UK utilities Bristol Energy and Baxi Heating have partnered with Energy Systems Catapult to pilot selling ‘heat-as-as-service’, in a move that will pave the way for the low carbon retrofit revolution.
Energy Systems Catapult created a heat-as-a-service offering called a ‘Heat Plan’ – where instead of buying units of energy (kWh), consumers buy hours of warmth in their home – called ‘Warm Hours’.
As part of the pilot, Energy Systems Catapult provided its Living Lab – where 100 homes spread between Newcastle, Manchester, the West Midlands, Gloucestershire and Bridgend in Wales – were fitted with ‘smart heating systems’ that provides room-by-room temperature control and a wealth of data on consumer behaviour and the thermal performance of the home.
Baxi Heating UK successfully sold a ‘Heat Plan’ that bundled a new heating system, servicing, maintenance and energy for a fixed monthly price.
Bristol Energy became the first energy supplier in the UK to trial selling heat-as-a-service, selling both fixed price and Pay-As-You-Go ‘Heat Plans’ to domestic customers.
Each of the 20 Living Lab households already had smart heating controls installed and were familiar with the concept of ‘Heat Plans’. The results were:
- 13 wanted to discuss the offer
- 10 said they liked it and were enthusiastic
- 1 accepted the offer and had a boiler installed (the only one of the 20 triallists who had an old, inefficient boiler they were ready to replace).
Dr Matt Lipson, Consumer Insight Business Lead at Energy Systems Catapult, said: “The UK has a target of achieving net zero emissions by 2050, yet only about 5% of UK homes currently have low carbon heating, compared to 85% with gas boilers.
“Low carbon heating is simply a step into the unknown for most households.
“Consumers have concerns about their ability to get warm and comfortable at an affordable price and how to fix the system if it breaks down.
“Yet our research clearly shows that people care more about heating outcomes – such as getting warm and comfortable – than which device or system delivers the heat.
“To overcome this impasse, we developed a Heat-as-a-Service offering called a Heat Plan. Where instead of buying units of energy (kWh), consumers buy hours of warmth in their home.
“This allows people to schedule and budget for a specific number of ‘Warm Hours’ – giving them the temperatures they want, in the rooms they want, at the times they want – for a fixed weekly or monthly price.
“If people have the peace of mind that heat-as-a-service will deliver the comfort they want at a price they can afford … then when it comes time to replace their gas boiler, they will be more confident of switching to a low carbon heating system like a heat pump, district heat network or hydrogen boiler.
“Now the work we are doing with Bristol Energy and Baxi is taking a leap forward, piloting commercial offers, that could pave the way for low carbon retrofit revolution”.
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Jeff House, Head of External Affairs, Baxi Heating UK, said: “As society continues to adopt service-based offerings in other sectors it is clear that Heat-as-as-Service has the potential to revolutionise the heating industry.
“In part, this model can help to defer the up-front capital barrier associated with many low carbon heating options thereby aiding decarbonisation efforts, importantly it also can help to streamline the customer experience when dealing with their heating provision.
“To help understand the practical aspects of delivering such a solution we have found our work with the Catapult invaluable.”
On average in the UK, 1 in every 20 households need to replace their gas boiler each year. So, the trial offered 20 households in the Catapult’s Living Lab a Baxi Heat Plan.
Click here for more information about the pilot.