The End of ECO: What Comes Next for Home Energy Efficiency

The UK Government has confirmed that the Energy Company Obligation (ECO) scheme will come to an end in spring 2026, marking a significant shift in how domestic energy-efficiency improvements are funded and delivered. Alongside this, ministers have outlined plans to shift delivery into a general taxation-funded approach, moving costs away from energy bills and into public spending.

This change represents one of the most important policy resets in home energy efficiency in over a decade.

What Is ECO and Why Is It Ending?

ECO has been a cornerstone of UK energy policy since 2013. It requires large energy suppliers to deliver measures such as insulation, boiler upgrades and other efficiency improvements, primarily for low-income and vulnerable households. The cost of delivering ECO has been recovered through levies on household energy bills, amounting to around £1.5–1.7 billion per year.

The government’s decision to end ECO is driven by two main objectives:

• Reducing energy bills by removing green levies from household costs
• Simplifying funding mechanisms by moving away from bill-funded supplier obligations

From April 2026, ECO will no longer operate in its current form, creating both opportunities and risks for households and the retrofit supply chain.

What Comes Next: An Expanded, Taxation-Funded Warm Homes Plan

The government has indicated that when ECO ends, its functions will be taken forward through an expanded, general taxation-funded approach under the Warm Homes Plan.

The Warm Homes Plan already exists as the government’s overarching framework for domestic energy efficiency support, and is expected to be expanded to absorb much of ECO’s current role.

Key features expected from the new scheme include:

• Funding through general taxation, removing the cost burden from energy bill payers
• A broader approach to home energy efficiency and retrofit, potentially covering insulation, heating systems and wider home improvements
• Alignment with the government’s longer-term housing, net zero and fuel poverty objectives

While headline funding figures suggest a multi-year commitment worth several billion pounds, detailed policy documents have not yet been published. Industry stakeholders are awaiting clarity on eligibility, delivery mechanisms and timescales.

A Major Shift in Who Pays

The move from supplier obligations to general taxation funding represents a fundamental policy shift.

Under ECO:

• Costs were paid by all energy bill payers, regardless of income
• Energy suppliers acted as delivery bodies

Under the new approach:

• Costs are expected to be met through general taxation
• Government will take a more direct role in funding and oversight

Supporters argue this is a fairer system, as energy levies disproportionately affect lower-income households. Critics, however, warn that funding from general taxation may be less stable and more vulnerable to future spending cuts.

Concerns About a Policy Gap

One of the biggest concerns raised by charities, local authorities and the retrofit industry is the risk of a “cliff edge” between the end of ECO and the full rollout of its replacement.

Key risks include:

• Disruption to fuel poverty support if new schemes are delayed
• Loss of capacity and jobs across the insulation and retrofit supply chain
• Reduced delivery if overall funding is lower than ECO’s annual spend

ECO has provided a predictable pipeline of work for installers and local partners. Any delay or reduction in replacement funding could undermine confidence and slow progress on improving the UK’s least efficient homes.

What Happens Next?

At the time of writing, the government has confirmed the direction of travel but not yet published full delivery details. Further announcements are expected, including:

• Publication of further policy detail and delivery guidance
• Details on eligibility and targeting
• Transition arrangements between ECO and the new scheme

For households, landlords and the retrofit sector, the next 12 months will be critical in determining whether this policy shift delivers on its promise of lower bills, fairer funding and warmer homes – or creates new gaps in support.

Conclusion

The end of ECO marks the close of a long-running chapter in UK energy policy. Moving the cost of home energy efficiency from bill payers to taxpayers is a bold ideological move, but success will depend on clarity, continuity and adequate funding.

As the government prepares to publish further details, all eyes will be on whether the new scheme can match – or improve upon – ECO’s role in tackling fuel poverty and upgrading the UK’s housing stock.