ECO4 is Ending in 2026 - What Does That Mean for the Retrofit Sector?

1 day ago
3 min read

The Energy Company Obligation has been one of the UK's most important tools for funding energy efficiency improvements in low-income homes. Since the first ECO scheme launched in 2013, it has supported measures in around 2.6 million properties across Great Britain.

That chapter is now drawing to a close. ECO4 will end on 31 December 2026. For housing providers, contractors and retrofit coordinators, understanding what this means is essential.

ECO4 in Numbers

2.6 million properties supported since ECO began in 2013

Around 5,000 homes per month receiving measures under ECO4

£1.3 billion per year in home improvement works

ECO4, launched in 2022, represented the most ambitious phase of the scheme. It introduced a stronger focus on whole-house approaches and deeper retrofit outcomes, requiring TrustMark-registered professionals and PAS2035-compliant delivery.

Why Was ECO4 Extended?

ECO4 was originally due to end on 31 March 2026. Following a public consultation in late 2025, the government confirmed a nine-month extension, moving the end date to 31 December 2026.

The extension was granted for two key reasons:

• To give energy suppliers additional time to meet their delivery targets

• To allow the supply chain to complete remediation of non-compliant installations, particularly relating to solid wall insulation issues that were raised by the National Audit Office

There is no increase in delivery targets and no carry-over arrangements beyond the December 2026 deadline. The Great British Insulation Scheme, which ran alongside ECO4, ended as planned on 31 March 2026 with no extension.

What Replaces ECO4?

The government's Warm Homes Plan, published in January 2026, is intended to be the successor to ECO. However, the two are quite different in structure.

ECO placed a legal obligation on energy suppliers to fund improvements. The Warm Homes Plan is funded primarily through general taxation and delivered through a combination of grants, low-interest loans and area-based programmes administered by local authorities and housing providers.

The two key funding streams for social housing under the Warm Homes Plan are:

• Warm Homes: Social Housing Fund (WH:SHF) - supporting insulation, glazing, heat pumps and solar PV in social housing

• Warm Homes: Local Grant (WH:LG) - supporting low-income homeowners and private tenants in properties rated EPC D to G, delivered through local authorities

Both are currently operational.

From 2027/28, these are expected to be consolidated into a single scheme, with further details expected in spring 2026.

Read the Warm Homes Plan here.

The Risk of a Delivery Gap

The transition between ECO4 and the Warm Homes Plan has not been without concern. The sector has been clear about the risks.

With ECO4 delivering improvements to around 5,000 homes a month, there is real concern that if the Warm Homes Plan is not sufficiently mobilised before ECO4 concludes, delivery capacity will contract at precisely the moment when the government needs it to scale up.

Retrofit businesses, housing associations and industry bodies have warned of potential supply chain disruption, job losses and stalled progress if the transition is not managed carefully. The nine-month extension is designed to provide breathing room, but the sector needs clarity on the successor framework sooner rather than later.

What Should Housing Providers Be Doing Now?

There are clear steps organisations should be taking in the current period.

• If you have properties in active ECO4 programmes, manage your pipelines closely and work with delivery partners to complete works within the revised December 2026 timeframe.

• Familiarise yourself with the Warm Homes: Social Housing Fund and Warm Homes: Local Grant, including eligibility criteria and application processes.

• Begin or progress whole-house stock assessments so you are ready to access the next phase of funding without delay.

• Ensure your delivery partners are PAS2035 compliant, as this remains a requirement under both current and forthcoming funded programmes.

Use our free stock assessment checklist here:

How Target Green Can Help

Target Green has direct experience delivering PAS2035-compliant retrofit programmes for housing associations and local authorities across Wales and England. We understand the compliance requirements, the delivery challenges and the importance of strong coordination during funding transitions.

Whether you are mid-programme under ECO4, preparing for the Warm Homes Plan or trying to understand how your housing stock fits within the new funding landscape, we can help you plan ahead with confidence. Get in touch to discuss your programme.