which will improve around 300,000 homes. The homes are expected to save £300-400 a year on average.
4. Does the scheme apply in Scotland and Wales?
The scheme will operate across Great Britain.
Eligibility and customer contributions
5. Who will be eligible under the GBIS?
GBIS will target two groups.
A minimum of 20% of the scheme will be directed to a ‘low-income group’. These will be people who have entitlement under ECO4 on the grounds of household circumstances and who are living in EPC E-G rated homes. But they will need to be unlikely to receive support under ECO4 because of their property’s physical condition; GBIS is much more about the installation of single measures, rather than ECO4’s focus on more comprehensive upgrades to homes, and there will be no requirement to improve homes by a set number of EPC bands. In a change to the consultation, it no longer needs to be demonstrated that low-income homes cannot meet the Minimum Requirements of ECO4 in order to be eligible for GBIS.
The second group will be the ‘general group’. This group will consist of those living in homes with an EPC rating D-G and within Council Tax bands A-D in England and A-E in Scotland and Wales. The eligibility for Wales has changed from the consultation’s proposal of Council Tax bands A-C. Up to 80% of the obligation can be delivered to the general group in line with the Government’s aim that GBIS should support those who do not benefit from existing schemes.
6. Will there be a GBIS Flexible Eligibility component?
Yes. Up to 80% of the 20% for the low-income group can be delivered through GBIS flexible eligibility with households targeted that do not meet the ECO4 eligibility requirements, but who are nevertheless fuel poor, and others because of vulnerability to the cold. Use of Flex will be unlimited in the second group. The Government will introduce a new GOV.UK eligibility checking and self-referral service and accompanying dedicated telephone support to assist with the delivery of GBIS and Flex, in particular. Local authorities will either need a new GBIS Statement of Intent or will have to update an existing SoI to include GBIS criteria.
7. What about the private rented sector and social housing?
For the private rented sector, with a few exceptions, only homes in EPC bands D and E will be eligible across either GBIS group. This is because there are already statutory requirements on private landlords to let homes that are at least at EPC Band E. Private rental sector households in the general group will only be eligible for higher-cost insulation measures so excluding loft or cavity wall insulation. No PRS (or social housing) households will be eligible for heating controls. Social housing will be eligible where it has an EPC band of D-G. The broader eligibility is because there are no social housing regulations equivalent to those in the private sector.
8. Will there be a rural uplift?
In Scotland and Wales, low-income group off-gas households living in rural areas will be supported with a 20% uplift to the score given to each measure. There will be no equivalent uplift in England on the grounds that 60% of the Home Upgrade Grant is ring-fenced for rural delivery.
9. Will in-fill be allowed?
Yes, with a ratio of 1:1 for flats and 1:3 for houses. The Government has moved away from the idea of allowing ECO4 houses to contribute to the in-fill ratio on the grounds that it was an unnecessary complication.
10. Does receiving support under GBIS exclude a property from benefitting from ECO4 in future?
No. E-G properties will in future be able to receive ECO4 for different measures (blending GBIS with funding from other schemes for the same measure remains prohibited). This also works in reverse (ECO4 followed by GBIS). Households can only access GBIS once.
11. Will households have to contribute to the costs of work?
Not for the low-income group. There is an assumption that householders in the general group will contribute 10% (£80m of the maximum £800m) budget. But it will be up to suppliers to determine how this is achieved with contributions decided on an individual household basis.
BEIS have published research findings on the willingness of customers to contribute to costs alongside the Government response. Government believes that the research suggests that requiring customer contributions does not appear to disproportionately reduce consumer uptake of schemes. We expect that customer contributions are more likely to be sought for the highest cost measures.
Measures, costs, standards and scores
12. What measures can participants receive?
The following insulation measures will be eligible:
- Cavity wall insulation (including party walls)
- Solid wall insulation (both external and internal)
- Loft insulation
- Pitched roof insulation
- Flat roof insulation
- Under floor insulation
- Solid floor insulation
- Park home insulation
- Room-in-roof insulation
Households in either group will only be able to receive one measure. Owner-occupied households in the low-income group will be able to receive heating controls as well as an insulation measure.
13. What standards will be set for delivery?
This was the subject of some debate during the consultation. Ultimately the Government has decided that all measures must be delivered to PAS:2035 including the simpler ones (loft and cavity wall insulation and heating controls).
14. Will search costs assumed be lower for the general group than the low-income group?
No. While this was mooted in the consultation on the grounds that there are additional household eligibility requirements for the low-income group, the Government has decided that search costs should be the same for the two groups. This is partly because of the need to find contributions from a proportion of those in the general group.
15. Has the Government done anything to reflect recent increases in the costs of measures installed?
Yes, the cost assumptions for installing measures have been changed resulting in substantial increases in some property archetypes for loft and cavity wall insultation as set out on page 21 of the consultation. The new cost assumptions for higher cost measures will be set out in the Final Impact Assessment. The assumptions for the cost of heating controls and compliance with PAS:2035 remain as per the consultation.
16. How will scores for work be determined?
ECO4 partial project scores will be used to calculate the bill savings a measure achieves (without the 20% deflator). As pre-retrofit RdSAP (Reduced Data Standard Assessment Procedure) assessments are required for all retrofits under the Scheme, EPCs will not be needed to evidence the pre-installation energy efficiency rating of a property.
Obligated suppliers and targets
17. Will obligated suppliers simply be required to reach their target by the end of the scheme as with ECO4?
No, there will be annual targets. Ofgem will determine the amount of annual bill savings required of suppliers. Suppliers must achieve at least 90% of their annual targets each year although there is no restriction on over-delivery. This seems to be an attempt to smooth out delivery. Scheme targets will be confirmed when the Final Impact Assessment is published but the Government response indicates that the first-year target will be no higher than £8,850,000 in notional Annual Bill Savings (ABS).
18. The consultation proposed changes to ECO4 as part of the new Regulations. Will these be implemented?
Yes, the following changes will be made:
- The definition of a renewable heating system will be amended back to the ECO3 definition of “wholly or partly”. A new definition will be introduced to allow electricity generation equipment, such as solar PV, to be installed alongside electric storage heaters (ESH) and electric heating systems (EHS). Together they will be considered a renewable heating system if some of the electrical output produced by the solar PV is used to generate heat.
- Solar PV may be installed in both on-gas and off-gas homes that either already have a hydronic heat pump, ESH or an EHS with a manufacturer responsiveness rating of 0.8 or above when assessed against the Standard Assessment Procedure or are having them installed as part of an ECO4 project.
- The opportunities for ESH/EHS to be installed will be extended to homes with neither an efficient nor inefficient heating system (i.e., homes with no heating or use only plug in room heaters or wall mounted electric heaters), and for off-gas homes where it is not possible to install measures from the off-gas heating hierarchy in these homes.
- Off-gas homes may connect to district heating systems fuelled wholly or partly by gas in accordance with the off-gas heating hierarchy at stage 2.
- The changes to ECO4 outlined above will be effective once GBIS legislation comes into force and Ofgem’s ECO4 guidance is updated.