Government Consultation on ECO4 and GBIS: Proposed Mid-Scheme Changes and Pay-For-Performance Mechanism

Why are the government proposing mid-scheme changes?

In the consultation, the government states:

“We are proposing changes because GBIS is proving more costly to deliver than we originally estimated. Other minor changes are proposed to align GBIS and ECO4 to wider industry changes. We are also proposing to pilot an innovative Pay-For-Performance mechanism in ECO4 and GBIS that could incentivise better quality retrofits.”

What does the consultation cover?

The consultation covers the following areas:

Part 1: Mid-scheme changes to current requirements:

– Loft and Cavity Wall Insulation:

GBIS currently allows only one insulation measure to be installed per household, with an additional heating control permitted for installations in low-income households. The consultation proposes that households in the general or low-income group could receive both cavity wall insulation and loft insulation as part of the same GBIS project.

– Smart Thermostats:

GBIS currently allows heating controls in owner-occupied households in the low-income group only, as a secondary measure in addition to a primary insulation measure. Certain types of heating controls are eligible measures, but smart thermostats have not previously been allowed. The consultation proposes allowing the installation of smart thermostats alongside insulation in the low-income group for GBIS, broadening the variety of measures on offer.

– GBIS Targets (ECO4 counting towards GBIS):

The consultation proposes allowing part of the GBIS home heating cost reduction target to be delivered through actions that currently only qualify under ECO4 criteria. This would enable a proportion of delivery under ECO4 rules to count towards an obligated supplier’s GBIS targets.

The consultation also welcomes views on the alternative option of not introducing this proposal and only allowing the GBIS target to be met through measures conforming to GBIS rules.

– Minor ECO4 and GBIS policy amendments:

Additional minor amendments including:

• Updating ECO4 to ensure that Shared Ground Loops (SGLs) are treated similarly to other District Heating Connections (DHCs).
• Updating the interpretation of “rural area” to ensure ECO4 and GBIS use the most up-to-date datasets.

– TrustMark Licence Plus (TMLP) for GBIS:

To make the delivery of loft insulation more attractive in GBIS, the consultation proposes allowing an alternative installation standard for loft insulation when installed as a standalone measure or when paired with heating controls.

The alternative standard considered is a version of the TrustMark Licence Plus (TMLP), with further developed principles for GBIS. TrustMark is currently consulting on the details of this alternative standard. You can view the summary of this consultation via the following link: TrustMark Consultation: New TrustMark Licence Plus (TMLP) for the Great British Insulation Scheme (GBIS)

The government consultation welcomes views on whether this adapted version of TMLP, deemed suitable for GBIS, should be introduced.

Part 2: Pay-For-Performance (PFP)

Pay-For-Performance (PFP) on ECO4 and GBIS is a new feature that will measure and reward actual improvements to the energy efficiency of treated homes using Smart Meter Enabled Thermal Efficiency Ratings (SMETERs).

SMETER technologies take direct measurements from a building to assess its performance. For PFP, SMETERs would calculate the average rate at which the home loses heat – measured as the Heat Transfer Coefficient (HTC). Measuring improvements in this way and rewarding industry parties accordingly is expected to drive higher-quality measures and encourage adherence to even higher standards.

Through PFP, obligated suppliers would be able to receive a score uplift for retrofits where, among other things, pre- and post-retrofit monitoring has taken place in the property by an eligible SMETER provider.

Over the longer term, PFP approaches may result in several benefits, such as:

• Incentivising and rewarding higher-performing products and installation practices.
• Better addressing of housing defects, including hidden defects such as gaps in insulation that might reduce monitored scores if left untreated.
• Encouraging the development of innovative and more effective measures.
• Supporting the creation of improved in-use performance methodologies.
• Providing policy data and insights to enable the development of an improved PFP mechanism for future ECO schemes, where this aligns with scheme objectives.

The SMETER method:

The consultation proposes using the Smart Meter Enabled Thermal Efficiency Ratings (SMETER) method in PFP and seeks views on the application process by which SMETER providers can participate in PFP, along with the criteria against which they would be assessed.

SMETER refers to a methodology for calculating thermal performance in an occupied property using input data (e.g., smart meter data and in-home temperature sensors). This data is fed into a SMETER algorithm to calculate HTC.