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