Smart Systems and Heat Phase 2 (SSH2) was a successor programme to Smart Systems and Heat Phase 1 (SSH1) and took the form of a £9.8m grant from the Department of Business, Energy and Industrial Strategy (BEIS) Energy Innovation Programme to fund activity by the Energy Systems Catapult between Summer 2017 and March 2019.

The programme was set up to develop evidence on how to facilitate the take up of low-carbon heating technologies across the UK through the development of new digitally enabled services. The total funding was approximately split 70/20/10 between the three activities of the programme; the research and development winter trial, business modelling and local engagement.

These work packages consisted of:

1. A winter trial of households equipped with advanced heating controls. A ‘living lab’ of 108 homes was created to understand consumer energy use and preferences and test the concept of ‘Heat as a Service’ during winter 2017/18.
2. Business modelling. A series of market engagement, research and analyses were conducted to explore the business case for consumer-focused delivery of heat decarbonisation.
3. Local engagement. The Catapult worked collaboratively with Greater Manchester Combined Authority, Bridgend County Borough Council and Newcastle City Council around smart energy planning.

As part of the grant for SSH2, the Catapult committed to deliver both an interim and final evaluation of the programme. In consultation with the programme delivery team, three core aims of the evaluation were agreed, a programme learning aim, a system learning aim and a strategic learning aim.

Key points

The key findings of the evaluation have been set out in response to the three evaluation aims:

1. Programme learning’ aims

To provide evidence of what has been delivered: alongside understanding that supports and improves SSH2 delivery.

Delivery of programme outputs

The main conclusions from examining how far the programme delivered outputs are as follows:

• SSH2 successfully defined – and built understanding amongst stakeholders of – the concept of Heat as a Service (HaaS).
• SSH2 generated learning about the take-up of heat plans.
• SSH2 identified a number of business models to delivery decarbonisation of domestic heat.
• SSH2 identified opportunities for delivering decarbonisation of domestic heat at a local level.

Delivery of programme outcomes

At the time of programme conclusion, there was already some evidence that some SSH outcomes had been achieved. Generally, the outcomes from SSH2 were not expected to be realised until beyond the end of the programme, from April 2019 onwards. The following evidence of programme outcomes can be observed.

• Policy response to SSH2.
• Local area response to SSH2.
• Development of ESC capabilities and assets.

Learning

The evaluation confirmed that the component activities of SSH2 were appropriate to delivering the anticipated outputs and outcomes. However, it also identified a number of ways in which the delivery of those activities could be improved for this programme / future programmes of this nature.

• Allow sufficient time for project preparation, development of software and recruitment (so starting the trial earlier in the winter period).
• There needs to be a stronger and more explicit focus on decarbonisation – and how this is being delivered – running through all project activity.
• The programme team should be better coordinated and communication targeted to avoid teams working in isolation.
• Sufficient time and resource should be allowed for development and installation of software and hardware.
• Sufficient time should be allowed for data analysis.
• The expectations of delivery partners (local authorities and industrial partners) need to be carefully managed.

2. System learning’ aims

To provide understanding and evidence of the extent to which SSH2 is developing an effective pathway to decarbonisation.

• Near term assumptions underpinning the longer term steps on the path to decarbonisation appear to be being fulfilled through SSH2.
• SSH2 has demonstrated that HaaS approaches to delivering heat decarbonisation are technically achievable.
• SSH2 has not clearly demonstrated the commercial viability of HaaS.

3. Strategic learning’ aims

Reflecting beyond SSH2, to provide broader understanding and evidence about the models, capabilities, and contextual factors required to enable market innovations to be delivered at sufficient scale to meet 2050 targets.

• The SSH2 winter trial has provided a specific example of how an Energy Service Provider offering could work and generated a large number of learnings
• SSH2 provided a detailed examination of potential future market approaches which may deliver decarbonisation.
• Private and public sector investment in decarbonisation of domestic heat.
• Government policy that supports a market-led approach to decarbonisation of domestic heat.
• A regulatory landscape that supports decarbonisation of domestic heat.