Metered Energy Savings: Unlocking home retrofit financing by reliably measuring energy savings

To attract the necessary £250bn to decarbonise UK homes and achieve Net Zero by 2050, the financial community need to develop affordable, appealing financial products to drive home retrofit. Designing and promoting suitable financial products requires robustly quantified evidence to underpin promised benefits.

Householders (and other stakeholders) must have confidence that refurbishments and low carbon technologies in their home will deliver the promised level of performance – in terms of the cost/energy saving and improved comfort and wellbeing. Ongoing research by Energy Systems Catapult into consumer attitudes towards decarbonisation of homes has identified that low confidence regarding energy savings is a key barrier that prevents many from taking steps to decarbonise their home or take on finance to do this.

In practice, energy savings are difficult to measure as they represent the absence of energy use. Currently, the savings expected from energy upgrades are typically estimated using models (e.g. SAP) that assume fabric performance based on visual inspection and standard usage patterns.

The Metered Energy Savings project aimed to analyse the quality of existing methodologies – that use only smart meter data and external temperatures – to calculate the expected energy savings from energy efficiency works on homes.

The project was partly funded through the Welsh Government’s Optimised Retrofit Programme (ORP) that is treating thousands of social housing properties across Wales with energy efficiency retrofit measures, and partly funded through a grant from the Microgeneration Certification Scheme (MCS) Charitable Foundation.

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Metered Energy Savings: Unlocking home retrofit financing by reliably measuring energy savings

Key points

The Metered Energy Savings project analysed existing methodologies (that require only smart meter data and external temperatures) to calculate expected energy savings following energy efficiency works on buildings.

The two open-source methodologies analysed were originally designed for commercial properties and these were applied to 42 UK homes. The data collated for analysis found:

  • Existing methodologies appear suitable for estimating monthly, weekly, and potentially daily savings on UK homes.
  • They were also found to be suitable for estimating sub-daily (e.g. half-hourly) savings on portfolios of properties. However, the project found that existing approaches are inadequate for estimating sub-daily savings on individual homes. Domestic energy usage includes many spikes resulting from behaviours that are not fundamentally driven by time or temperature.
  • Existing methodologies were unable to reliably estimate sub-daily (e.g. half-hourly) savings, which are important in quantifying carbon savings. This is because many low carbon technologies aim to shift energy usage to less carbon intensive times of the day. Methodologies are inadequate for time-of-use applications for single dwellings.
  • Also the wide variation in energy usage patterns and quality of the energy efficiency works meant expected energy savings were often unreliable. This undermined the incentives on suppliers to deliver well designed and executed improvements and increases the risk to consumers that the expected benefits of the work are not realised.

The project then took several steps towards defining a standard methodology.

A standard method for accurately measuring energy savings using metered energy data would provide confidence and unlock financial products and business model innovation. It would support greater customer confidence in low carbon technologies and encourage new business models such as comfort-as-a-service or performance guarantee-based offers. This would help grow the market and the commensurate finance products which will be required to decarbonise the UK housing stock.

Next Steps

Additional work is required on three fronts, and this would move the industry forward in achieving a reliable and practical methodology to measure and report energy savings:

  1. Additional work is required to improve the accessibility of the monthly/weekly/daily approaches to enable widespread use, through the creation of user  interfaces and guides suitable for a broader range of users.
  2. The conclusions of this report ideally require validation on a larger, fully representative sample of UK homes – particularly regarding the accuracy of the daily savings estimates – as this project relied on a small sample of only 42 homes.
  3. Further research is required to develop and test a methodology that would estimate half-hourly savings on individual homes to sufficient accuracy. This is likely to require both additional data collection from homes (i.e. not just smart meter data) and advances in the algorithms used. Since collecting additional data has significant practical and financial implications, the industry would likely benefit from a systematic, data-driven analysis of the extent to which different  additional data sources tend to increase the accuracy of savings estimation.

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