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 3b: Payback period drivers.
The payback period of an intervention refers to the time taken for the ongoing stream of cost-savings to outweigh the initial investment. For long-run optimising models of intervention take-up (like ESME and BMET), the payback period is only of tangential relevance: interventions with a high net present value overtheir lifetime will be taken up, regardless of whether there is a significant delay before these benefits are realised.
However, both customers and business model providers face limits on the length of payback period they are likely to accept. Since many low-carbon interventions are associated with high initial investments and long payback periods, this leads to a barrier to uptake.
Contents of this annex:
Overall, we find that HEMS and cavity wall insulation are the only interventions which are likely to have payback periods within such a window given BMET default assumptions.
This document was prepared at the time to contribute to ETI internal thinking and planning only.
Publication Year:
2015
Publisher:
ETI
Author(s):
Frontier Economics
Energy Categories
Class Name:
Subclass Name:
Category Name:
Language:
English
File Type:
application/pdf
File Size:
789528 B
Rights:
Energy Technologies Institute Open Licence for Materials
Rights Overview:
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Further information:
N/A
Region:
United Kingdom
Related Dataset(s):
List of projects for the ETI Smart Systems and Heat (SSH) Programme
Related Project(s):
Smart Systems and Heat (SSH) Programme - Value Management and Delivery
Related Publications(s):
SSH Stagegate 1 - Review of International Smart Systems and Heat Initiatives - Final Report
Value Management - Characterisation of the Current Energy Value Chain (WA4 D1)
Value Management - Future Business Models: Options and Analysis
Value Management - Overcoming barriers to smarter heat solutions in UK homes - final report