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Value Management - Overcoming barriers to smarter heat solutions in UK homes - Annex 3a: Modelling customer uptake (including attitudes to risk)


Citation Frontier Economics Value Management - Overcoming barriers to smarter heat solutions in UK homes - Annex 3a: Modelling customer uptake (including attitudes to risk), ETI, 2015. https://doi.org/10.5286/UKERC.EDC.000537.
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Author(s) Frontier Economics
Project partner(s) Frontier Economics Limited
Publisher ETI
DOI https://doi.org/10.5286/UKERC.EDC.000537
Download SSH_SS1401_8.pdf document type
Associated Project(s) ETI-SS1401: Smart Systems and Heat (SSH) Programme - Value Management and Delivery
Associated Dataset(s) No associated datasets
Abstract 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.

The final report has 11 annexes. This is Annex 3a: Modelling customer uptake (including attitudes to risk)

In our main report, we have considered how the interactions between the features of the market or low carbon heat; the way consumers behave in relation to the heating market and the characteristics of the interventions themselves drive barriers to uptake of low-carbon heating interventions. We now show how the “rational agent” modelling used within BMET fits within this framework, and examine whether there is scope for BMET to incorporate a broader set of consumer behaviours. This annex is structured as follows.
  • A brief summary of the framework for customer uptake used within the main report
  • How customer attitudes to risk can be incorporated into this framework.
  • How customer uptake (both of interventions and of business models which can package up interventions) is modelled within BMET.
  • Implications for quantitative customer uptake modelling
    • The “rational agent” approach to modelling adopted by BMET can provide important insights into the long-run potential for interventions, and how business models may be able to overcome specific barriers that can already be quantified (for example, credit constraints).
    • While theoretical predictive models of consumer take-up do exist, it would not be possible to produce a quantitative model that attempts to forecast all relevant aspects of uptake. However, BMET does provide a framework for thinking about uptake. It could help design questions and inform the design of trials to investigate how consumers make these types of decisions within the energy sector.
This document was prepared at the time to contribute to ETI internal thinking and planning only.