What Replaces ECO4? The Warm Homes Plan Explained

If you have been asking what replaces ECO4, the answer is clear: there will be no ECO5. Instead, the UK Government is shifting from the supplier-funded Energy Company Obligation model to a new government-funded approach called the Warm Homes Plan. Backed by 15 billion in public investment and targeting 5 million homes by 2030, this is the most significant change to energy efficiency funding in over a decade. This guide explains what the Warm Homes Plan involves, how the transition from ECO4 works, and what it means for homeowners seeking support.

What Replaces the ECO4 Scheme?

The Warm Homes Plan is the UK government’s successor to the ECO4 scheme, which ends in March 2026. Announced in the 2024 Autumn Budget, the Warm Homes Plan commits £13.2 billion over this parliament to upgrade 5 million homes with insulation, heat pumps and other energy efficiency measures. It combines elements of ECO4, the Great British Insulation Scheme and the Boiler Upgrade Scheme into a single long-term framework.

The Warm Homes Plan is expected to prioritise fuel-poor households and those with the worst-performing homes. Initial delivery is through the Warm Homes Local Grant (up to £30,000 per home in England) alongside continued devolved nation programmes. Unlike ECO4, which was funded by energy suppliers, the Warm Homes Plan uses a mix of government spending and supplier obligations. Full details of the replacement scheme are expected in late 2026, but households currently eligible for ECO4 should apply before the March deadline to avoid any gap in support.

Why ECO4 Is Not Being Replaced by ECO5

The Energy Company Obligation has been running in various forms since 2013. ECO1, ECO2, ECO3, and ECO4 all followed the same basic model: energy suppliers were legally required to fund energy efficiency improvements in eligible homes, with the cost ultimately passed on to all customers through energy bills.

This supplier-funded approach had several problems that led the government to rethink the entire model.

• Regressive funding – The cost was spread across all energy bills, meaning lower-income households who did not qualify for ECO were effectively subsidising improvements for others
• Variable quality – The rush to meet supplier targets sometimes led to poor-quality installations
• Limited scope – ECO primarily funded insulation and basic heating measures, with limited support for heat pumps and renewable energy
• Complex eligibility – The benefits-based and LA Flex criteria created a complicated system that many eligible households found difficult to navigate

The government decided that funding home energy upgrades through general taxation and public spending is fairer and more effective than loading costs onto energy bills. This marked the end of the ECO model and the beginning of the Warm Homes Plan.

What Is the Warm Homes Plan?

The Warm Homes Plan is the government’s comprehensive strategy for improving the energy efficiency of the UK’s housing stock. It was announced as part of the 2024 manifesto commitment to make homes warmer, greener, and cheaper to run. The plan has several key components.

The 15 Billion Investment

The headline figure is 15 billion in public funding over the course of the current Parliament and beyond, directed at upgrading 5 million homes. This money comes from general government spending rather than energy bill levies, which should reduce the burden on household energy costs over time.

Warm Homes Local Grant

The primary delivery mechanism for the Warm Homes Plan is the Warm Homes Local Grant, administered by local councils across England. This provides up to 15,000 for insulation and 15,000 for heating upgrades to households with incomes below 36,000. It effectively replaces ECO4 as the main route for funded energy improvements.

Warm Homes Social Housing Fund

A separate funding stream targets social housing, providing grants to housing associations and councils to upgrade their properties. This replaces the Social Housing Decarbonisation Fund (SHDF) and rolls it into the broader Warm Homes Plan framework.

Boiler Upgrade Scheme Continuation

The Boiler Upgrade Scheme, which provides 7,500 towards heat pump installations, continues as a standalone programme within the Warm Homes Plan. It remains available to all homeowners in England and Wales regardless of income.

Timeline: ECO4 to Warm Homes Plan Transition

The transition from ECO4 to the Warm Homes Plan is happening gradually rather than as a single switch. Here is the key timeline.

During the transition period, some households may still receive improvements funded through ECO4 where suppliers have outstanding obligations. New applications, however, should be directed through the Warm Homes Local Grant route via your local council.

Key Differences Between ECO4 and the Warm Homes Plan

The shift to government funding should improve quality and accountability. Local councils have a direct interest in ensuring good outcomes for their residents, which adds an extra layer of oversight beyond the existing TrustMark and PAS 2030 certification requirements.

What This Means for Homeowners

If you are currently exploring energy efficiency funding, the transition from ECO4 to the Warm Homes Plan has several practical implications.

If You Were Eligible for ECO4

You will almost certainly be eligible for the Warm Homes Local Grant. The income threshold of 36,000 is broader than ECO4’s benefits-based criteria, so more households can qualify. Contact your local council to apply.

If You Were Not Eligible for ECO4

The wider income threshold means you may now qualify under the Warm Homes Plan even if ECO4 rejected you. If your household income is below 36,000, it is worth applying through your council.

If You Earn Above the Threshold

The Boiler Upgrade Scheme remains available with no income cap, providing 7,500 towards a heat pump. For insulation and other measures, you will need to fund these privately, though the long-term energy savings make many improvements financially worthwhile even without a grant.

Will Energy Bills Fall Without the ECO Levy?

One of the arguments for moving away from the ECO model was reducing the levies on energy bills. Under ECO4, the cost of funding improvements was estimated at approximately 30 to 50 per household per year, added to every electricity bill in the country.

With the shift to government funding, this levy should reduce or disappear. However, the overall impact on bills will depend on other factors including wholesale energy prices, network costs, and the remaining policy costs still charged through bills (such as the Warm Home Discount and renewable energy support schemes).

The government estimates that the combined effect of removing the ECO levy and improving millions of homes’ energy efficiency should contribute to a meaningful reduction in average household energy costs by the end of the decade.

How to Access Funding Now

If you are waiting for the Warm Homes Plan to fully launch in your area, there are several things you can do right now.

• Contact your local council to check if the Warm Homes Local Grant is already accepting applications in your area
• Apply for the Boiler Upgrade Scheme if you want a heat pump and do not need to wait for council funding
• Check ECO4 availability with your energy supplier, as some still have outstanding obligations
• Get a free energy assessment to understand which improvements your property needs most
• Request a quote to compare the cost of private installation with potential grant-funded options

The transition period creates opportunities. Multiple funding routes are open simultaneously, giving homeowners more options than usual. The key is to explore all available schemes and choose the one that offers the best support for your specific situation.

Frequently Asked Questions

Can I still apply for ECO4 in 2026?

ECO4 obligations are winding down, and most suppliers have met or are close to meeting their targets. Some installations may still proceed under ECO4 where work was approved before the transition, but new applications should be directed to the Warm Homes Local Grant through your council. Contact your energy supplier to check if they still have any ECO4 capacity.

Is the Warm Homes Plan available in Scotland, Wales, and Northern Ireland?

The Warm Homes Local Grant operates in England only. Scotland has its own Home Energy Scotland grant and Warmer Homes Scotland programme. Wales has the Nest scheme and Green Homes Wales loan. Northern Ireland has the NISEP and Affordable Warmth scheme. Each devolved nation runs its own energy efficiency programmes.

Will the 15 billion be enough to upgrade 5 million homes?

At an average cost of 10,000 to 15,000 per home for a comprehensive upgrade package, the 15 billion budget could cover approximately 1 to 1.5 million homes directly. The government expects private investment, leveraged financing, and cost reductions from scaling up the supply chain to bridge the gap to the 5 million target. Whether this proves sufficient remains to be seen.

What happens to ECO4 installations that are already in progress?

Any ECO4-funded work that has been approved and scheduled will be completed as planned. The transition does not affect installations that are already in the pipeline. If you have received an ECO4 approval, your improvements will proceed as agreed with your energy supplier or installer.