Bristol Energy became the first energy supplier in the UK to trial selling ‘Heat as a Service’ that tailored an offering to a consumers’ individual home and lifestyle, rather than selling kilowatt hours of gas.

Energy Systems Catapult helped Bristol Energy trial this ‘smart energy service’ with consumers in our in a Living Lab of 100 real-world homes.

The Low Carbon Heat Challenge

Decarbonising heat is the biggest challenge the UK faces in terms of transforming the energy system to meet carbon reduction targets and achieve our clean growth ambitions. This is due to a number of factors, including:

1. Net Zero targets – under plans to reduce carbon emissions to Net Zero by 2050, most buildings need to become zero carbon.
2. Size of the challenge – only about 5% of homes currently have low carbon heating. The UK is dominated by fossil fuel gas – with 85% or about 24.5 million homes heated by natural gas.
3. No silver bullet solution – low carbon or carbon neutral heating solutions already exists, however a top-down “blanket” solution such as all-electric or all-hydrogen is projected to cost twice (2.28%) or three-and-a-half times (3.51%) as much respectively compared to a bottom-up approach that chooses the best low carbon heating solutions on a place by place basis.
4. Poor energy efficiency – UK building stock is generally of poor thermal efficiency. Around 2/3 of households suffer from either damp, drafts, or overheating – wasting energy and making home life uncomfortable.

Our research shows that for most consumers, switching to low carbon heating is simply a step into the unknown. They 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 also clearly shows that people care more about heating outcomes – such as getting warm and comfortable – than which device or system delivers the heat.

Energy services, such as Heat as a Service, could provide a powerful proposition for the switch to low carbon heating and create opportunities for entirely new business models and policy options.

The Innovation

Bristol Energy became the first energy supplier in the UK to trial HaaS, selling both fixed and pay-as-you-go heat plans to domestic customers. With HaaS, customers buy hours of warmth in their home called ‘warm hours’ instead of purchasing energy units (kWh).

HaaS allows consumers to schedule and budget for a specific number of warm hours to control their heat consumption for a fixed weekly or monthly price.

If consumers have the peace of mind that HaaS will deliver the comfort they want at a price they can afford, it’ll increase their confidence in switching to a low-carbon heating system.

Our Approach

Building on the work from the Smart Systems and Heat programme, Energy Systems Catapult has developed a specialism in designing smart energy services to drive the creation of innovative business models that help energy providers give consumers improved control over cost and comfort and create a route to market for low carbon technology.

The Energy Services specialism utilises:

• The Living Lab – over 100 real-world homes spread between Newcastle, Manchester, the West Midlands, Gloucestershire and Bridgend in Wales – fitted with smart heating control systems linking a cloud-based digital platform, to in-home IoT sensors/actuators, advanced data science and machine learning algorithms. This provides room-by-room temperature control and a wealth of data on consumer behaviour and the thermal performance of the home.
• Consumer Insight – expertise in helping innovators research, develop, design, price, and run energy service trials with consumers in the Living Lab.
• Data Science – drawing on over four million data points per home per day, our advanced data science helps develop, design, price, and analyse energy services using machine learning algorithms.
• Business Model Innovation – help with developing innovative commercial solutions for energy services for both today’s market arrangements, and possible future markets.

Heat as a Service Trials

We worked with Bristol Energy to design and trial a Heat as a Service offering called a ‘Heat Plan’ in the Living Lab.

The Living Lab smart heating controls provided data about the thermal performance of residents homes and room-by-room, hour-by-hour consumption data. This allowed Bristol Energy to calculate the cost of a bespoke Heat Plan for each household that charged by hour of warmth (‘Warm Hours’) rather than charging per units of gas (kilowatt hours / kWh).

Residents in the Living Lab were able to compare two Heat Plan offerings on our digital Energy Services Marketplace:

• Heat Plan 1 – priced for a fixed number of Warm Hours based on their existing heating schedule,
• Heat Plan 2 – Pay As You Go with a price per Warm Hour.

The Heat Plans allowed people to schedule and budget for a specific number of Warm Hours – giving them the temperatures they wanted, in the rooms they wanted, at the times they wanted – for a fixed weekly or monthly price.

This approach was designed to give people greater control over comfort and cost. Crucially, it also provided the energy supplier with:

• A commercial incentive to deliver the levels of comfort that consumers want using as little energy and carbon as possible
• An opportunity to differentiate themselves in a market
• Create a route-to-market for low carbon heating.

Impact

• Designed smart energy services so energy providers can give consumers improved control over cost and comfort.
• Helped Bristol Energy test an innovative business model selling a smart energy service that gave consumers improved control over cost and comfort.
• The project helped Bristol Energy attract new customers and switch them to their HaaS offer.
• ESC helped Bristol Energy use data to design, tailor and target a range of new Heat Plans, including suitable retrofit options for each customer.
• Nine out of ten new customers continue to use HaaS (the 10% that didn’t were too late to the offer) as they felt more in control of their energy usage and half of them opted for Heat Plans with the energy efficiency of new low carbon heat systems.