Renewable heat is a major challenge for countries in Northern climates, a thornier issue than clean electricity. Where power is generated by the energy companies and there’s no change to what comes into your home, heat is generated where it is needed. That means home-owners need to make the changes themselves, and that’s not going to be popular. 85% of homes in Britain have gas boilers, and that is an awful lot of people who need to be somehow persuaded to make substantial and disruptive changes to their homes.
One possible approach is ‘heat as a service’, and it is being tested in Bristol at the moment. As circular economy advocates have noted, a lot of products are a means to an end, and in many cases you could just sell the end itself. People don’t want a drill, they want a hole in the wall. They don’t want a washing machine, they want clean clothes. Offer the same ultimate result as a service, and you can open up a variety of alternative business models, including more sustainable ones.
Heat as a service would sell people a heat plan for their home, a fixed price for a set number of hours of warmth. The product would be the warmth, not the units of gas or electricity to power your heating appliances.
The advantage for the customer is that they get a convenient and flexible way to control their heating – all done through an app and controllable room by room, by the hour. If companies can show that heat as a service is an improvement on what people already have, they could prove popular.
The environmental benefit is that by selling warmth rather than energy, there is now a commercial incentive for the company to provide that heat as efficiently as possible. The more efficient people’s homes and heating technology, the wider the potential profit margin.
It also breaks open the energy market in new ways. Rather than everybody competing to sell customers electricity and gas, they could offer heat plans based around heat pumps, insulation or heating controls – or things that we haven’t thought of yet. If a company has a brilliant low carbon heat solution, they could take it to market as a service rather than trying to persuade homeowners or housebuilders to try it.
A recent pilot project of heat as a service found that while 33% of the general population would consider a low carbon replacement to their gas boiler, 58% would after being part of the trial. If the heat plan provider could guarantee the same level of comfort at a reasonable price, that rose to 85%. So heat as a service may be a useful business model for helping people to imagine their home without a gas boiler.