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.

Key points

Society is progressing toward connected homes, which is likely to enable a profound change in the way people buy energy; away from input commodities, people can’t understand toward service outcomes people value.

We explored how energy providers could use data from the emerging ‘smart home’ could enable profound changes in their energy retail provision, such as selling ‘Heat as a Service’ instead of units of fuel, to deliver high-quality heating outcomes that consumers really valued.

We also looked at how this could be used to accelerate the switch from gas central heating to low carbon alternatives, including the need for commercial, policy and regulatory arrangements to converge.

Insights included:

• Underpinning such a profound change in energy retail services will be the emergence of open data frameworks and advanced machine learning.
• Carefully designed user experience can help people become discerning customers, discovering what they value and expressing their expectations to retailers.
• Data analytics reveal opportunities for helping customers to achieve better comfort experiences and to determine how best to deliver low carbon solutions.
• Innovative future services could focus on selling the experiences people value, opening new business opportunities to capture new value beyond the meter – by using a new dialogue and new datasets to help people obtain the heating experience they want.
• Central to a profound change in domestic energy retail will be the emergence of a service language with which customers and suppliers can align expectations.
• Data enables ‘warm hours’ to be priced like insurance offerings, given the inherent uncertainties due to the fabric of the home, how it is used and energy costs.
• There are potential market failures that could be avoided by thoughtful early design to ensure device vendors can capture a share of value from services.
• There are significant opportunities to better integrate low carbon heat components and improve the quality of connected home devices for the mass market.
• Installation and maintenance teams are critical in a customer’s journey towards connected homes and advanced energy services, but they need to prepare.
• Decarbonisation could help the vulnerable access basic energy services, but there are also risks.