The Department for Energy Security & Net Zero has awarded funding to an E.ON-led consortium to pilot consumer-friendly green finance products, Energy Systems Catapult announced on 19 May 20231. The project will be delivered by E.ON, Energy Systems Catapult and Heatio, and was supported through DESNZ's Net Zero Innovation Portfolio as part of its Green Home Finance Accelerator1. The accelerator was established to provide innovation funding for the development of green finance products which can enable uptake of home energy efficiency and low carbon heating measures1.
The consortium is developing two products. Heat as a Service (HaaS) would remove the upfront costs associated with installing, operating and repairing low carbon heating, with initial costs covered by a financial provider and paid back by the consumer over an agreed long-term period1. Its development and piloting will focus on the removal of upfront costs associated with the purchase and installation of a heat pump, alongside a wraparound care package covering ongoing optimisation, servicing, maintenance and breakdown support, and a series of simple "heat packages"1. Energy as a Service (EaaS) will examine how pairing power purchasing agreements and innovative grid services can remove the upfront costs faced by consumers considering a heat pump, solar PV or battery storage, while lowering the household's energy costs by integrating preferential energy tariffs1. The project aims to better understand how both models could open the market to those on lower incomes and with no available capital1.
Michael Lewis, E.ON UK Chief Executive, said:
"Energy efficiency makes people's homes more comfortable, it cuts energy costs, grows the economy, reduces our reliance on imported fossil fuels and it contributes to net-zero on a sustainable basis. When it comes to more efficient heating the task we've been set is a twenty-fold increase in heat pump installations to 600,000 a year by 2028."
A separate consortium led by digital mortgage provider Perenna, also including Energy Systems Catapult and Heatio, received funding under the same accelerator, announced on 22 May 20232. That project is testing consumer appetite for a 20 to 30 year fixed rate green mortgage that rewards homeowners for retrofitting, with a discount on the mortgage rate across the lifetime of the agreement for those who successfully retrofit2. Perenna intends to bring green mortgages to market funded through the issuance of green covered bonds2. Energy Systems Catapult states that 23% of the UK's carbon emissions stem from housing alone2. The two announcements describe the scheme slightly differently, as the Green Home Finance Accelerator1 and the Green Homes Finance Accelerator2.
Why it matters for households
Both models are attempts to move the cost of a heat pump, solar panels or a battery away from a single upfront payment and into a long-term contract, which is the point at which many households currently stop. The accelerator funding sits within UK innovation funding for home energy technology, and the products are intended to work alongside the existing landscape of grants and household energy independence. For a household, the practical questions are what the contract period is, what happens if the equipment underperforms, and who owns the kit at the end; the announcements describe the intent to spread costs and validate savings, but not the contract terms. Heatio's Home Energy Management System is intended to validate energy reductions and connect renewable technologies for demand flexibility services2. Energy Systems Catapult's page for the E.ON project records its status only as "Project ongoing"3.
What happens next
No dates for pilot deployment, participant numbers or product launch have been reported. The consortium says the funding gives it the opportunity to innovate a green finance market model that can be replicated nationally beyond the lifetime of the programme1.
Sources3 cited
- E.ON leads consortium to pilot heat and energy as a service - Energy Systems Catapult, es.catapult.org.uk
- Green mortgages with discounted rates trialled to tackle barriers to housing retrofit - Energy Systems Catapult, es.catapult.org.uk
- E.ON (Green Home Finance Accelerator) | Energy Systems Catapult, es.catapult.org.uk