||This project studied how value can be delivered across a smart energy value chain - in the context of the UK. It built a clear understanding of how smart energy systems can deliver combined consumer value alongside commercial value for market participants - producers, suppliers, distributors. The analysis will help to make the commercial deployment of smart energy systems more likely. This £600,000 project was delivered by Frontier Economics, a leading economic consultancy.
The final report has 11 annexes. This is Annex 3a: Modelling customer uptake (including attitudes to risk)
In our main report, we have considered how the interactions between the features of the market or low carbon heat; the way consumers behave in relation to the heating market and the characteristics of the interventions themselves drive barriers to uptake of low-carbon heating interventions. We now show how the “rational agent” modelling used within BMET fits within this framework, and examine whether there is scope for BMET to incorporate a broader set of consumer behaviours. This annex is structured as follows.
This document was prepared at the time to contribute to ETI internal thinking and planning only.
- A brief summary of the framework for customer uptake used within the main report
- How customer attitudes to risk can be incorporated into this framework.
- How customer uptake (both of interventions and of business models which can package up interventions) is modelled within BMET.
- Implications for quantitative customer uptake modelling
- The “rational agent” approach to modelling adopted by BMET can provide important insights into the long-run potential for interventions, and how business models may be able to overcome specific barriers that can already be quantified (for example, credit constraints).
- While theoretical predictive models of consumer take-up do exist, it would not be possible to produce a quantitative model that attempts to forecast all relevant aspects of uptake. However, BMET does provide a framework for thinking about uptake. It could help design questions and inform the design of trials to investigate how consumers make these types of decisions within the energy sector.