Most of us only think about central heating when it stops working or when the fuel bills arrive. So reports of an impending ban on gas boilers in the UK – and news that green alternatives such as heat pumps can cost over £10,000 – might have been a nasty shock for many.
Most UK households rely on gas boilers, which are more efficient than ever, but still burn fossil fuels. As a result, domestic heating accounts for over a third of greenhouse gas emissions and almost half of energy consumption nationwide.
Tackling climate change means changing how we heat our homes. But this is possible without turning warmth and comfort into unaffordable luxuries. Our research has looked at how business models can break this trade-off between people and the planet. One involves reimagining heating as a service.
When buying a boiler, a customer typically pays someone to buy and install it. They then sign a contract with an energy company to provide the fuel and find another service provider to fix the boiler when it breaks down. Wouldn’t it be simpler to sign one contract with one company that could guarantee a steady supply of heat?
A manufacturer would be responsible for installing the heating system and for ensuring it works. Since the manufacturer would be paid for delivering heat, you wouldn’t be billed for repairs or have to pay steep upfront installation costs – you’d simply have to keep up with flat monthly payments. By aligning the objectives of all parties, “heat as a service” allows the risks and rewards of investing in new technologies like heat pumps to be shared.
Low-carbon technologies such as heat pumps can go a long way to achieving net zero targets. Unlike a boiler, heat pumps move heat from warm to cold spaces rather than generate it, operating in a similar way to air conditioning.
Heat pumps run on electricity and can reduce greenhouse gas emissions if their power comes from low-carbon sources. Waste heat from sewage plants and other facilities can even be redirected to supply home central heating systems with the right infrastructure, such as district heat networks. But most UK homes have gas on tap, and new heating technologies are expensive to install and manage. Much of the required infrastructure needs to be funded.
Over two million households in England suffer from fuel poverty. This means that paying fuel bills would leave them with nothing left over for food and other necessities. More efficient, low-carbon heating can bring those bills down, but when faced with the decision to heat or eat, is it fair to expect people to invest in expensive technology? If these technologies are unaffordable, can we hope for the needed revolution in domestic heating?
The slow adoption of rooftop solar panels and electric cars demonstrates what a hard sell these technologies can be for cash-strapped consumers. Technology is not enough. Instead, we need to change the business logic for bringing technology into our homes.
Heat as a service
Digital technology has made it easier for almost everything we use, from music to cars and clothing, to be delivered as a service. Record stores selling albums now compete with online streaming services which offer a vast library of music ready to be played with a monthly subscription. Taxi drivers and car dealers have had to adjust to ride-sharing services and even fast-fashion companies are now threatened by online rental services, which help old clothes find new purpose.
Businesses offer software as a service and even manufacturing as a service, which take away the need for upfront investment and unexpected bills and allow customers to access and pay for what they need with a single fee or subscription. Heat as a service does something similar by cutting out the complexity of installing, maintaining and fuelling a boiler or heat pump.
In the winter of 2017, over 100 UK homes were offered a heat plan, which guaranteed an indoor temperature for an arranged monthly fee. Customers often struggle to keep track of how much they spend on heating, so the plan offered some peace of mind. The trial involved collaboration between local authorities, an energy company and a boiler manufacturer, plus digital tool providers that helped monitor and control the temperature. Most participants found they were more comfortable and were more likely to consider low-carbon heating on its own, and particularly as part of an arrangement like heat as a service.
Paying for heating technologies that are kinder to the planet is likely to be too expensive for lots of people. Relying on households to make these preparations on their own would also be disastrous for decarbonisation. A recent report by the International Energy Agency forecasted that less than 5% of the total emissions reductions needed to reach net zero by 2050 can be expected to come from such behaviour changes among the general public. Rather than expecting households to buy heat pumps, states and energy utilities should offer them low-carbon heating as a service.