Project Summary
Decarbonising heat in homes is one of the hard problems of Net Zero, and all customers must have access to credible options to decarbonise which are fair and affordable. MoBs, ranging from social housing and blocks of flats to Victorian terraces, are one of the hard-to-reach sectors.
The most common solution currently is the use of electric boilers or heat pumps, which for private/rental properties are marketed directly to the owner for installation in single residences, when a whole-building solution could have a lower energy demand per household and therefore accelerate connections and reduce costs for the energy system and consumer.
This project, therefore, targets Challenge 4: Accelerating the decarbonisation of major energy demands by (a) developing approaches to integrate heat solutions for MoBs to reduce network impact, delays and disruption; and (b) enabling the use of solutions that improve network efficiencies for heat decarbonisation pathways. The proposal also supports Challenge 1 by enabling the decarbonisation of heat for consumers which may have reduced opportunities for decarbonisation.
The energy network innovation involved in this proposal includes the design of novel network incentives, connection products, and/or services, that favour the uptake of whole-building solutions. The key outcomes of the project will be to ensure network constraints are less likely to prohibit residents of MoBs from uptake of heat solutions and to enable a reduced price point for customers in MoBs. These two factors should ensure that fewer customers are excluded from participating in a competitive market for heat solutions in the near-term.
The Discovery Phase will be delivered through the collaboration of the following partners:
- UK Power Networks: as the DNO providing project oversight and key input to the current upgrades process, avoided network costs and service/incentive design;
- DG Cities and RB Greenwich: as the local government representatives providing insight from prior projects into MoB archetypes and applicable heat solutions, customer segments, stakeholders, and route to market challenges;
- Passiv UK: as a technical consultant to provide input regarding the breadth of whole-building solutions in the market; and
- Baringa: as the project design and delivery lead utilising their commercial and market expertise.
If successful, this project will deliver value to:
- End consumers: ensuring fairness and progress in heat decarbonisation;
- Building operators: identifying a clear route to decarbonise their building heat; and
- DNOs (and their customers): minimise the number of connection requests and ensure that strategic solutions with lower network impact are selected
Innovation Justification
The common solution for decarbonising heat in homes, heat pumps, is marketed directly to the consumer for installation in single residences. In MoBs this often results in the installation of multiple solutions, which can lead to a constraint in the external or internal building network, impeding further customers' installations. Delays are often experienced due to unclear roles and responsibilities for upgrading the internal building networks.
The accountabilities and route to market for retrofitting MoBs are also complex, with multiple ownership structures and responsible entities (e.g. owner occupied, private rental, housing associations, managing agencies, etc.) and a need to coordinate buying decisions with multiple customers at the same time. In many customer/building scenarios it's not clear who should be buying these solutions, and who is incentivised to try to sell them in favour of heat pumps.
In addition, in the event of gas outages in multi-occupancy buildings, GDNs are often unable to repair gas solutions due to the outdated nature of the buildings. This has led to customers being off supply, fines, and a requirement for mitigation funds for GDNs (a further incentive for proactive retrofits).
BEIS' Heat and Buildings Strategy and UK Power Networks' Right to Heat project have developed insight into the customer landscape and buildings archetypes to be addressed through the roll-out of heat technologies. This project aims to build on this body of work by generating further insight regarding how MoB customers may be left behind by the status quo, the range of solutions that could address these segments, and the potential savings these solutions could deliver to all parties.
This is complementary to our accompanying Watt Heat SIF project proposal, which will generate insight into how solution adoption can be accelerated in smaller buildings.
The accelerated roll-out of MoB heat decarbonisation solutions will contribute towards Net Zero targets, as well as lower costs to the energy system and consumers. It will also increase the fairness of the roll-out of heat solutions to consumers who could otherwise be left behind.
This customer/building solution encompasses technological and commercial complexities that make the commercial returns of such projects risky for private investors. We, as the DNO, are unable to commit our allowances to this project given future cost savings are unproven. A demonstration of the solutions and business models would enable all parties to pursue such solutions in BAU and would exceed the size of an NIA demonstration project.
Project Benefits
Our expectations of the benefits from increased flexibility from heat rest on an assumption that the energy market will return to a pre-crisis mode, in which consumers are exposed to variable energy prices depending on the time of use of demand.
Financial -- Future reduction in the cost of operating the network
The benefits can be tracked using the following KPIs:
- (K1) -- Average avoided cost to the DNO of whole building solutions compared to multiple single residence solutions
Financial - cost savings per annum on energy bills for consumers
There are 1.3 million purpose-built flats in London, and the running costs of whole-building heat solutions can be 40% less than isolated air source heat pumps -- driving the following benefits:
- (K2) -- Average cost of whole building heat solution installation and running costs per customer compared to multiple single residence solutions
- (K3) -- The number of whole-building solutions adopted over time
Environmental - carbon reduction -- indirect CO2 savings per annum against a business-as-usual counterfactual
The benefits can be tracked using the following KPIs:
- (K4) -- Uptake of heat solutions (number of households) in UK Power Networks' areas compared to DFES assumptions
- (K5) -- The number of whole-building solutions adopted over time
New to market -- products, processes, and services
These benefits can be tracked through the:
- (K6) -- Number of DNO services, connections products, and incentives available for whole-building solutions
- (K7) -- Installer/developer satisfaction with UK Power Networks' connections services for heat solutions
- (K8) -- Number of mainstream providers and propositions available for whole-building solutions
We will identify and evidence high-level assumptions for KPI 1 and 2 and forecast 3 - 6 during the Discovery Phase; validate these in more detail through Alpha Phase; and demonstrate them in Beta Phase. KPI 7 and 8 will be tracked over time post-Beta Phase.
