RetroMeter is a project to demonstrate a consistent, open-source methodology to accurately meter the energy and cost savings of retrofit energy efficiency measures – unlocking pay-for-performance financing, increasing uptake and leading to reduced costs for consumers and additional flexible services for the Distribution Network Operator (DNO).

RetroMeter was first awarded funding through Ofgem’s Strategic Innovation Fund (SIF) Round 2, a programme from the UK’s independent energy regulator Ofgem and managed in partnership with Innovate UK, to answer Challenge 4: Accelerating Decarbonisation of Major Energy Demands: Improving energy efficiency at all levels in the system. The first phase, Discovery, was delivered by Energy Systems Catapult in April 2023 alongside partners Electricity North West, Energypro Ltd, Carbon Co-Op and Manchester City Council.

The challenge

With electricity demand from homes set to double by 2050, DNOs are faced with a significant capacity problem, leaving networks either to reinforce the network in constrained areas or procure flexible services such as end-user energy efficiency.

Energy efficiency is considerably more attractive for consumers with home retrofit measures providing health and comfort benefits in addition to reductions in volatile energy bills. Historically, however, high upfront costs have hampered consumer investment in residential retrofit, leaving them reliant on limited subsidy programmes or supplier obligations that are seen as a regulatory requirement rather than a business incentive.

The innovation

Established ‘pay-for-performance’ (P4P) schemes in the US offer a compelling alternative solution. By using advanced Measurement and Verification (M&V) techniques to accurately baseline energy usage, aggregators sell pooled savings from retrofitted homes to long-term finance providers in return for upfront investment in the cost of retrofit.

This spreads the consumer’s costs, enabling them to experience the multiple benefits of energy efficiency upfront; meanwhile the finance provider generates returns through savings.

This approach – Metered Energy Savings (MES) – could unlock massive investment in UK retrofit and has been subject to considerable sector attention including from the Green Finance Institute (GFI).

Following the successful completion of the Discovery phase, RetroMeter was awarded further funding for the Alpha Phase of SIF Round 2. In this phase, the conclusions of the discovery project were further developed into a proof-of-concept methodology for measuring MES, which laid the groundwork for the first demonstrator project in the UK, with the goal of piloting the baselining methods and verifying savings in a live retrofit scheme in Manchester in the future.

The project focused on the most common retrofit use case in the UK – fabric upgrades to gas-heated homes – and evaluated three core methodologies:

• OpenEEmeter, an open-source implementation of the CalTRACK method, which uses weather data and statistical models to predict a home’s energy use in the absence of a retrofit, against which their actual metered consumption can be compared.
• Comparator groups, where the predictions are adjusted based on the consumption patterns of similar homes that did not receive a retrofit, to account for non-weather externalities (like energy prices) that OpenEEmeter cannot capture.
• Physics-based modelling, to estimate the portion of savings that may be taken back as increased comfort rather than bill savings. This part of the methodology in particular incorporates the work by the Smart Meter Enabled Thermal Efficiency Ratings (SMETER) project.

The first two methodologies were tested on smart meter data from approximately 3,000 homes provided by Hildebrand, with the physics-based methodology tested on 15 homes from the SMETER project. Key findings were:

• OpenEEmeter alone was not sufficiently accurate, largely due to its inability to account for the sharp increase in energy prices experienced in the winter of 2022/23.
• Using comparator groups matched on similarity of consumption profiles eliminated OpenEEMeter’s bias and greatly improved accuracy. Grouping candidate homes into portfolios of as few as 5 homes brought accuracy within industry guidelines. This improvement by portfolio size is show in the box plot below – the lower the error (CVRMSE), the better the model is at predicting the post-retrofit energy consumption.
• The physics-based approach shows some promise for estimating comfort take-back when aggregated to larger portfolios, though further validation is needed. A better understanding of how the availability of smart meter and internal temperature data affects HTC and energy demand estimation performance was attained.

The work has made a significant step forward by demonstrating that the RetroMeter methodologies provide a suitably robust foundation for assessing energy savings from small groups of homes in the UK. Focus now needs to shift to creating the conditions for large scale adoption, which include:

• Establishing a mechanism for ongoing access to smart meter data for comparison groups.
• Turning the methodology into an open standard and open-source software tool that are easy to apply.
• Creating regulatory incentives to encourage the use of MES in publicly funded retrofit programmes.
• Testing the effectiveness of comfort takeback estimates on a larger group of homes.

The Catapult produced a public webinar, hosted by Carbon Co-Op, discussing our methodology and key results that you can view here.

All materials, including our methodology report and briefing notes for a range of audiences, can be found on the Smarter Networks project page.

Dr. Steve Fawkes, Managing Partner of ep Group, said:

“We are very pleased to be part of this project which will lead to the first real-life application of metered efficiency in Europe. Metered efficiency is the innovation that could remove many of the barriers to increasing investment into energy efficiency, something that we need to do to hit our net zero and energy security targets.”

Emma Harvey-Smith, Programme Director, Green Finance Institute, said:

“Innovation is vital to support the retrofit market to scale at the pace required to upgrade the UK’s energy inefficient homes. Metered Energy Savings were a key recommendation to help increase energy efficiency upgrades and we’re delighted to see Ofgem supporting a project that could boost both consumer and investor confidence in retrofitting.”

Rebecca Sweeney, Business Leader for Homes at Energy Systems Catapult, said:

“Retrofit levels in the UK continue to remain stubbornly low despite the benefits it can deliver to households and to the wider energy system in the form of reduced energy bills and reinforcement costs. Evidence routinely indicates how this impacts the most vulnerable in society more than any other group, making it imperative that we act to enable a fair and just transition to Net Zero.

“The RetroMeter consortium will tackle these barriers to retrofit in an attempt to deliver and demonstrate the effectiveness of a consistent methodology to meter the financial and energy savings brought about by retrofit measures. Until we have in place a robust, industry-wide methodology for measuring the effectiveness of MES, industry and policy will continue tinkering around the edges. We’re hopeful that the work we are doing alongside Electricity North West, EP Group, Carbon Co-op and Manchester City Council will deliver for consumers and networks alike.”

Victoria Turnham, Head of Network Innovation at Electricity North West, said:

“We’re really pleased Ofgem has recognised the potential of this project and awarded us funding to explore it in more detail. We recognise the importance of making retrofit energy efficiency measures more appealing and attainable for our customers. We’re one of the most digital electricity networks in the world and we’re constantly looking at ways to operate more smartly and efficiently. This project could provide real benefit to customers in the North West and I look forward to seeing the results.”