Project Summary
Hy-Fair aims to address the challenges faced by Consumers in Vulnerable Situations (CIVS) and Small Businesses during the transition to hydrogen and other low carbon technologies. Through the Hy-Fair Fairer Warmth Hub, we will provide a central environment equipped with specialized tools and tailored guidance to empower community champions, individuals, and small businesses. Hy-Fair's Innovative features will include a streamlined system for CIVS to access financial support, guidance and simplified access to resources, data analytics for precise planning, and community engagement tools. By fostering place-based approaches, Hy-Fair will encourage collaboration and help communities deliver a fair energy transition.
Innovation Justification
The Innovation: The Fairer Warmth Hub is a groundbreaking platform that will catalyse a community-led, place-based, fair energy transition. Specialised tools will empower community champions and provide tailored guidance for individuals and small businesses. This will support communities through the transition to hydrogen and other sources of clean energy. The software will be supported by a dedicated team and introduces a range of cutting-edge features as set out in theAnnex.
This project addresses the specific challenge theme, is highly innovative, hascustomers and stakeholder centrally involved.
For Individuals and Community Champions:
Fairer Warmth App: Streamlines access to financial support and guides,simplifying the energy transition process for consumers and businesses.
A Training Toolkit for Champions: Train individual champions and organisationsto become advocates for sustainable practices and energy transition advice.
Tailored Information: Customised guidance to different interest groups, includingbusinesses, ensuring targeted support.
For Organisations:
Demographic Analysis Tool: Utilises data analytics to understand unique needs,enabling precise planning for an inclusive transition.
Contact Details for Support Organisations: Centralises contact information forrelevant support networks, fostering collaboration.
Community Engagement and Transition Pathway Tools: Facilitating communityinvolvement, empowering localised decarbonisation strategies.
The Fairer Warmth Hub's innovative features could push the sector forward byproviding tailored guidance, data analytics, simplified access to support, andbetter community engagement.
Challenge Theme:
The project addresses the challenge theme of "Supporting ajust energy transition: Novel and replicable approaches for better identification,support, and inclusion of vulnerable and disadvantaged consumers." Our projectdirectly aligns with this theme. It will address the specific needs of vulnerable anddisadvantaged consumers throughout the energy transition process. Through theFairer Warmth Hub, we provide tailored information, financial support access,guides, and community engagement tools to ensure these consumer groups arenot excluded.
Learning:
Previous innovation projects, including the ESC and Wales and WestUtilities project focused on mitigating disruption caused by a hydrogen transition,have provided valuable insights and lessons. We have conducted extensiveengagement with stakeholders, including vulnerable consumers, smallbusinesses, and representative groups, to understand their concerns andincorporate their feedback into our proposed solution. The insights gained fromthese engagements have guided our plan for the Alpha Phase.
Working in the Open:
We have actively worked in the open with stakeholdersthroughout the Discovery process. By engaging with vulnerable consumersthrough the Consumer Impact Panel and speaking with many more businesses and stakeholders, we have incorporated diverse perspectives into our project. Thiscollaborative approach has ensured that our proposed solution is grounded in theneeds and challenges identified by the stakeholders themselves.
Technology Readiness Levels (TRL):
Throughout the project, we will developvarious tools with different TRLs. The Fairer Warmth App, which will be adaptedfrom its current use, has a higher TRL, while other tools will be developed fromscratch, starting at lower TRLs. This phased approach allows us to leverageexisting technologies while pushing the boundaries of innovation in areas wherenew solutions are required. We also aim to achieve high levels of commercialreadiness, addressing barriers to BaU implementation.
SIF Funding:
SIF funding is essential for the success of our project. This centralvirtual environment, along with the supporting operating model, will providecommunities and organisations with the necessary tools to support all consumersfairly through the energy transition. This ambitious and complex undertaking goesbeyond the remit of network companies alone and requires a whole-systemapproach involving wider stakeholders. The SIF provides an ideal funding source,allowing us to realise this innovative vision and raise the profile of the project toensure its success.
Impacts and Benefits
The Fairer Warmth Hub addresses the specific challenges faced by CIVS andsmall businesses, offering a range of benefits including financial savings,environmental impact, introduction of innovative solutions, and substantial socialreturns on investment. The Alpha phase will provide an opportunity to furtherquantify and refine these benefits, demonstrating the significant impact the Hy-Fairproject can make in the field of decarbonisation.
The Hy-Fair Fairer Warmth Hub offers specific benefits that address the distinctchallenges faced by CIVS and small businesses, providing valuable contributionsin the following areas:
1. Financial Benefits:
The current BaU approach to the energy transition often encounters delays andplanning oversights due to poor engagement and messaging, resulting in potentialcost escalations. The Hy-Fair project mitigates this risk by improving communityengagement through tailored materials for CIVS and small businesses. While theexact financial impact is currently unquantified, data collection during the Alphaphase will allow for the assessment of the financial benefit in terms of reducedcosts associated with improved engagement providing metrics that can informfuture industry investment in engagement.
2. Financial Savings for Consumers:
Hydrogen, as a fuel, is more expensive than natural gas and transition costs couldlead to an uneven take up of new technologies. UKERC research shows thatsupport for hydrogen is significantly lower amongst lower income groups (UKERC,2022). Without adequate support, this price disparity and scepticism about take upcould lead to increased levels of fuel poverty and associated societal impacts. TheFairer Warmth Hub aims to address this issue by expanding access to energyefficiency advice and grants. Research has shown that following energy efficiencyadvice typically results in annual savings of up to £270 on energy bills forconsumers (Energy Saving Trust). The Alpha phase will focus on data collection toquantify the increase in uptake of home efficiency measures and the resultingfinancial savings.
3. Environmental Benefits:
By improving the uptake of low carbon measures and reducing resistance throughclear and impartial advice, the Fairer Warmth Hub can help to acceleratedecarbonisation, leading to direct annual carbon dioxide (CO2) savings. While theprecise carbon reduction impact is currently qualified in the Discovery CBA, theAlpha phase will enable the quantification of these environmental benefits.
4. Introduction of New Products, Processes, and Services:
The Fairer Warmth Hub introduces a range of innovative products and servicesthat improve upon existing provisions or introduce entirely new offerings. Theseadditions are detailed in response to Q3 of the funding application, showcasingthe project's commitment to fostering innovation in the energy transition sector.
5. Social Return on Investment: Improving provision for CIVS and the fuel poor bygranting access to advice and financial assistance brings significant socialbenefits to both the recipients and society at large. These are conservativelyestimated at several million per year in savings to the end users. It is important to note that these benefits are based on conservative estimates and do not accountfor the potential impact of the Fairer Warmth Hub on other types of energytransition, such as heat networks. Collaboration with new partners in the Alphaphase will enable a more comprehensive assessment of the system's widerimpact.
Impacts and benefits
By facilitating collaborative working the FWH promotes more efficient investment in network upgrades. Improved stakeholder communication reduces likelihood of transition plans being cancelled due to local objections, derisking network investments.
Key customer benefits of the FWH include reducing customer anxiety, reducing costs of heating through personalised support, increasing uptake of home energy grants and other support, improving the rate of renewable heating installations, and providing physical health benefits for vulnerable individuals.
Households and Small Businesses: Much of the costs of the energy transition will be borne by households and small businesses. Small improvements on the scale of individual households in upfront costs or ongoing energy savings, aggregate to large savings on this scale (e.g. 10% saving for group purchasing of a heat pump or hydrogen-ready boiler for 3% of transitioning households could save households over £30 million per year in 2030s).
Modelling: Detailed modelling of costs and savings utilised a "broad reach scenario"80% of network users) and a "narrow reach scenario" (20% of network users).
In Broad Reach Scenario we calculate whole life net present value of £841M (2024-2035) a ROI of x40. The Narrow Reach Scenario will deliver benefits of £203M over the same period (ROI x14). This demonstrates that modest percentage gains on a wide range of benefits result in enormous financial, social and health benefits that far exceed FWH costs.
Network Benefits: Networks will reduce costs, derisk investments, and drive better customer experiences, - reducing direct costs to consumers and reducing debt (and associated costs of recovery). This will fulfil regulatory requirements around support for vulnerable customers whilst creating holistic networks of partners able to support further collaboration and impact.
Consumer Savings: Research has shown that supported delivery of energy action for consumers typically results in annual savings of up to £270 on energy bills (EST). Customer benefits for combined SMEs and households are calculated to be £688M (broad reach) and £172M narrow reach (2024-35).
Environmental Benefits: 17% of UK carbon emissions are linked to domestic buildings and improvements to heating systems and fabric efficiency of buildings will support delivery of Net Zero. Project improving uptake of low carbon measures will help to accelerate decarbonisation, leading to direct annual carbon dioxide (CO2) savings.
Social and Health Benefits: BRE research has found that poor quality housing (cold and damp) costs the NHS £1.4bn a year (BRE, 2023). The FWH will reduce customer anxiety and deliver physical health benefits through improved thermal comfort. Using established metrics for QALYs, we calculate that these benefits are worth £57M (broad reach) and £14M (narrow reach) between 2024-35.
ROI: CBA has demonstrated potential for very high returns, even from modest percentage improvements across energy transition costs. Returns on investment (with future discounting) are estimated between 3.9-15.5x considering only financial benefits, 12-46x considering all financial benefits and 12-49x considering all benefits.
