The Energy Company Obligation

The Energy Company Obligation (ECO) provides heat pump grants for retrofit energy efficiency schemes featuring ground source heat pumps. Under the ECO, larger energy suppliers are legally obliged to fund energy efficiency measures in British households.

Our delivery partner, Kensa Contracting, successfully supports thousands of ECO installations in social housing retrofits across the UK. The aim is to reduce carbon emissions and confront fuel poverty.

Energy Company Obligation

Who is the ECO for?

ECO supports retrofit efficiency projects. Such projects include heating replacements in the domestic sector, with a particular focus on vulnerable consumer groups and hard-to-treat homes. This might be properties with limited or no access to mains gas, or homes where energy efficiency is expensive.

Under the rules of ECO, energy suppliers are obliged to fund energy efficiency improvements of their domestic customers’ buildings in two distinct streams: ECO3 and the Home Heating Cost Reduction Obligation.


ECO3 is the latest stream of ECO. It mainly focuses on low income and vulnerable households, helping to meet the Government’s fuel poverty commitments. This grant is intended to fund renewable technology and replace expensive, broken, inefficient fossil fuelled systems or non-centrally heated systems.

As a funding stream, ECO3 is based on the cost savings between the old and new heating and hot water systems. This grant applies to district heating schemes and social housing installations, but the properties must have a registered Energy Performance Certificate (EPC) of E, F or G to be eligible.

Under ECO3, heating replacements tend to go hand in hand with insulation and energy efficiency measures. For the funding of ground source heat pumps, walls must be insulated and evidenced. The roof of each property must be insulated by a minimum of 250mm, but if the roof is flat and cannot be insulated, evidence must be provided.

The current ECO scheme is closing on 31st March 2022, at which point it is set to be replaced by ECO4 – a stream currently under consultation which is due to run from 1st April 2022 to 31st March 2026.

Find out more about ECO3

ECO4: Have your say in the consultation

The upcoming ECO4 scheme, due to begin in April 2022, is currently under consultation and seeking views from sectors including energy efficiency installers and local authorities. We encourage you to look at the consultation and make a representation here. The consultation closed on 31st August 2021.

See more about the consultation

Home Heating Cost Reduction Obligation (HHRCO)

Under the HHRCO, energy suppliers are required to fund measures which improve the ability of low income and vulnerable households (the ‘Affordable Warmth Group’) to heat their homes. This includes actions that result in heating savings, such as the replacement or repair of a boiler for example.

See more on ECO & eligibility

Related Content

The Non-Domestic RHI

The Non-Domestic RHI has now ended The Non-Domestic RHI scheme has now closed – please bear with us as we remove mentions of this expired funding stream across the website. In the meantime, visit this page to explore other funding options or contact us directly to talk about your project.

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