Matthew Lipson, Energy Systems Catapult
There is a growing consensus that we need to put consumers at the heart of the energy system if we are to transform it successfully. Standard consumer research is instructive, but struggles to guide the complex choices that need to be made about the future energy system. For instance, what combination of generation and storage should we build where, what networks should we invest in and how much capacity should we build? People do not know exactly what they want and cannot say which they will prefer of futures they can barely imagine.
The decisions made will constrain how people can use energy in their lives every day. The networks built to heat buildings in each area will influence how many households have to insulate their homes and install hot water tanks to get comfortable and clean as conveniently as they can today.The amount of capacity built will determine whether everyone can use electricity when they like, or some will have to go without at peak times.</p><p>Consumer choices have helped guide similar decisions in other sectors. The telecoms sector has used market feedback to decide what networks and how much capacity to build. This has revealed consumers are willing to pay for unlimited broadband access and mobile coverage. Similar techniques could help the energy sector decide how to transform the system.
Previous work has shown that people care more about their experiences using energy, than how they are delivered. They like the idea of buying services, like a warm home, rather than kWh of fuel and a boiler. They are open to their provider changing their energy supply as long as they can get the heat experiences they want.
Energy services create opportunities for entirely new business models and policy options. Businesses who can sell high quality energy services will find it easier to attract and keep customers who will pay more, complain less and be more loyal. Network investors and operators could work with energy service providers to plan network upgrades that deliver service levels consumers want to pay for. Long-term, technology-netural, carbon targets could persuade providers to decarbonise their services, as they have for car manufacturers. This would open up new channels to market for low carbon device vendors.
The concept of energy services is not new, but the maturing of ‘smart home’ infrastructure means they are now becoming commercially viable and technically feasible. With the support of the Energy Technologies Institute and the Department for Business, Energy and Industrial Strategy, the Energy Systems C has built a capability to help governments and businesses take this opportunity to design delightful low carbon energy policies, products and services. This includes creating a segmentation of consumers’ energy product and service needs and connecting a ‘living lab’ of 100 households to a Home Energy Services Gateway platform. The platform has an open architecture designed specifically to enable businesses to work together to offer many households a range of energy products and services. Consumers’ reactions to these offers could reveal their requirements for a low carbon energy system.
This paper describes findings from an experiment using this living lab to test Heat as a Service with 100 households over the Winter of 2017-18. This has involved:
- Upgrading homes to the 2020s level of data and control;
- Co-designing three types of Heat Plan with households;
- Tailoring offers to suit each households’ heating preferences;
- Using data to estimate the expected delivery cost in each home;
- Understanding households’ reactions to these Heat Plans; and
- Measuring the actual cost of delivering Heat Plans.