This project studied how value can be delivered across a smart energy value chain - in the context of the UK. It built a clear understanding of how smart energy systems can deliver combined consumer value alongside commercial value for market participants - producers, suppliers, distributors. The analysis will help to make the commercial deployment of smart energy systems more likely. This £600,000 project was delivered by Frontier Economics, a leading economic consultancy.
This document was prepared at the time to contribute to ETI internal thinking and planning only it should be read in the context of the final reports of the Building Retrofit Project
This is the final report from WA4 of the project. Key points:
Businesses can be well placed to make it easier for consumers to choose low–carbon interventions.
Policy support is also required to tackle the fact that some low-carbon interventions currently cost more and in some cases provide fewer benefits to consumers, relative to the incumbent options.
Whether subsidies in excess of the carbon price would be justified, depends on the extent to which we believe:
there are wider benefits from low-carbon heating interventions, such as improvements to health and wellbeing;
the costs of heat pumps and solidwall insulation will be driven down by the growth of the UK market (rather than global growth); and
there are no alternative, more cost-effective options across the energy system for meeting carbon targets.
These issues would need to be examined further,before a case could be made.
District heat will also require policy support.
There are 11 annexes to this report, which are available as separate documents.
Annex 1a: Case studies
Annex 1b: Analysis of existing policy
Annex 1c: Energy efficiency and low-carbon heating in Germany
Annex 2a: Qualitative policy analysis
Annex 2b: Cost benefit analysis of policies
Annex 3a: Modelling customer uptake (including attitudes to risk)
Annex 3b: Payback period drivers
Annex 3c: Factors affecting intervention take-up order
Annex 3d: Elements of business model offerings
Annex 3e: Assumptions on current and future levels of insulation