Stewart Clements, Director at the Heating and Hotwater Industry Council, talks about the potential benefits and challenges of introducing heat as a service.
With research ongoing into both appliances and fuel for the path towards net-zero, attention is also being given to how the solution, whatever it may be, is actually delivered. A transformative shift in heating technology will inevitably impact end-users – homeowners, landlords, and those in rented accommodation. Therefore, a successful transition to decarbonised heating will have to get buy-in from consumers, since they are the ones who will ultimately be on the receiving end of any changes.
Heat as a service
It has been suggested that one of the ways this could be achieved is to offer heat as a service. Essentially, this is a way to position heat as something customers buy directly, as an outcome in itself rather than the result of its constituent parts. In other words, instead of paying for an appliance (such as a boiler), and then separately for fuel and maintenance, homeowners will be able to pay directly for the end result – thermal comfort.
This would take the form of a monthly payment that would cover everything required to produce heat, which could be sold in comfort hours, whereby homes are supplied with a particular number of hours at a given temperature; or it may be that consumers simply pay a fixed fee to have their home kept to a specific temperature schedule.
The potential benefits
One of the obvious advantages of offering heat as a service is that it would enable new technology, such as electric heat pumps, to be widely adopted fairly quickly. Whichever direction the UK moves in with regards to decarbonisation, the likelihood is that potentially expensive new technology and energy efficiency measures will have to be put into people’s homes.
Rather than having to pay a big upfront cost, heat as a service allows the cost of installing new appliances to be incorporated into monthly payments that also cover fuel and maintenance, facilitating a more rapid transition across the UK to the latest heating technology.
It would also be appealing to the rental sector, with landlords able to forego expensive upfront costs in favour of a long-term approach. It would then be up to the supplier to guarantee tenants are getting the correct temperature, which is why it is important to ensure rigorous regulations are put into place that protect end-users.
One of the major obstacles for offering heat as a service is the viability of electric heating.
Currently, electricity is around four times more expensive than gas, which means even if technology such as heat pumps are three times more efficient, many households would end up with higher bills.
There are also concerns that the electricity grid would be overwhelmed if large numbers of households switched from gas to electric heating. Having heat as a service providers managing equipment operation may offer a potential solution to this. Perhaps more pertinently, there are still questions over who these providers of heat as a service will be.
Roxanne Pieterse, Research Manager at Delta-EE: “Within the heating industry, you have two large sectors that currently feed into the delivery of heat into people’s homes. Appliance manufacturers, who under this new model may be able to provide heating contracts alongside their products, and energy suppliers, who could expand their offering to include installing appliances into properties. Across both of these are also the installers, who will be on the frontline undertaking maintenance, repairs, and continuing to be that touchpoint for customers.
“While a number of important questions must still be addressed, trials such as those being carried out by Energy Systems Catapult are showing how heat as a service could be a genuine solution for the future of UK domestic heat.”
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