What Cutting the ECO Scheme Really Means for UK Homeowners

Cutting the Energy Company Obligation (ECO) will give many UK households a small short-term bill reduction, but at the cost of fewer free or subsidised upgrades like insulation and low-carbon heating, higher long-term bills, and slower progress on net-zero. For UK homeowners who want to future-proof their properties and control energy costs, schemes like ECO have been a major route to funded efficiency and, in some cases, solar PV and heating improvements.

What the Energy Company Obligation Scheme Actually Does

The Energy Company Obligation is a legal duty on medium and large suppliers to fund energy-efficiency measures in British homes, mainly for low-income and fuel-poor households. Typical measures include loft and cavity wall insulation, solid wall insulation, heating upgrades and, under some iterations, support for technologies that work well with solar PV such as high-efficiency boilers and heat pumps.

Since 2013, ECO has funded around 4.3 million individual measures in about 2.6 million households, making it the UK’s largest home-energy efficiency scheme. Government statistics show that in 2024 ECO alone accounted for about 80% of all measures installed under national household energy-efficiency schemes, underlining how central it has been to cutting heat loss from UK homes.

How Funding ECO Through Bills Has Affected Your Energy Costs

ECO is funded via a levy on energy bills, which suppliers recoup from all customers in their tariffs. Because lower-income households typically spend a larger share of their income on energy, expert commentators have long argued that ECO’s funding model is “regressive”, even though many of its benefits are targeted at fuel-poor homes.

In the 2025 Autumn Budget, the Chancellor confirmed that ECO will be scrapped and some other levies shifted into general taxation, with the government estimating this will remove about £150 from the average household energy bill from April 2026. Money saved from ECO4 is planned to flow into a Warm Homes Plan funded from tax rather than bills, which some analysts see as a fairer way to pay for similar work.

What Cutting ECO Means for Insulation and Heating Upgrades

Independent think tank E3G estimates that scrapping ECO cuts overall “green homes” funding this parliamentary term from roughly £20 billion to £15 billion, a reduction of about 25%. They calculate that, over its 30-year life as a supplier obligation, ECO has helped insulate or upgrade around 15 million homes, delivering an average lifetime saving of about £7,500 per property and national savings of over £100 billion in avoided energy and infrastructure costs.

E3G warns that removing ECO will likely mean around 1 million fewer families receive insulation over the next four years and could cost around 10,000 jobs in the retrofit and energy-efficiency supply chain. For homeowners, this translates into fewer free or heavily subsidised loft, cavity and solid-wall insulation projects, plus less funded replacement of old, inefficient heating systems that pair well with technologies like air-source heat pumps and solar PV-ready hot-water systems.

How UK Homeowners Will Feel the Change on Their Bills

For many households, the immediate impact from April 2026 will be a modest drop in annual bills, with estimates suggesting that removing ECO and similar levies could reduce a typical dual-fuel bill by around £60–£150 per year depending on how costs and taxes are rebalanced. However, without large-scale insulation and heating upgrades funded by schemes like ECO, homes will continue to leak heat, so homeowners may end up spending more over the long term, especially if wholesale gas prices spike again.

Government data already shows how much ECO has been doing each year: in 2024 alone, ECO delivered roughly 337,800 measures across 62,500 first-time households, a 24% increase on the previous year. Removing that engine of upgrades risks slowing the overall improvement of the UK’s housing stock, which currently accounts for about 17% of the UK’s greenhouse gas emissions once heating is included.

Could New Schemes Still Support Solar PV and Battery Storage?

Although ECO has focused mostly on insulation and heating, its role has been to prepare homes for low-carbon technologies such as solar PV, heat pumps and home battery storage by improving fabric efficiency first. The Warm Homes Plan proposed as a successor, funded from general taxation, has been presented as “broadly equivalent” in terms of aims, but detailed design and delivery capacity will determine whether it truly replaces ECO’s scale and reach.

For homeowners interested specifically in solar PV and battery storage, the end of ECO shifts the emphasis even further towards market-driven installations, regional grants, and private finance. This makes working with specialist installers such as Atlantic Renewables more important, as expert system design can maximise payback from self-consumption, smart tariffs and battery optimisation even without national grant support.

If you are considering a solar PV and battery storage system to cut bills and carbon, Atlantic Renewables’ team of experts can design and install a tailored system for your property and usage profile. Our engineers specialise in integrating high-efficiency solar panels with batteries to give you maximum benefit from every kWh generated.

What This Means for Fuel Poverty and Climate Targets

ECO has been one of the main long-term tools for tackling fuel poverty by permanently reducing heat loss in the least efficient homes, rather than relying solely on bill subsidies. Analysts warn that cutting ECO without rapidly scaling a robust replacement risks leaving more low-income households exposed to volatile energy prices, even if headline bills fall slightly in the short term.

From a climate perspective, the UK’s official statistics show ECO drives most of the recorded household energy-efficiency measures each year, helping lower overall energy demand and thus the scale of new power infrastructure required. Slower progress on insulation and heating upgrades will make it harder and more expensive to hit legally binding carbon-budget milestones and the 2050 net-zero target.

How UK Homeowners Can Still Future-Proof Their Homes

With less centralised funding for upgrades, homeowners who can invest will increasingly drive decarbonisation and efficiency improvements themselves. Key steps include:

• Improving fabric efficiency first (loft, cavity or internal wall insulation, airtightness, high-performance glazing) to reduce overall heating demand.
• Installing smart, efficient heating systems such as air-source heat pumps where suitable, ideally combined with well-designed emitters and controls.
• Adding solar PV and, where budgets allow, battery storage to capture and use low-carbon electricity on site, reducing dependence on grid prices and providing resilience.

Atlantic Renewables can help you sequence these investments so that insulation, low-carbon heating, solar PV and batteries work together as a coherent home-energy system.

Throughout your project, intermittent scheme changes and local grants can still play a role, so working with an installer that tracks national and regional support can make a real difference. Atlantic Renewables regularly advises homeowners on available incentives while focusing on robust payback based on real-world performance rather than one-off subsidies.

Get in touch

If you are looking to protect yourself from rising energy costs with solar PV and battery storage or want expert advice on how to future-proof your home now that the ECO scheme is being cut, please get in touch and the Atlantic Renewables team of experts will be happy to help. Call us on 0161 207 4044 to start planning a high-performance solar PV and battery system for your property today.