A new approach to decarbonising heat€¦ · A new approach to decarbonising heat Learnings from...

A new approach to decarbonising heat

Learnings from Smart Systems and Heat Phase 2 Programme

© 2019 Energy Systems Catapult

Agenda

• Decarbonising heat: the challenge

• The energy world is changing very fast

• The SSH2 Programme

• How do you enable a Market Transformation

• Creating a Living Lab to test Heat as a Service

• New local contexts

• What happens next and how you can get involved

2


The challenge

4

At the current rate of conversion, it would take…


The cost of decarbonising heat

5

Source: National Infrastructure Commission

Cumulative additional cost of decarbonising the UK’s heating system by 2050

utilityweek.co.uk/decarbonising-uks-heating-system-cost-450-billion


Decarbonising heat is going to require

significant changes to our economy

6

Homes and

Buildings

Transmission and

Distribution

Generation

Heating

systems

Consumers Control systems


There is no silver bullet for decarbonising our homes

Each home is different, and households have very different

heating requirements

Many people

struggle to meet

winter heating

needs in poor

quality building

stock

Cost to improve

and budget to

spend vary widely

between

households

Decarbonising will

require significant

investment


There is no silver bullet for decarbonising our homes

Technical options have their strengths and weaknesses

ElectrificationDistrict heatingHydrogen

Different local areas have different characteristics and priorities which brings

different opportunities/risks


Consumers aren’t choosing low carbon heat today

9

of homes have low

carbon heating today

prefer gas central

heating given the choice


And are facing significant barriers to choosing low carbon heat

10

Subsidies?

Smart controls?

Which supplier?

Intrusive?

Will I like it?

Is it reliable?

Disruption?

Will I be locked in?

Which technology?

Which installer?

Maintenance?

Financing?

Capital costs?

Retrofit?

Will it work?

Running costs?


Helping overcome these barriers is a huge opportunity

for innovation and industry

11

District heating

Heat pumps

Low carbon gas

Smart controls

Electricity networks

Generation and storage

Retrofit


The energy revolution has started

13

Connected

homesProsumersRenewables Electric

Vehicles


Digitalisation is just starting to transform energy

14

More households have smart thermostats

with 500K being installed last year

Of people asked found the use case

of controlling heating very attractive

Source: Delta EE Smart speaker customer research

utilityweek.co.uk/smart-thermostats-now-in-1-5-million-homes

statista.com/outlook/279/156/smart-home

Expected sales growth of energy related

connected home devices in 2020

Increase in revenue expected for Energy

Management devices in the Smart Home

Market from to 2023


Digital can help with the three main consumer challenges

to low carbon heat

15

Improve low carbon heating systems

Make low carbon heat systems easy to install

Make low carbon heating easy to control


Smart Systems and Heat Phase 2 (SSH2)

17

Funded by: May ‘17 – Mar’19:

Two year-programme

Our challenge: to look at innovative ways to decarbonise domestic heat


How to decarbonise heat: our hypothesis

19

Start with the consumer, not the technology

Digitalisation offers significant potential (and some risk)

Heat as a service could be a powerful proposition

Understanding different local energy systems is essential

Heat decarbonisation will require significant market changes/policy drivers


Learning from SSH Phase 1

20

People care about being warm and

comfortable at home - not which fuel is

used

Advanced control and retrofit is critical to

making low carbon heating work

Shift to low carbon will be complex and

systems engineering approaches can help

Work with local areas found a balanced

mix of solutions would be cheapest

Energy services + policy could help create

a market that enables the mix of solutions

needed to decarbonise heat

A technology-neutral, carbon reduction

obligation placed on energy suppliers

appeared a promising policy approach

Energy services appeared a promising

business model to support

decarbonisation


Key questions

21

To what extent can

service business models

help reduce the barrier to

decarbonisation of heat?

Will consumers

accept and value

new energy

services?

Which policy

drivers might help

decarbonise heat?

Can local energy

planning help unlock

decisions and

investment?

Subsidies?

Smart controls?

Which supplier?

Intrusive?

Will I like it?

Is it reliable?

Disruption?


Which technology?

Which installer?

Maintenance?

Financing?

Capital costs?

Retrofit?

Will it work?

Running costs?Which Service?

Which Provider?

Intrusive?

Disruption?


Running costs?

Which Service?

Which Provider?

Intrusive?

Disruption?


Running costs?


Understanding the barriers and opportunities for business

23

Business model

families flow-

diagram produced

Business models

evaluated in detail

Business models

developedDemand Side

Management

simulation

Business model

canvassing

Municipal ESCo

models studiesWorkshops Policy and

stakeholder

journey maps

Analogous

transitions

Data

analysis

50+ business

models

28 business

model families


Value Propositions

Data

Interoperability

Devices

Low carbon energy servicesEnergy Service Providers

Learning from what’s happened in other industries


Aerospace - Services can deliver revenue

and better value for consumers

Television - Demand can be latent /

dormant

Transport - Data can lead to innovation

Hospitality - Data can increase choice and

support consumer protection

Automotive - Portfolio obligation can

drive change

Mobile communications - inter-

operability can open the market

and considering how it might relate to heating at

home in the future


A range of new Business Models were explored

Each represents new opportunities

26

Energy as a

Service

Community

energy

Peer-to-peer Lifestyle services

company

Off-grid

solutions

Building/

retrofit

Aggregators/

marketplace


Future energy system needs to be

interoperable in different ways

27

Commercial Physical

Data

Consumer

Vector

ensuring that provisions exist for

consumers to switch between both

different commercial offers and

technology choices.

to ensure that incentives are aligned

across the energy system to ensure

that value can flow where it needs to,

driven by market forces.

to ease the sharing and portability

of data between different systems.

Devicesto ensure that devices are swappable, replaceable and

exchangeable as needs change and technologies

develop and to allow consumers to make informed

choices between open and closed eco-systems.

to ensure that end-to-end systems function as

changes happen to parts of the system.

to ensure that energy provision across gas,

electricity, heat, transport fuels etc. are compatible

with one-another and that coordination occurs in a

timely fashion.


Today: starting to see digital devices enter market

28

C O N S U M E R S – 26 million

A P P L I A N C E S A N D T E C H – 000’s

00’s


Future: an interoperable market

29

C O N S U M E R S – 26 million

A P P L I A N C E S A N D T E C H - 000’s

E

N

E

R

G

Y

S

E

R

V

I

C

E

P

R

O

V

I

D

E

R

00’s

00’s


Consumers will need protecting in this

smarter new energy world

30

Know what they’re buying

Can get the experience they want

Can get their problems fixed

Can compare offers and switch


Field Trial: creating a Living Lab to test new products,

services and business models in 100 real homes

32

Four million data points

per home per dayUnderstanding

consumer

preferences

New service and product ideasReal world

homes


Giving the consumer a new level of control

33

Commands

from device

Cloud control

and research

database

Home WiFi and

Hub

Boiler controller

and boiler

Room temp/

humidity sensor

Radiator

surface temp

WRV

A room in a

house


Last year I spent

• £1,400 on

• 15,000kWh of gas and

• 4,000kWh of electricity

Next year, I’ve no idea

• How much fuel I need

• What it will cost, or

• What experience I will get

I want to

warm the rooms I choose…

…to the temperatures I like…

…when I am home.

and control my costs

Using this data to understand what people really want

34


Doing that by helping consumers discover and choose the

heating that suits them and their home

35

Time to warm

Extras

Consumers discovered how warm they like their rooms at different times, what limits their experience

(e.g. time to warm), what shapes the cost and what is excluded from their plan (i.e. extras)


Heat Plans: a starter-for-ten energy service

36

Pence per warm hour

Like “mpg” for

heating

Warm hours

Hours any room is

warm

Schedule

Temperature of

rooms at any time

Extras

Cost of warmth

outside the schedule


Selling Heat as a Service in our lab of connected homes

37


Peoples response to being offered Heat Plans

More than half of people bought a Heat Plan

38

• Used most of planned hours

• More likely to use extras

• More consistent

• Used fewer planned hours

• Made little use of spares

• Never used any extras

• Six moved to unlimited

during a ‘flash sale’

• Homes did not increase

energy use

Most popular plan was FlexiTime


People heated their homes in very different ways

39

Hate feeling cold, but

dislike ‘waste’, so turn

heat up high when

needed

On-Demand Sizzlers

Often tweak

heating as worried

about bills and

trying to minimise

costs

Cool Conservers

Rarely adjust their

heating schedule

Steady and Savvy

Want home warm when

someone is in, but not

that bothered about

heating. Could afford to

leave it on all day, but

prefer to spend the money

on something else.

On-off Switchers

Often adjust

temperature to

get comfortable

Hot and Cold Fluctuators

Love having a cosy

home and would

prefer not to put on

a jumper if they are

cold

Toasty Cruisers


People valued different things from their heating

40

Comfort focused

• Liked the experience of

comfort from new controls

• More likely to sign up for a

Heat Plan

• Preferred FlexiTime Plan –

the extra hours gave

reassurance they could stay

comfortable

Value focused

• Loved feeling in control of

both cost and comfort –

though they were less likely

to change their settings

• Like to know what they’re

paying

• Not afraid to haggle (e.g.

over summer payments)

Cost focused

• Know what they pay now

and compare prices to this

• Switch frequently, so more

open to something new

• Preferred FixedTime plan:

helped them to fix costs

• However, many used

significant extra hours


Better data and new energy services could create a pathway

to low carbon heat for existing homes

41

Is used by service

providers to identify

that heating in your

dining room isn’t

efficient or giving the

comfort you want

This data is used with

advances in simulation and

design to target solutions

that deliver comfort and

efficiency gains

Data about your

home and

household

preferences

This starts to get your

home ready for service

providers to offer you the

right low carbon solutions

for my home at the right

time


Signs that energy services could unlock low carbon heat

42

Could Heat Plans help

‘sell’ low carbon heat? Preferred the idea of a heat pump bundled with a

heat plan vs. 23% for a heat pump alone

Does experience of a

Heat Plan make people

open to low carbon heat?of people who bought heat plans were open to

alternatives to gas when replacing their boiler

(vs. 1/3 for people who have not)

Would services be a

more popular approach

to decarbonising heat? were positive to energy services vs.

38% for a home improvement loan,

30% for a boiler ban and 22% for a carbon tax


What happened when we tried to get 5 owner occupiers to

switch from gas to an electric heat pump?

43

Reading an on-line advert

wanted a free heat pump

<0.1%Of people who stayed on the

trial wanted a free heat pump

>15%

Signs people

who had

experience of

Heat Plans

were more

likely to want a

free heat pump


Unlocking new services and value generation

44

Flexibility services

DSR / DSM

Solar Building / Retrofit

Batteries Electric vehicles

Innovative

technologies

Energy

Services


Our Field Trial has demonstrated

45

Different people want and value different things from heating at home

People like to be in control (comfort and cost)

People like and accept the concept of heat as a service (compared to buying units of energy)

Better heat experiences, improved control and new business models could help overcome

current barriers to low carbon heat

Solutions will need to fit the needs of people, their homes and neighbourhoods


As part of the programme we have been working with

three very different local areas

47

Bridgend NewcastleGreater

Manchester


Local forms an important our heat hypothesis

48

Start with the consumer, not the technology

Digitalisation offers significant potential (and some risk)

Heat as a service could be a powerful proposition

Understanding different local energy systems is essential

Heat decarbonisation will require significant market changes/policy drivers


Improving local area energy planning is an important

enabler to low carbon heat

49

Open planning dialogue on

what solutions, where and

when should be implemented

to decarbonise domestic heat

in different places

Whole system local energy plans

can inform local and strategic

decisions on electrification,

hybridisation, hydrogen, heat

networks and fabric retrofit

This can inform decisions and

investments in cost-effective

network solutions that meet

consumers needs in a low

carbon and digital future

Can underpin engagement

with consumers and

communities on local energy

systems of the future


As part of SSH2 we have been working with each local area in

developing their own smart energy plans

50

Continued to collaborate

with the three local areas

Supported developing their

local smart energy plans

Connected to wider local

priorities such as fuel

poverty and transport

Used to stimulate a pipeline

of near term deployment

and innovation projects


There were some common innovation priorities that emerged

across the local areas to meeting the heat challenge

51

Better integrated

electric heating

solutions for gas

heated homes

Solutions for

expanding district

heating to supply

existing homes

Hybrid heating

and advanced

control as an

enabler for low

carbon heat and

new energy services

Data driven

approaches to

better target

retrofit in local

areas and homes

Creating place based

innovation zones as

a springboard for

scaling solutions


Next steps

53

Move 5 owner

occupied gas

heated homes to

heat pumps in our

Living Lab

Sell industry’s

heat plans in our

Living Lab

Support innovators

testing new products

and services

Large scale

Demonstration

Programmes with

partners


Funded by BEIS

54

Delivered by ESC

in collaboration with:

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