SSH2: Introduction to Heat as a Service

Published: 20 June 2019

Introduction

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.

Energy Systems Catapult is delivering 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 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 within three local authorities areas. SSH2 was funded by the Department for Business, Energy and Industrial Strategy.

Heat as a Service is a new model for how businesses sell heating. Consumers who buy Heat as a Service choose how much to spend on the experience they want – feeling warm and comfortable when and where they want in their homes – instead of paying for kilowatt hours of energy.

Once a service provider understands a consumer, the service provider can help them pick the best low carbon system for their situation, and help them prepare their home, so it is easy to install when they want to replace their existing.

Key points

  • Improved consumer experiences: Trialists preferred the idea of paying a fixed price for Heat as a Service than for units of fuel. They found Warm Hours easier to understand than kilowatt hours. Half chose one of the three Heat Plans, improving their control of what they spent getting the level of comfort they wanted.
  • Increased willingness to pay and loyalty: Trialists who bought Heat Plans enjoyed knowing they would get the comfort they wanted for a predictable price. On average, they paid more for Heat as a Service than they were paying for their energy. Two thirds said they would be more likely to recommend their supplier if they offered Heat Plans.
  • Higher quality low carbon systems: Manufacturers could use data about how consumers use their heating, what they value and prioritise, and what outcomes they seek to design more  appealing low carbon products. Trialists revealed their preferences by spending different amounts of money and heating different numbers of rooms to different temperatures for different amounts of time.
  • Homes that are more ready for low carbon heating: Many consumers experience problems like damp, drafts and overheating. Triallists were enthusiastic about using data to solve such problems, for instance by replacing radiators that were too small to heat the room they were in. They liked the idea of spreading the cost of these energy performance improvements over time. Tailored retrofits could help consumers prepare their homes for low carbon heating before they replace their heating system.
  • Accelerated uptake of low carbon heating: 58% of triallists who had bought a Heat Plan were open to a low carbon alternative when replacing their gas boiler. This compares with around 33% of owner-occupiers in the general population. This rose to 85% of triallists if their Heat as a Service provider could guarantee they would get the level of comfort they wanted for a price they were willing to pay.
  • Reduced energy demand and increased flexibility: Energy service providers have commercial incentives to use as little energy as possible and learn how to give consumers the warmth they want without using electricity at peak times.