Smart Systems and Heat

Published: 22 January 2020

Decarbonising heat is the biggest challenge the UK faces in terms of transforming the energy system to meet Net Zero carbon reduction targets and achieve our clean growth ambitions.

Energy Systems Catapult delivered the UK’s largest smart, consumer-focused project aimed at overcoming the barriers to the decarbonisation of residential heat – the Smart Systems and Heat (SSH) programme.

SSH Phase 1 (2015-2017)

Focused on developing capabilities, tools and insights for Local Energy System Modelling and Domestic Energy Services. SSH1 was delivered by Energy Systems Catapult for the Energy Technologies Institute.

SSH Phase 2 (2017-2019)

Focused on running consumer trials of smart energy services, exploring new business models and market structures (including interoperability) and developing Local Area Energy Plans with three local authorities. SSH2 was delivered by Energy Systems Catapult and funded by the Department for Business, Energy and Industrial Strategy.

The Challenge and Opportunity

Heating (and hot water) for buildings accounts for around 20% of total UK carbon emissions. The UK is dominated by carbon intensive heating – with 85% or about 24.5 million homes heated by natural gas and only about 5% of homes have low carbon heating. To achieve our 2050 target of Net Zero emissions, the UK’s 28 million+ households will need to rapidly adopt new low carbon heat solutions throughout the 2020s and 2030s.

Innovators are struggling to address this market failure and unlock the commercial opportunity, due to technical, regulatory, economic and social barriers that block new low carbon heat products, services and business models getting to market.

Yet there is a massive potential market for UK businesses to lead the world in decarbonising heat. The UK’s low carbon economy is expected to grow four times faster than the rest of the economy over the next decade. The digitalisation of the energy sector alone will be worth £45 billion by 2025 and over £20 billion will need to be invested in electricity networks over the 15 years to upgrade infrastructure to meet the changing energy system. 

Our Approach

SSH took a whole systems approach to help innovators address this market failure and unlock the commercial opportunity of low carbon heating. This approach included:

1. Addressing the technical, regulatory, economic and social barriers that block new low carbon heat products, services and business models getting to market;

2. Bringing innovators, businesses, local authorities, networks, policy-makers, regulators and consumers together to investigate new energy market arrangements that deliver low carbon heating solutions at scale;

3. Establishing a range of platforms, capabilities, assets, modelling tools and insights to help innovators discover new low carbon heating solutions that consumers value.

Our Outputs

SSH Phase 1 – focused on developing capabilities, tools and insights on:

  1. Local energy system modelling – we designed a planning framework to help local government, energy networks and other key local stakeholders prepare for a low carbon future in an cost-efficient and strategic way.
  2. Consumer-focused propositions – research revealing that consumers care more about their experience of using heat, than how it is delivered. From enjoying a hot shower to using heat to relieve pain, many consumers are initially unaware of the value that heat is adding to their lives. People care more about their experience of using heat what the type of device (eg. gas boiler, district heat, electric heat pump) is delivering the heat. We explored how the smart technology can help energy providers understand what consumers want from heating, turning passive bill-payers into discerning customers.
  3. Domestic energy services – we explored how profound changes in energy retail provision, such as selling Heat as a Service instead of purchasing of units of fuel, could drive the uptake of  low carbon heating solutions. This included the need for commercial, policy and regulatory opportunities to converge, and how the emerging ‘smart home’ could help consumers get high quality outcomes from low carbon heating.

SSH Phase 2 – focused on developing capabilities, tools and insights on:

  1. Consumer trials of smart energy services – a 100-home trial in our Living Lab investigating how consumers use heat and testing their interest in buying ‘heat as a service’.
  2. Market transformation (new business models and market structures) – looking at new business models for energy services, the importance of interoperability and consumer protection, and the policy and regulatory context to enable this.
  3. Local Area Energy Planning – taking the local energy system modelling work from SSH1 and developing targeted, specific projects that demonstrate the ideas in practice, including Smart Energy Plans in the three local areas.


Evidence and Insights from the Smart Systems and Heat programme has had a major impact on innovation in industry, strategic planning across local government and distribution networks, and influenced thinking regulatory and policy development at Ofgem and in Government.

“Heat is a massive part of the emissions problem. If we’re going to hit our 2050 targets we have to grapple with many challenges. Luckily, we’ve gathered an enormous amount of evidence on options for heat decarbonisation through the work of Energy Systems Catapult.”

Rt Hon Claire Perry MP, Energy and Clean Growth Minister


  • EDF – has launched a Low-carbon, hybrid heating system offering for households not on the gas -grid using oil or LPG heating. Dan Bentham, Head of R&D Smart Customers, EDF Energy, said: “EDF was involved in SSH from the very start. Residential heating is a huge contributor to our carbon emissions, so we were keen to know how we can help our customers and the UK as a whole transition away from fossil fuels and onto renewable low carbon heating. What SSH has shown to us is that not only do we have to think about new business model and customer propositions and how we can offer new services to consumers but also the new policies and regulations needed to accompany those.”
  • Baxi and Bristol Energy – these two British companies successfully trialled selling ‘heat-as-as-service’, in a move that experts believe will pave the way for the low carbon retrofit revolution. Baxi Heating UK successfully sold a Heat Plan that bundled a new heating system, servicing, maintenance and energy for a fixed monthly price. 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
  • AirEx – invented a smart ventilation control – or put more simply – an intelligent airbrick, that uses sensors to monitor temperature, humidity and air quality in the home. AirEx is exploiting data from a trial in our Living Lab to support product validation and development, business planning, and planning for a larger scale trial.
  • Electrification of Heat trial – on the back of our experience in delivering SSH, Energy Systems Catapult has been appointed as Management Contractor for the £16.5 million Electrification of Heat Demonstration Project on behalf of the Department of Business, Energy and Industrial Strategy. The Project aims to overcome barriers to deployment and demonstrate the feasibility of a large-scale roll-out of heat pumps in Great Britain by installing the low carbon technology in 750 homes.
  • Shell and Passivsystems – launched B-Snug, a smart hybrid heat pump subsidiary. The smart heating system switches between an air source heat pump, which Passivsystems will install, and a conventional oil or LPG boiler. B-Snug will aim to cut customers energy bills as well as their carbon emissions. “Both the Committee on Climate Change’s support for hybrid’s and the SSH programme influenced Shell’s move into this area.” Jo Coleman, UK Energy Transition Manager, Shell UK

Strategic Planning

  • Integrating Tidal Energy into the European Grid – in Orkney is developing an all-in-one solution for the generation of clean predictable energy, grid management, and the production of hydrogen from excess tidal capacity. The Catapult is conducting Local Area Energy Planning (using the using our EnergyPath® Networks tool developed in SSH) to produce a detailed map and model of Orkney’s energy system. Looking at a range of future scenarios, they will consider: 
    • The circumstances where the technology adds the greatest value to the system;
    • At what price point the solution becomes commercially viable in its own right; 
    • The specific benefits to the local system, such as improving energy supply to local homes and businesses, and well as reducing greenhouse gas emissions.
  • Bridgend, Wales: Smart Energy Plan – “the work of the SSH Programme has given us a view of what the future might look like. It goes into an enormous amount of detail and isn’t just technology driven. It incorporates things like how consumers will behave with different technologies.” Jonathan Oates, Head of Clean Growth, Welsh Government

Regulation and Policy development

  • Ofgem – Energy sector regulator Ofgem has now included Local Area Energy Planning (developed in SSH) in recommendations in its latest RIIO-2 Business Planning Guidance for energy networks: “Given the potential benefits with LAEP .. to provide improved data on and assessment of possible heat decarbonisation options, provide a structured framework for engagement and investment planning decisions .. for net zero energy systems and network infrastructure .. we are interested in any information companies can provide in their business plan … to support the creation of shared LAEPs.”