In an industry first, two British companies have successfully trialled selling ‘heat-as-as-service’, in a move that experts believe will pave the way for the low carbon retrofit revolution.

Energy Systems Catapult runs innovation trials in their Living Lab – where 100 homes spread between Newcastle, Manchester, the West Midlands, Gloucestershire and Bridgend in Wales – are fitted with ‘smart heating systems’ that provides room-by-room temperature control and a wealth of data on consumer behaviour and the thermal performance of the home.

Energy Systems Catapult created a heat-as-a-service offering called a ‘Heat Plan’ – where instead of buying units of energy (kWh), consumers buy hours of warmth in their home – called ‘Warm Hours’.

Living Lab trials included: 

1. Baxi Heating UK successfully sold a Heat Plan that bundled a new heating system, servicing, maintenance and energy for a fixed monthly price
2. Bristol Energy became the first energy supplier in the UK to trial selling heat-as-a-service, selling both fixed price and Pay-As-You-Go Heat Plans to domestic customers
3. Energy Systems Catapult also tested the performance of hybrid heating systems that combine traditional gas boilers with an electric heat pump.

Dr Matt Lipson, Consumer Insight Business Lead at Energy Systems Catapult, said: “The UK has a target of achieving net zero emissions by 2050, yet only about 5% of UK homes currently have low carbon heating, compared to 85% with gas boilers.

“Low carbon heating is simply a step into the unknown for most households.

“Consumers have concerns about their ability to get warm and comfortable at an affordable price and how to fix the system if it breaks down.

“Yet our research clearly shows that people care more about heating outcomes – such as getting warm and comfortable – than which device or system delivers the heat.

“To overcome this impasse, we developed a Heat-as-a-Service offering called a Heat Plan. Where instead of buying units of energy (kWh), consumers buy hours of warmth in their home.

“This allows people to schedule and budget for a specific number of Warm Hours – giving them the temperatures they want, in the rooms they want, at the times they want – for a fixed weekly or monthly price.

“If people have the peace of mind that heat-as-a-service will deliver the comfort they want at a price they can afford … then when it comes time to replace their gas boiler, they will be more confident of switching to a low carbon heating system like a heat pump, district heat network or hydrogen boiler.

“Now the work we are doing with Bristol Energy and Baxi is taking a leap forward, piloting commercial offers, that could pave the way for low carbon retrofit revolution”.

Jeff House, Head of External Affairs, Baxi Heating UK, said: “As society continues to adopt service-based offerings in other sectors it is clear that Heat-as-as-Service has the potential to revolutionise the heating industry.

“In part this model can help to defer the up-front capital barrier associated with many low carbon heating options thereby aiding decarbonisation efforts, importantly it also can help to streamline the customer experience when dealing with their heating provision.

“To help understand the practical aspects of delivering such a solution we have found our work with the Catapult invaluable.”

Samantha Nicol, Head of Innovation at Bristol Energy, said: “We are thrilled to be the first UK energy company to be trialling Heat Plans in Energy System Catapult’s Living Lab.

“By working with the Catapult, we’ve gained great insights into consumers’ behaviour and attitudes around how our customers like to heat their homes. We’re continuing to pursue research development in this area with new trial offers coming soon… in our mission to decarbonise heat.”

1. Baxi Heating UK trial bundling a heating system into a Heat Plan

Heat Plans work by selling Warm Hours instead of kilowatt hours, with consumers paying a fixed price based on data about the thermal efficiency of their home and the number of hours of warmth needed by the customer each week. The price stays fixed no matter what the weather brings, and consumers can see precisely how much it will cost to achieve the comfort they want.

Energy Systems Catapult worked with Baxi Heating UK to create a mobile phone-style Heat Plan where the physical device – in this case a replacement heating system rather than a smart phone – is bundled with servicing, maintenance and the energy needed to be comfortable. This is just like a mobile phone bundled with calls, texts and internet data into a single service for a fixed monthly price.

On average in the UK, 1 in every 20 households need to replace their gas boiler each year. So, the trial offered 20 households in the Catapult’s Living Lab a Baxi Heat Plan.

Each of the 20 Living Lab households already had smart heating controls installed and were familiar with the concept of ‘Heat Plans’. The results were:

• 13 wanted to discuss the offer
• 10 said they liked it and were enthusiastic
• 1 accepted the offer and had a boiler installed (the only one of the 20 triallist who had an old, inefficient boiler they were ready to replace).

2. Bristol Energy trial fixed price and Pay-As-You-Go Heat Plans

Bristol Energy worked with Energy Systems Catapult to design and trial two Heat Plan options for heat and hot water, with variations on the levels of service and payment terms.

Using consumers’ own data, residents in the Living Lab could compare two Heat Plan offers on a digital Energy Services Marketplace. One was priced for a fixed number of ‘Warms Hours’ based on their existing heating schedule. The other was a PAYG option with a price per Warm Hour.

Participants who took part in the year-long trial, starting in February 2019, were asked to give their feedback to researchers at Energy Systems Catapult, helping them to understand how Heat Plans affected their behaviour with energy.

The Bristol Energy Heat Plan was offered to 85 Living Lab households (the other 15 homes were involved in other trials) that already had smart heating controls installed and were familiar with the concept of Heat Plans. The results were:

• A sub-set of households signed-up to the Bristol Energy Heat Plan trial
• The most common reasons given for switching was “improved control and comfort”; and “certainty of price”.

3. Trialling hybrid heating systems

The performance of Hybrid Heating Systems (combining a heat pump with an existing gas boiler) was trialled to understand how the system worked with smart controls as part of a Heat Plan and whether consumers could achieve the same comfort levels.

Highlights from the hybrid heating system trial, included:

• More than half of households asked in the Living Lab had never heard of heat pumps
• Heat pumps were installed in 5 of the 100 homes in the Living Lab, creating a hybrid system
• Hybrid heating systems achieved the same temperatures and levels of comfort as the gas boiler had done by itself
• Heat pumps delivered between 6% and 63% of the heating across the 5 different homes (6%, 17%, 44%, 59% and 63%) depending on how each household used their smart controls
• The household utilising the heat pump only 6% of the time, increased that figure to 51% with some simple advice on reducing the number of manual overrides to their heating schedule, which would force the boiler to frequently kick-in
• 4 of the 5 homes trialling the hybrid system were open to removing their gas boiler and relying entirely on a heat pump if they could buy their heat as a service, such as a Heat Plan.

Feedback from households trialling the hybrid heating system, included:

Mrs Johnson said: “I can’t even tell if it’s the heat pump or the boiler running when I’m in the house, I have to go outside and look to see if the fan is moving.”

Mrs Green, who improved her heat pump utilisation from 6% to 51%, said: “I’ve set a new schedule and banned the override button.”

Mr Dean said: “There’s been no difference to the comfort since the heat pump has gone in. I haven’t found anything different.”

Mrs Watt said: “You expect to have a boiler to heat the house, and that’s all anybody knows. They (most people) don’t even realise there’s the option of any other form of heating. When the boiler’s old you don’t think ‘is there any other alternative’ you think ‘the boilers old, I’ll replace it with another boiler’.”