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• 23 Nov

  ECO3 And ECO4 Invoice Finance Energy Company Obligation

  The Energy Company Obligation (ECO) scheme has evolved from ECO3 to ECO4, continuing its aim of improving energy efficiency in UK households.

  Energy Company Obligation is a government energy-efficient scheme that operates in Great Britain. It was launched to help reduce carbon emissions and to alleviate fuel poverty. It achieves this by delivering energy efficiency measures to residential premises.

  

  If you are an installer of ECO4 measures seeking invoice finance, there are companies on our panel that are ready to provide that funding.

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  The ECO Scheme

  The ECO scheme began in April 2013 and has been updated over time. The latest policy ECO4 runs from April 2022 to March 2026. The policy is formed from the Home Heating Cost Reduction Obligation (HHCRO).

  ECO4 targets low-income, fuel-poor, and vulnerable households by promoting energy efficiency measures, such as insulation and upgraded heating systems.

  Energy suppliers are required to meet Home Heating Cost Reduction Obligations (HHCRO) under ECO4 to reduce heating costs for eligible households.

  ECO4 Invoice Finance

  ECO is not a grant or loan scheme, unlike the earlier Green Deal initiative. Instead, it is up to the energy companies to determine which measures they choose to fund, to what level, and via which installers.

  Under ECO4, installers face the same challenges of delayed payments for completed installations. Invoice finance continues to be a useful solution for managing cash flow during this phase of the scheme.

  Installer Invoice Financing To Intermediary Funders

  With ECO4’s continued focus on energy efficiency projects, invoice finance helps installers maintain liquidity, cover operational expenses, and scale their operations.

  The installers could be involved with the installation of insulation for walls, floors, lofts or boiler improvements etc. Also, they may be providing their services via "intermediary funders" which sit between them and the main energy providers. There can be a gap between completing the work and receiving payment from the intermediary funder.

  Invoice finance against these invoices is not available from some financiers, however, we have a funder that specialises in helping these installers get prepayments against these invoices when they are raised.

  Set-Off Clauses

  Our funding partner has encountered set-off clauses within the contracts between the installers and the intermediary funders. However, they have had some success in agreeing for this to be removed in return for operating small retentions to account for any work on jobs that were not fully signed off by OFGEM. In this way, they are able to overcome the issues that others face in funding these invoices.

  By Glenn Blackman