Five challenger energy suppliers required to participate in Ofgem’s ECO3 Energy Efficiency Scheme after hitting customer threshold

Five challenger energy suppliers are now required to participate in Ofgem’s energy efficiency scheme (ECO3) after acquiring enough customers and exceeding a certain volume of energy supply.

The suppliers are ESB Energy, Foxglove Energy, Igloo Energy, People’s Energy and Together Energy.

What is the ECO3?

The Energy Company Obligation (ECO3) is the latest version of the Government’s energy efficiency scheme and requires all energy suppliers to join once they achieve a certain number of customers and reach designated supply thresholds.

The main objective of the ECO3 is all part of the governments push towards a greener country by reducing carbon emissions and tackling fuel poverty.

Last April the customer threshold was lowered from the previous figure of 200,000 to 150,000 in an attempt to get more energy suppliers to participate. The current energy supply threshold stands at 300gWh of electricity and 700gWh of gas.

Also read: Ofgem sets out plans to hit net-zero carbon emissions by 2050

What does it mean for Energy Suppliers?

Energy suppliers that reach the targets required to participate must demonstrate to the energy regulator that they will offer energy saving and efficiency measures to their customers such as providing support for insulating homes or cavity wall insulation.

Smaller energy suppliers also need to ensure that they have identified customers who are eligible for support. Customers claiming Universal Credit, Working Tax Credits or have a household income below £16,190 all fit the criteria.

According to government statistics, there are currently 1.2 million low-income households living in low energy-efficient homes.

Also read: Add your Customers to the Priority Service Register with Dyball’s CRM

What do Energy Suppliers have to do to be compliant?

All qualifying energy suppliers to the scheme must demonstrate to the regulator that they have done all they reasonably can to support customers with improving the energy efficiency of their homes. If a supplier fails to do so, then they will be penalised.

Several suppliers have been fined missing their ECO3 targets with Utilita Energy being having to pay over £170,000 into a redress fund for failing to hit their targets to reduce carbon emissions.

Also read: Number of consumers switching energy supplier soars after Ofgem Energy Price cap rise

Is the scheme working?

The latest government figures on the scheme show that since the schemes launch in October 2018 to February 2021, 560,000 energy efficiency measures had been installed in properties.

The final quarter of 2020 saw 114,000 installations even with lockdown restrictions in place, a 22% increase on the preceding quarter. Even with the Covid-19 pandemic installations hit their highest level since May 2016 with over 80,000 installations recorded in October and November.  

Need help with your data quality? Contact us for how Dyball Associates Managed Services for Energy Suppliers can assist.

Further Reading

What are Smart meter and Time of Use tariffs?

Ofgem greenlights market wide half-hourly settlement across the retail electricity market

The key compliance and regulatory issues new energy market entrants need to know

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