Value Management - Overcoming barriers to smarter heat solutions in UK homes - final report

Abstract:

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.

This document was prepared at the time to contribute to ETI internal thinking and planning only it should be read in the context of the final reports of the Building Retrofit Project

This is the final report from WA4 of the project. Key points:

• Businesses can be well placed to make it easier for consumers to choose low–carbon interventions.
• Policy support is also required to tackle the fact that some low-carbon interventions currently cost more and in some cases provide fewer benefits to consumers, relative to the incumbent options.
• Whether subsidies in excess of the carbon price would be justified, depends on the extent to which we believe:
• there are wider benefits from low-carbon heating interventions, such as improvements to health and wellbeing;
  • the costs of heat pumps and solidwall insulation will be driven down by the growth of the UK market (rather than global growth); and
  • there are no alternative, more cost-effective options across the energy system for meeting carbon targets.
  These issues would need to be examined further,before a case could be made.
• District heat will also require policy support.

• Annex 1a: Case studies
• Annex 1b: Analysis of existing policy
• Annex 1c: Energy efficiency and low-carbon heating in Germany
• Annex 2a: Qualitative policy analysis
• Annex 2b: Cost benefit analysis of policies
• Annex 3a: Modelling customer uptake (including attitudes to risk)
• Annex 3b: Payback period drivers
• Annex 3c: Factors affecting intervention take-up order
• Annex 3d: Elements of business model offerings
• Annex 3e: Assumptions on current and future levels of insulation

Publication Year:

2015

Publisher:

ETI

DOI:

https://doi.org/10.5286/UKERC.EDC.000507

Author(s):

Frontier Economics