E.ON to lead heat and energy as a service consortium

In a bid to strengthen and enhance the UK’s emerging green finance market, E.ON has partnered with Energy Systems Catapult and Heatio to develop new green finance models, namely heat (HaaS) and Energy as a Service (EaaS).

The consortium aims to innovate the otherwise underdeveloped green finance market models, which they hope to be replicated nationally beyond the lifetime of the programme.

Heat as a Service (HaaS)

According to research by Energy Systems Catapult on the DESNZ-funded Electrification of Heat Demonstration Project, UK consumers are often put off by the upfront capital cost and the perceived lifetime running cost of a low carbon heating solution.

Heat as a Service would remove the upfront costs associated with installing, operating, and repairing low carbon heating solutions. Initial costs would be covered by a financial provider and paid back by the consumer over an agreed long-term period.

The consortium’s development and piloting of HaaS will focus on the removal of upfront costs associated with the purchase and installation of a heat pump. A wraparound care package to include ongoing optimisation, servicing, maintenance and breakdown support, will be developed as part of the HaaS project.

To further enhance the offering available to consumers the consortium will develop a series of simple ’heat packages‘ to make HaaS an attractive offering for customers, helping to encourage their adoption and to act as a replicable model throughout the UK energy market.

Have you read:
New hydrogen-powered data centres as a service offering
Schneider Electric launches grid operations platform as a service on Microsoft Azure

The E.ON-led consortium will also examine how the pairing of Power Purchasing Agreements (PPAs) and grid services can remove the upfront costs faced by consumers when considering a heat pump, solar PV, or battery storage, while simultaneously lowering the household’s energy costs by integrating preferential energy tariffs.

The aim of rolling out both HaaS and EaaS is to spread the cost of low carbon energy and heating solutions over a significant contract period to deliver savings for consumers.

The project aims to better understand how heat and energy as a service models could accelerate the adoption of alternative heat and energy sources by opening the market up to those on lower incomes and with no available capital.

In a press release announcing the project, Michael Lewis, E.ON UK chief executive, said: “Energy efficiency makes people’s homes more comfortable, it cuts energy costs, grows the economy, reduces our reliance on imported fossil fuels and it contributes to net-zero on a sustainable basis.

“When it comes to more efficient heating the task we’ve been set is a twenty-fold increase in heat pump installations to 600,000 a year by 2028. To achieve that we need to inspire significant consumer demand through stronger, simpler and more specific policies: greater guidance to homeowners, longer term access to grants, and new building regulations so all new properties are built to net zero standards.”

Becky Sweeney, business leader for homes, at Energy Systems Catapult, added, “Our work with E.ON and Heatio has the potential to reshape the UK’s approach to green finance. We need to convince consumers that decarbonisation can work for them, rather than being imposed on them. If we don’t get this right, we won’t get their buy-in.

“The rollout and adoption of HaaS and EaaS models can help change this view, by deferring the up-front capital costs associated with low carbon heat and energy solutions – barriers which often convince consumers that decarbonisation is out of reach for them. Innovative services can also help to streamline the process for consumers. This will go a long way in convincing homeowners to make the switch to alternative heat and energy sources.”

The project has been supported by the Department for Energy Security & Net Zero (DESNZ), through its Net Zero Innovation Portfolio (NZIP), as part of the department’s Green Home Finance Accelerator (GHFA).

The GHFA was established to provide innovation funding for the development of green finance products which can enable uptake of home energy efficiency and low carbon heating measures.