Baxi trial bundles heating system into service offering
Baxi Heating UK trialled ‘Heat as a Service’ with households in our Living Lab, creating a proposition that bundled a new heating system together with energy for a fixed monthly price.
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’.
The Challenge and Opportunity
Baxi Heating are a leading UK provider of smart heating and hot water solutions. However as the UK move towards a Net Zero energy system, the capital cost of low carbon heating systems and the associated home energy eficiency upgrades presents a barrier for many households.
They wanted to understand how their existing capabilities could be applied to a service-based model, and what customers might want from a Heat as a Service offering that included a Baxi heating system.
Baxi turned to Energy Systems Catapult, with our experience running innovation trials in our Living Lab – where 100 homes fitted with ‘smart heating systems’ that provide room-by-room temperature control and a wealth of data on consumer behaviour and the thermal performance of the home.
Based on insights from our Home Energy Segmentation research, we know that people are not always confident that a new heating system will give them the comfort they want – particularly if the system is different to what they are used to. So we co-designed with Baxi a Heat as a Service proposition aimed at providing customers with a comfort guarantee – called the Baxi Heat Plan.
Energy Systems Catapult worked with Baxi to design a mobile phone-style Heat Plan where the physical device – in this case a replacement heating system rather than a smart phone – is bundled together 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.
Heat Plans work by selling Warm Hours instead of kilowatt hours, with consumers paying a fixed price based on the number of hours of warmth needed each week and data about the thermal efficiency of their home. 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.
We created a customer journey that focused on helping Baxi to learn how to deliver a proposition like this, and understand which benefits and features of the proposition are most appealing to consumers, and why.
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 replacement boiler installed (the only one of the 20 triallist who had an old, inefficient boiler they were ready to replace).
By doing the trial, Baxi have understood more about the benefits of Heat as a Service to customers and to their business, confirming what they need to do to continue leading the market in smart heating and hot water solutions.
Dave Willets, Director of Aftersales and Innovation, Baxi Heating UK, said: “We are always challenging ourselves to look at what the future holds, working with Energy Systems Catapult has allowed us to quickly test this new business model without interrupting our business-as-usual work.
“It’s very valuable having access to real homes where we can test propositions and with the Catapult providing the user experience software and hardware to do so, has made this as simple as possible.”
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.”