Energy Systems Catapult have been working with Baxi Heating UK to explore digitalisation and how it can be applied to deliver Heat-as-a-Service. Heat service contract brings together connected products, data insights, maintainance and energy supply in a simple monthly plan that has applications for homes and landlords.

Through use of the Catapult’s Living Lab, our Consumer Insights and Business Model Innovation teams, we’ve been able to help Baxi lead the way in the transition from energy products into energy services.

The Heating Innovation

Baxi Heating UK is a leading UK provider of smart heating and hot water solutions.  A focus on low carbon and connected products are a major part of its product roadmap, and this presents an opportunity to re-think Baxi’s place in the value chain.

Starting in 2019, Energy Systems Catapult helped co-design with Baxi a Heat-as-a-Service proposition aimed at providing customers with a comfort guarantee – called the Baxi Heat Plan.

Similar to a mobile phone-style contract, the Heat Plan bundled together physical device – in this case a replacement heating system rather than a smart phone – with servicing, maintenance and the energy needed to be comfortable. This is just like a mobile phone bundled with calls, texts and internet data into a single service for a fixed monthly price.

The Challenge

The transition to net zero needs a seismic shift in how we interact with and buy our energy. Attractive consumer offerings will be key to unlocking a more dynamic and flexible energy system. Customers will not make low carbon choices if their expectations on quality, service and value are not met.

In the UK, one in every 20 households needs to replace their gas boiler each year. When a family replaces an existing gas boiler, there is an opportunity for them to select a low-carbon heating source.

For the heating industry there are two key issues:

• How do you give customers the confidence that a new heating system won’t cost them more and provide the same comfort as their old one?
• How can you explore disruptive business models when your business is still dependent on the current way of doing things?

To overcome this, the Catapult and Baxi worked on a series of projects during 2019 and 2020 to explore the future of heat services and how to start their journey into a digitalised and decarbonised energy system.

The Solution

The Consumer Insight team designed with a Heat Plan, where instead of buying units of energy (kWh), consumers buy hours of warmth in their home – called Warm Hours.

Heat Plans assure consumers they can get the comfort they want for a fair price from a new heating system. The plan consumers pick, and the way they use it, reveals their preferences to manufacturers so they can design better products.

By testing the Baxi Heat Plan in our Living Lab (a safe and affordable, real-world test environment of over 500 homes for trialling new energy products, services and business models), the team could look at what worked and what didn’t, to build Baxi’s heat‑as‑a‑service roadmap.

The team targeted the near term opportunity in the new build and social housing sector, and created the Baxi Heat Service, including:

• Providing Social Landlords with a fixed price Heat Contract including gas, connected boiler, controls, service and repair.
• Utilising data from Baxi’s connected products to provide new insights on the homes and improve efficiency, comfort and well-being.
• Heat Service+ would look at automatic upgrades to a low carbon heating source at end of the contract.

The Impact of the Heat Trial

Working together with Energy Systems Catapult has helped to define Baxi’s product roadmap for Heat‑as-a-service and its future partner strategy.

The Catapult has provided Baxi with a greater understanding of what this service could offer for both customers and the business.

The Living Lab helped gather unique insights on what the future of energy might look like, and the Baxi Heat Plan sparked interest in 13 out of 20 households, where 10 were enthusiastic.

The project has helped build requirements for a demonstration facility (due to complete in 2022) that will be able to explain the concept to clients and industry stakeholders.

Next Steps

• The work on Heat-as-a-Service with the Catapult is now being developed further in an Innovate UK project called the “Digital Servitisation Demonstrator”.
• It is part of a wider programme called “Manufacturing Made Smarter”. The project consortium includes Siemens, Energy Systems Catapult, Aston University and a range of other manufacturers looking to understand the services model.
• Baxi is building a live demonstration facility for Heat-as-a-Service and will be taking live data from pilot projects with Housing Associations.

Consumers should be at the heart of transforming the UK energy system to meet carbon reduction targets and achieve our clean growth ambitions. Explore our range of Consumer Insight assets and expertise to find out how we could work together.