Project Summary
RetroMeter addresses SIF Round 2 Challenge 4: “Accelerating Decarbonisation of Major Energy Demands: Improving energy efficiency at all levels in the system”. It will implement P4P financing models based on metered savings calculations, which use smart meter energy consumption data and independent parameters such as external temperature data to construct reliable counterfactuals for energy consumption in buildings.
The innovative validation of achieved energy savings will encourage homeowners, landlords and local authorities to deploy retrofit energy efficiency measures to reduce energy consumption and provide potential additional flexible services, allowing DNOs to defer costly network reinforcement.
The Discovery Phase will be led by ENWL, and principally delivered by ESC, EPL, Carbon Co-op, supported by Manchester City Council.
In Discovery Phase, EPL will document the finance model options to be developed in the Alpha Phase, drawing on their experience from drafting the Green Finance Institute’s white paper for metered savings in the UK. ESC will draw on their expertise in smart meter data access/ governance and M&V baselining methods development gained from a previous metered savings research project (with EPL) during 2021/22, to make recommendations for suitable methods and datasets for development in Alpha Phase. Carbon Co-op will ensure that any financing models are deliverable by providing their extensive expertise in integrating retrofit delivery with energy technologies, through their dedicated retrofit team, and experience developing metered savings methods through their OpenEnEffS project. Each delivery partner will also draw on existing links to organisations piloting these finance models and methods internationally, including Recurve, Inc., NYSERDA, EnergyRM, and SENSEI.
The Discovery Phase project will be delivered through 3 key activities:
1. Develop a list of available and proposed UK energy consumption datasets, with access plans for each. (ESC lead)
2. Assess output parameters and current state of M&V methods and propose two or three methods for development in Alpha Phase. (ESC lead)
3. Identify barriers to P4P energy efficiency models; develop a least-cost quantitative model to value the benefits to householders, network users and DNOs; and propose and refine three delivery model options for development in Alpha Phase (ENW lead).
Beyond Discovery Phase, RetroMeter aims to build on existing metered savings and Energy Services Company (ESCo) design expertise from the Project Partners. It will implement the first metered savings-financed retrofit programme in the UK, emulating programmes already in existence in the US and solving for the first-tier problems of UK residential retrofit and grid optimisation.
Innovation Justification
Successive residential retrofit programmes in GB, such as the Green Deal or ECO, have struggled to incentivise mass uptake to address both the climate emergency and soaring energy bills. A principal barrier to these programmes has been the validation of achieved energy savings, as they rely on an outdated savings calculation methodology known as deeming. Deemed savings approaches ascribe a per-product savings figure before installation, which has been shown to systematically overestimate savings – handing windfalls to generators and preventing the efficient operation of a functioning retrofit market.
MES methods use comparatively low-cost statistical and machine learning principles to dynamically baseline energy consumption and reliably calculate post-retrofit savings. These methods hold great potential to unlock new sources of retrofit financing in the UK. Initially, measuring and valuing retrofit savings will help DNOs to make informed decisions regarding investment in either flexible services from energy efficiency or network reinforcement. Beyond this use case, these methods could unlock significant amounts of private financing for retrofit via energy performance contracting/ metered energy services agreements. This project will be the first of its kind to trial MES methods in a live area-based retrofit in the UK, answering calls from industry (GFI, 2021) and BEIS (call for evidence, 2019), in addition to a call for novel financing methods in the UK Heat and Buildings Strategy (2021).
Two major UK projects have investigated MES for retrofit financing: GFI (2021) and ESC/EPL (2022). GFI called for further work to develop an industry-accepted MES protocol to support confidence to invest in energy efficiency; ESC/EPL recognised some methods as fit for purpose with data aggregated across several household retrofits. RetroMeter seeks to a) inform a future MES protocol; and b) trial methods, including those identified in the ESC/EPL report, in a live area-based retrofit to demonstrate that such methods can be used to support investment in the manner described above.
Carbon emissions from residential buildings comprised 19.9% of the UK total in 2021; meanwhile domestic energy bill expenditure could reach 8.1% of GDP in 2022. This proposal – to pilot a system of cost-effective investment in residential energy efficiency – could ultimately save up to 25% of residential emissions, and a similar amount on bills (Rosenow, 2021).
SIF ideally suits this project, with its multi-year, multi-phase approach; opportunities for consortium partnerships; and significant capital grant opportunities. No other UK funding opportunities are available to support work of this scale.
Project Benefits
Using RetroMeter would widen access for all consumers to the multiple benefits of energy efficiency improvements in the short term, including energy bill reductions, whilst spreading the considerable costs. One recent study found cost-effective energy efficiency procurement could save consumers £390pa on average, which is particularly pertinent now, with the squeeze on disposable income and energy price rises. There is also potential for consumers to participate in flexible services at individual building/ appliance levels – expanding Demand Side Response participation and enabling every householder to sell Energy Efficiency flexible services.
Reduced energy consumption afforded by the increased uptake of energy efficiency retrofit will reduce overall peak demand, leading to deferment of costly network reinforcement further reducing consumer bills. Additionally, the option of procuring flexible services will offer a cost-effective solution for network operation.
While RetroMeter focuses on the residential sector, given its urgent requirement for novel financing solutions for retrofit, metered savings approaches are equally applicable to commercial/ industrial network users. Benefits from demonstrating such approaches will translate to, and support, investment in energy efficiency in all built environment network users.
This expansion of metered savings approaches will enable replication of existing business models at larger scales. This will allow end users, who would otherwise be excluded, to participate in demand reduction, driving additional carbon and cost savings.
The reduced energy consumption will deliver a direct carbon saving, as overall energy generated will be reduced. Additionally, enabling consumers to better manage their energy will accelerate the uptake of low carbon technologies and behaviour change, and will highlight events that lead to wasted energy (e.g. changes to temperature setpoint).
Indirect carbon savings are achieved through deferment of network reinforcement and the associated embedded emissions.
RetroMeter will create new revenue streams. For example, metered energy data and analysis outputs, such as savings benchmarks, can be sold to other energy industry actors. The aggregated grid-service impacts and carbon savings could be validated and sold through flexibility and emissions trading markets. Additionally, the final methodology could be “white labelled” and sold to independent actors in the retrofit sector to help measure the performance and savings outcomes of their projects.
RetroMeter will give innovators and funders a proven methodology to demonstrate energy-saving performance, which would accelerate innovation in product offerings and therefore accelerate domestic decarbonisation in GB.
Metrics to quantify these benefits will predominantly be avoided reinforcement costs which are calculated via conventional ENWL CBA tools.
