Here he talks us through the difference for installers between working in the ‘able to pay’ sector and working with the ECO4 market.
In this current climate, some installers of renewable energy sources are solely concentrating on the ‘able to pay’ market whilst others are enviously eyeing the £4bn government funding available as part of Energy Company Obligation phase 4 (ECO4).
ECO4 is the latest version of the government scheme to improve the energy efficiency of certain homes but, before you load up the van with ASHPs or solar panels and go hell for leather, there is a framework to consider.
I must get three calls a day from installers who have heard about the scheme and, seeing their competitors undertaking ECO4 installations, they believe this to also be their best way forward. Whilst it’s true that riches can be made from the scheme, the phrase ‘no pain, no gain’ springs to mind. The ‘able to pay’ and ECO4 market are, in my opinion, a world apart with vast differences.
Rip it up and start it again
For an established renewable energy installer to be successful in ECO4, it requires ripping up the current business model and putting in place planning, strategy and very deep pockets at the start.
had a call from an installer yesterday “wanting to get into the game”, my advice straight away was to “Google: ECO4 Ofgem Guidelines…this will give you a riveting 280+ page turner guideline as to how the scheme works, what can be installed, who qualifies and what evidence is required to prove the installation has taken place”.
I haven’t personally worked within an installation business but, from conversations with those who do, I believe the current able to pay business model is something like this:
As I currently work alongside over thirty ECO4 installers, this, in a very brief nutshell, is the business model for an ECO4 installation business, such as Hyde Solar.
Hopefully this brief outline highlights the significant differences between ‘able to pay’ and ECO4. An Installer looking to decide if they are ‘ECO4 or against’ needs to have an understanding of a few key differences between the two business models.
Whilst there are challenges to making the switch into the world of ECO4 there is also a sizeable opportunity. With the potential for profit margins of 30-40% hopefully the above has given some insight and food for thought and not been too off putting.
As I stated from the outset: “no pain no gain”.
If you have any questions related to working with ECO4 please contact REI Editor Margaret on email@example.com so we can cover them in a follow up.
Mark can be contacted directly via mark@ ronnancorp.com or on 07973 793878