Heat as a service is a new model for selling energy, in which consumers buy heat plans tailored to their lifestyle instead of paying for kWh of gas.
One element of this is demand-side management, where energy service providers anticipate the heat requirements of consumers want and provide the requisite level of comfort. An approach that encourages service optimisation and efficiency, has the potential to transform the energy sector and reduce consumer energy bills, but both government and industry needed a deeper understanding of the opportunities and constraints.
Energy Systems Catapult is conjunction with the Energy Technologies Institute and the Department for Business, Energy & Industrial Strategy, is exploring the consumer and economic benefits of demand-side management, as well as viable business models for bringing it to market at scale.
The Challenge and Opportunity
Most market research and academic studies on consumer energy usage look at averages – for example, the average amount of energy required to heat a property and the average person’s consumption habits. The problem, however, is that the “average person” and their “average energy use” don’t reflect the reality of energy provision and network requirements when you’re talking about demand-side management and heat as a service – because heat plans are bespoke for each household.
Additionally, the integrated systems and technologies required to deliver heat as a service at scale either don’t exist or are still in their infancy. Stakeholders therefore need evidence to inform innovation strategies, business models and policy development – and that’s where our modelling and systems integration expertise came in.
EnergyPath® Operations is our cutting-edge simulation tool, allowing stakeholders to test energy systems, technologies and business models in a risk-free environment. For this project, we simulated six months of household energy usage – with and without demand-side management. The simulation incorporated real-world data on building physics, weather, energy consumption, network capabilities and appliance specifications to create dynamic models of homes, markets, heating systems and consumer behaviour.
Thanks to EnergyPath® Operations, we were able to analyse demand-side management at a granular level, providing an accurate view of how it affects individual household behaviour, room temperature, network capacity, energy prices and consumption patterns.
This allowed us to quantify the value of demand-side management – and understand how the energy market would develop as it was deployed at scale.
Our research confirmed that demand-side management reduces the cost of providing energy. It quantified the savings at 3%, which totals £168 million over six months when scaled up to 28 million UK consumers.
It also showed that demand-side management reduces peak loads by shifting consumption to times with lower demand – all while guaranteeing (and potentially enhancing) consumer comfort. This means it could help reduce the need for future network reinforcement.
Importantly, the analysis also showed the best ways to structure new energy services so consumers want to buy them. The Department for Business, Energy & Industrial Strategy is now using our findings to inform its approach to supporting the market, so the supply chain can develop to deliver demand-side management in a viable way.