ECO4 and the Great British Insulation Scheme Get An Overhaul

Analysis of Proposed Changes to ECO4 and the Great British Insulation Scheme (GBIS)

The UK government’s mid-scheme consultation on the Energy Company Obligation 4 (ECO4) and the Great British Insulation Scheme (GBIS) reveals discussion about much needed updates aimed at increasing delivery efficiency, addressing fuel poverty, and aligning with net-zero targets. We evaluate these proposed changes, their potential impacts, and the unresolved challenges.

Key Proposed Changes

1. Dual Insulation Measures: Allowing loft and cavity wall insulation (CWI) to be installed together under GBIS. This change seeks to improve cost-effectiveness by spreading fixed costs over multiple measures.
2. Introduction of Smart Thermostats: Expanding the eligible measures to include smart thermostats for low-income households to enhance energy efficiency with low upfront costs.
3. Pay-For-Performance Mechanism (PFP): Incorporating a voluntary PFP model to incentivize high-quality retrofits using SMETER technologies to track real-world energy efficiency improvements.
4. Alternative Installation Standards: Proposing TrustMark Licence Plus (TMLP) as a cost-effective alternative to PAS 2035/2030 for loft insulation delivered as a single measure.
5. ECO4 and GBIS Interoperability: Allowing energy efficiency measures delivered under ECO4 to count towards GBIS obligations, with a cap to prevent excessive substitution.
6. Strengthened Guarantees: Enhancing consumer protections with guarantees of up to six years for loft insulation.

Potential Impacts

1. Improved Scheme Attractiveness

• Supply Chain Engagement: Combining loft and CWI measures and introducing smart thermostats are likely to make GBIS more appealing to contractors and suppliers.
• Lower Costs for Installers: The TMLP standard could reduce compliance costs significantly (estimated at £400–£500 vs. £1,030 under PAS), potentially increasing the pool of participating installers.

2. Enhanced Consumer Outcomes

• Fuel Poverty Reduction: Measures like smart thermostats offer immediate cost savings and are particularly impactful for low-income households.
• Higher Energy Savings: Dual installations (e.g., loft and CWI) ensure comprehensive insulation, enhancing energy efficiency.

3. Data-Driven Insights

• The PFP mechanism could yield valuable data on real-world performance, paving the way for future, evidence-based policy designs.

Challenges Yet to Be Resolved

1. Implementation Complexity

• Overlap with ECO4: Allowing ECO4 measures to count towards GBIS obligations introduces administrative complexities. Balancing the two schemes without reducing GBIS's distinctiveness is critical.

2. Consumer Safeguards

• The consultation acknowledges concerns around unintended consequences, such as mould risks, particularly with alternative standards like TMLP. Ensuring robust consumer protections while minimizing costs is an ongoing challenge.

3. Delivery and Target Achievement

• Cost vs. Reach: Allowing multiple measures per household could reduce the total number of homes treated under GBIS. Careful capping and monitoring are needed to maintain equity.
• Supply Chain Capacity: Expanding the scope of eligible measures risks overburdening an already constrained installer network.

4. SMETER Accuracy and Uptake

• SMETER technologies, critical to PFP success, must demonstrate reliability and affordability to gain widespread adoption.

Recommendations for Addressing Challenges

1. Enhanced Training and Accreditation: Expand support for installer accreditation under both PAS and TMLP standards to ensure a skilled workforce.
2. Transparent Conversion Mechanisms: Develop clear guidelines for integrating ECO4 projects into GBIS without undermining the integrity of either scheme.
3. Robust Evaluation Metrics: Establish stringent performance metrics for SMETER technologies to build confidence among stakeholders.
4. Incremental Targets: Introduce phased implementation of dual measures to evaluate impacts on delivery rates and costs.

Conclusion

The proposed updates to ECO4 and GBIS represent a positive shift toward achieving the UK's net-zero goals by 2050.

GOVERNMENT SEEKING VIEWS ON ECO4 AND GBIS PROPOSED CHANGES | EEA Energy Efficiency Association

Coordinating Communication & Collaboration across the field of Energy Efficiency

Energy Efficiency AssociationGordon Walker

By addressing critical barriers in the supply chain, leveraging innovative technologies, and enhancing consumer protections, these changes promise to bolster scheme effectiveness. However, challenges around implementation complexity, cost management, and quality assurance must be carefully navigated. Ultimately, these updates demonstrate a proactive, adaptable approach to fostering a greener, more equitable energy future.

Energy Company Obligation 4 and the Great British Insulation Scheme: mid-scheme changes

We’re seeking views on proposed changes to the Energy Company Obligation (ECO4) scheme and Great British Insulation Scheme (GBIS).

GOV.UKDepartment for Energy Security and Net Zero

References

1. Consultation Document, "ECO4 and GBIS Mid-Scheme Changes," Pages 3–12.
2. Ibid, Pages 16–19.
3. TrustMark Licence Plus Proposal, Pages 20–23.
4. Pay-For-Performance Mechanism, Pages 43–49.
5. Strengthened Guarantees, Pages 27–30.
6. Costs of Compliance, Pages 22–24.
7. Consumer Safeguards, Pages 30–36.
8. SMETER Technology Overview, Pages 44–47.
9. Legislative Amendments, Pages 26–28.
10. Smart Thermostats, Pages 12–14.
11. ECO4 and GBIS Interoperability, Pages 13–16.
12. TMLP Implementation, Pages 18–22.
13. Dual Insulation Measures, Pages 11–13.
14. Consumer Feedback Mechanisms, Pages 19–22.
15. Workforce Capacity Considerations, Pages 21–24.
16. ECO4 Capacity and Delivery Rates, Pages 15–16.
17. Compliance Costs Analysis, Pages 23–25.
18. Stakeholder Responses, Annex A.
19. Legislative References, Annex E.
20. Scheme Overview, Executive Summary.