ECO5 Scheme Details: Policy, Funding & Technical Guide
Executive Summary: ECO5 launches April 2026 with £5B+ funding. Key changes: 40% allocation to heat pumps, carbon-weighted scoring, 100,000+ customer threshold for suppliers, and enhanced Ofgem compliance. This guide covers policy framework, technical specifications, and regulatory requirements.
Contents
Policy Framework & Legislation
Understanding the legal and regulatory foundation of ECO5.
Primary Legislation
Energy Act 2023 provisions for ECO5
ECO5 operates under the Energy Act 2023, which grants DESNZ powers to set supplier obligations for domestic energy efficiency improvements. The scheme aligns with the Climate Change Act 2008 and Net Zero Strategy.
Secondary Legislation
ECO5 Order (expected Q4 2025)
The Electricity and Gas (Energy Company Obligation) Order will set out detailed rules for ECO5, including supplier thresholds, measure requirements, and delivery deadlines. Expected Royal Assent late 2025.
Regulatory Framework
Ofgem administration and enforcement
Ofgem will administer ECO5, including supplier registration, measure notification, compliance monitoring, and enforcement actions. New digital reporting systems expected for streamlined delivery.
Government Guidance
DESNZ technical and policy guidance
DESNZ will publish comprehensive guidance covering eligibility criteria, measure specifications, installer requirements, and quality assurance. Consultation expected Q3 2025.
Official guidance will be published on GOV.UK Energy Company Obligation
Funding Allocation & Budget
How ECO5's £5+ billion budget is expected to be distributed across measures.
Primary focus on air and ground source heat pumps for decarbonising heating
Solar panel installations with battery storage systems
Loft, cavity wall, and external wall insulation
Smart heating controls, hybrid systems, and innovation measures
Supplier Obligations
How energy supplier requirements are changing under ECO5.
| Metric | ECO4 (Current) | ECO5 (Expected) | Key Change |
|---|---|---|---|
| Threshold | 150,000+ customers | 100,000+ customers (expected) | More suppliers included |
| Annual Target | Variable by supplier size | Based on market share + emissions | Carbon-weighted formula |
| Delivery Period | April 2022 - March 2026 | April 2026 - March 2030 | 4-year obligation cycle |
| Penalty Rate | £0.35/credit shortfall | £0.40-0.50/credit (expected) | Increased enforcement |
Technical Requirements by Measure
Detailed specifications and standards for ECO5 eligible measures.
- Minimum COP 3.0 at A7/W35
- MCS certified installation
- Minimum 5-year warranty
- Property must be insulated to minimum standard
- EPC improvement of minimum 2 bands
- Minimum 3kWp system size
- MCS certified installation
- Grid-tied with export capability
- Smart meter required
- Battery storage optional add-on
- Minimum 5kWh capacity
- Must be paired with solar PV
- Smart grid-ready
- 10-year manufacturer warranty
- Recyclable end-of-life
- U-value ≤ 0.30 W/m²K
- PAS 2030:2019 compliant
- Fire safety certified
- 25-year guarantee minimum
- Building regulations approval
PAS 2035 Compliance Required
All ECO5 projects must follow PAS 2035:2019 retrofit assessment framework. This includes a qualified Retrofit Coordinator, comprehensive dwelling assessment, improvement option evaluation, and medium-term improvement plan. Non-compliant installations will not receive ECO5 credits.
ECO5 Scoring Methodology
How measures are valued under the new carbon-weighted credit system.
Carbon Savings
Tonnes of CO2 saved over measure lifetime (typically 15-25 years)
Energy Bill Impact
Estimated annual energy cost savings for the household
Fuel Poverty Uplift
Additional weighting for households in fuel poverty
Innovation Bonus
Bonus credits for innovative or whole-house approaches
Example Credit Calculation
Total Credits = (Carbon Savings × 0.40) + (Bill Savings × 0.25) + (Fuel Poverty Uplift × 0.20) + (Innovation Bonus × 0.15)Example: A heat pump installation saving 2.5 tonnes CO2/year, £450/year on bills, for a fuel-poor household using whole-house approach would receive significantly more credits than a single-measure installation.
Delivery Mechanisms
Direct Delivery
Suppliers engage TrustMark-registered installers directly to deliver measures to eligible households.
LA Flex
Local authorities can refer eligible households who don't receive qualifying benefits but meet local criteria.
Credit Trading
Suppliers can trade ECO credits between obligated parties to meet targets efficiently.
Monitoring & Compliance
Quality Assurance
- 5% minimum post-installation inspections
- Customer satisfaction surveys mandatory
- Defect rectification within 30 days
- Annual installer audits by TrustMark
- Real-time measure notification system
Enforcement
- Financial penalties for non-compliance
- Installer suspension for quality issues
- Public reporting of supplier performance
- Credit recovery for invalid measures
- Criminal prosecution for fraud
Transition from ECO4 to ECO5
ECO5 Consultation Published
DESNZ publishes formal consultation on ECO5 policy framework and regulations.
Consultation Response & Final Rules
Government response to consultation and final ECO5 Order laid in Parliament.
Supplier Registration Opens
Obligated suppliers register with Ofgem for ECO5 delivery.
ECO5 Scheme Launch
First ECO5 measures can be delivered and notified to Ofgem.
Annual Compliance Periods
Yearly supplier compliance checks and target adjustments.
ECO5 Scheme Ends
Final deadline for ECO5 measure delivery and notification.
Don't Wait for ECO5 - Apply for ECO4 Now
If you're eligible for ECO4, we strongly recommend applying now. ECO4 funding remains generous and is available until March 2026. ECO5's exact terms are still being finalised, and waiting could mean missing out on current support.
Check ECO4 EligibilityCheck Your ECO4 Eligibility Today
While ECO5 launches in 2026, you may already qualify for free home upgrades under ECO4. Check your eligibility in 60 seconds.
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Frequently Asked Questions
Related Resources
ECO5 Scheme Overview
General guide to ECO5 eligibility, benefits, and application process.
Learn moreECO4 vs ECO5 Comparison
Detailed comparison of ECO4 and ECO5 schemes.
Learn moreHeat Pump Grants
Learn about air source heat pump funding options.
Learn moreECO4 Achievements
See the impact of ECO schemes to date.
Learn morePeter Davies, ECO4 Analyst
Free Boiler Upgrade UK
Last updated: 20 January 2025
Sources: DESNZ, Ofgem, Energy Act 2023