Earth Notes: EGC: HaaS Lite WP1 D17 Financial Research

Updated 2023-07-30.
EGC Work Package 1: Deliverable 17: Financial Research, Public Report.

D17: Financial Research, Public Report

Deliverable 17, part of Work Package 1.

Summary and introduction

Summary of current state of play of existing shared-savings and ESCo strategies most relevant to our prime focus on private rental households.

We have spoken to fintech firms and observed what has and has not worked in analogous situations, such as non-domestic (eg) office environments.

We have also drawn on some of our previous work to find out what may make savings persist, lower risks of participants, and some potential novel means of bringing the cashflows from return-hungry sources.

Partial Abstract from HaaS WP1 D12 Technical Architecture Report

The current heating market offers little incentive for fuel providers to reduce carbon emissions. Additionally, end-users face significant barriers to improving their heating efficiency.

By switching to selling heating instead of fuel, fuel usage becomes a cost and utilities are encouraged to provide the heating efficiency technologies that the users cannot afford. The model has been proven to work in other markets such as lighting, with Philips' flagship "Pay-per-Lux" scheme. OpenTRV hopes to leverage the improved and in-home data available from the smart meter rollout and the IoT boom to provide a way of accurately calculating and sharing savings between the utility and the end-user. [PayPerLux]

Schemes for Futher Investigation

Our current intention is to investigate up to three variants from the technical, customer and financial point of view, though this may change as the project progresses:

  • pre-HaaS shared-savings
  • two HaaS with different regulatory positions

Example Savings/XaaS Schemes

There are various existing interesting "as a Service" business models running, some of which are in, or could be nudged sideways into, the domestic arena.

Some of these help resolve CapEx/OpEx split incentive issues, or swap/use an expensive asset for a cash flow stream, such as a landlord paying for heating improvements but a tenant reaping the rewards.

For example:

  • commercial: replace your boiler with something efficient, keep paying old energy costs, pay off CapEx out of now-reduced OpEx costs
  • Air Conditioning as a Service in commercial buildings [ACaaS]
  • Philips lighting as a service [PayPerLux]
  • Time-of-Use (ToU) tariffs can be seen as sharing costs between generators, networks, and consumers
  • EV battery leasing: Battery leasing schemes key to pushing electric vehicles into the mainstream, and why it can be bad: Nissan is ending the battery leasing
  • data storage, eg Google Drive, Dropbox
  • office tools such as word processing with Google Docs, Office 365
  • solar rent-a-roof schemes (roof space as a service?)

An example heat scheme for the UK

To support decoupling: let a utility install something expensive to improve efficiency and cut energy/carbon demand such as insulation or a new boiler and if the household switches supplier (possibly because of a move or a simple supplier switch) the original utility should have a means of recouping the cost (ie passing it on) to the new supplier. The nearest scheme: the Green Deal allowed the debt to be attached to the electricity meter to stay with the property and whoever is occupying it and whatever the supplier/utility.

New Financial Viewpoints and Sources of Finance

There are obvious ways to finance the equipment to implement HaaS Lite, including trade or asset finance.

We want to explore some slightly more unusual avenues such as green YieldCos (with securitisation to adjust tenors for example), and other more agile fintech partners.

Note also that a securitisation view may make it possible to incorporate into a portfolio of energy savings measures devices with a significantly longer payback time such as battery storage, maybe too long to stand alone in such a scheme.

Interestingly, for completely automated long-term technical measures such as battery storage, there may continue to be a substantial carbon saving beyond the financial payback, eg if a customer quits the scheme the device may continue to function effectively for a long time.

Public Findings

Not all of our findings will be public.


  • [ACaaS] Air Conditioning as a Service in commercial buildings.
  • [Aglen2020] Wasted opportunity: using UK waste heat in district heating: If the UK reused waste heat from its buildings and industrial processes, it could be used to supply 14% of the hot water and heating demand in UK homes (space heat/cooling ~18% of UK 2016 emissions, 2017 UK domestic heat demand ~360TWh).
  • [Cent17] 2017-08-01: British Gas owner takes £1bn profit hit as legacy assets bite: We're trying to diversify away from pure energy sales to selling things other than energy. And we are the tenth largest insurance company in the UK. We have sold 660,000 Hive [thermostat] hubs which is becoming a material business and one we are planning to grow in Italy. We're selling to people who don't even buy energy from us, [Iain Conn, Centrica's chief executive] said.
  • [AXA2017] Landlords up their game on energy, but one in twenty rentals still pose hazard: tenants are over-paying on energy by an estimated £13 million every month. Energy is certainly top of mind for UK tenants, as cold and damp were named the biggest bugbears by 43 per cent of those surveyed. A quarter said they felt they were paying excess bills due to the energy inefficiency of their homes. ... The average monthly bill in a Band A rental is £61 per month, increasing to £76 in Band E, and then £112 in Bands F to G.
  • [EGCIntro] Energy Game Changer: HaaS Lite Introduction.
  • [BEISEE2015] Domestic energy consumption by energy efficiency and environmental impact, 2015.
  • [BNEF2017st] Utilities Subsidize Google and Amazon to Enter the Home: In 2016, one and a half million smart thermostats were sold in Europe.
  • [BOE2018] Transition in thinking: The impact of climate change on the UK banking sector: Mortgages on energy-efficient properties (with EPC ratings of A, B or C) are 18.4% less likely to be in arrears than mortgages on energy-inefficient properties (with EPC ratings E, F or G).
  • [BRELCI] BRE SME Low Carbon Innovation Workshop 2 (2017-09).
  • [ENW2017] 2017-08-14 (Survey of 1,539 consumers by Electricity North West (ENW)) Main barrier to domestic energy efficiency 'is cost' More than half (56%) of consumers that said they were unable to adequately heat their home blamed high costs and 30% said they would be encouraged to install energy saving measures if they received funding to do so. Around three-quarters (76%) said they would be more likely to buy from an energy company using a pricing system to ensure people who use less energy are not charged more. However, 39% of consumers stated nothing was currently preventing them from going green, which ENW suggests displays a level of indifference or unawareness of the financial and environmental gains associated with increased efficiency.
  • [ErE2018] 2018-04-17 Decarbonizing Britain: why are we so cool on heat?: Heating makes up 32 per cent of our total emissions, far ahead of power (21 per cent) and transport (24 per cent).
  • [LENDERS] EPCs and the LENDERS project: The LENDERS green mortgages project has developed a Fuel Bill Cost Prediction Tool on its website to help householders predict fuel bills and to show how they are likely to be affected by the energy performance of the home, as indicated by the property's Energy Performance Certificate (EPC).
  • [LlB2017] New build homes save owners £629 a year on energy bills According to Energy Performance Certificate data, more than eight out of 10 new builds have the top A or B rating for energy efficiency compared to just 2.2 per cent of existing properties. ... This means that new build home owners will spend on average £443.30 a year (£276 heating / £108 hot water / £60 lighting), well under half of the £1,072 the owner of an older home can expect to spend – saving, on average, £52 a month, or £629 a year.
  • [LO3] LO3 Energy: new ways of end users interacting with energy supply.
  • [MFGEPC] 2018-02-14 EPCs and home affordability: ... the theoretical benefits of including the EPC in the mortgage affordability process were not born out in reality. As the LENDERS report makes clear, there are three major stumbling blocks: (1) Only a minority of homebuyers borrow to their maximum affordability so a higher or lower EPC score will have little impact financially. (2) Given the disparity between different lenders' assumptions of overall expenditure costs, homebuyers would currently see more variation in maximum offer from this than energy performance. (3) The mortgage industry does not have a uniform process of assessing affordability, with some lenders not having an Agreement in Principle (AIP) stage. ... There is also the issue that an EPC, no matter how good the underlying data, can only ever give an indication of the potential energy performance of a home and not how individuals actually use that property on a day to day basis. ... incorporating the EPC in the mortgage process would not have the behavioural nudge the Government is looking for to help reduce emissions from our homes.
  • [OTETV] OpenTRV ETV.
  • [OTWP2016] White Paper: OpenTRV North London Homes Trial to 2016--2017.
  • [PayPerLux] This is the future for business Philips is already selling light as a service — where customers pay for the performance of lumens, measures of light output, rather than the physical hardware of a light bulb or light fitting. The company's 'pay per lux' solution is generating significant energy savings for customers such as the National Union of Students (NUS) and the Washington Metropolitan Area Transit Authority (WMATA).
  • [PHP2017] How to stimulate deep retrofit.
  • [PWPR] 2017-07-14 Number of rented homes in UK private rented sector has more than doubled since 1990s ... The latest English Housing Survey, published annually by the Department of Communities and Local Government (DCLG), also shows that more younger people are renting as are more families. ... The proportion of those aged 25 to 34 who lived in the private rented sector increased from 24% in 2005/2006 to 46% in 2015/2016. ... While the energy efficiency and quality of the private rented sector has improved, standards lag behind the social rented sector ...
  • [SRW2017] S Rodgers Swansea Wales Why improving housing leads to fewer hospital admissions: We linked monthly hospital admission data – from an anonymised databank – to information provided by the council on the month each home received improvements. ... We found that improvements to electrical systems – including fitting extractor fans in kitchens and bathrooms – contributed to the largest reduction (57 per cent) in respiratory-related admissions. This leads us to believe the removal of damp from homes using extractor fans was probably an important mechanism behind many of the reduced admissions. And that damp removal improvements are important as part of a whole home intervention.
  • [TEDCtech] A Note On TEDDINET Results Conference 2017.
  • [UD2018] Energy efficiency can save the world — if we can figure out how to pay for it.
  • [UKdomDR] Electricity shake-up could save consumers 'up to £40bn': some domestic heating loads could be driven by wind abundance spikes in UK for example (demand response, storage, etc).