The problem

A study about efficient heating by Ipsos Mori and the Energy Saving Trust showed that 30% of heating system replacements occur when an old system breaks down. An additional 28% of systems are replaced when they’re on their last legs and are either likely to break down soon or to require frequent repairs. These replacements are called distress purchases, because they’re made at a time when a householder is in a moment of distress due to imminent or actual loss of heating and hot water.

The end of life of an old heating system might seem like the perfect moment to transition away from fossil fuels, but in practice this is not so. The system design and installation of a low-carbon heating system such as a heat pump might take a couple of weeks. Moreover, the lack of qualified heat pump installers means they are booked up for months. Current supply chain issues mean lead times for equipment can also be long. By comparison, slotting in a replacement gas boiler might take just three days.

For a householder without heating and hot water, transitioning to low-carbon heating is all but impossible at times of distress. They are almost certain to opt for the ease of a like-for-like replacement, sinking capital into their purchase and locking themselves into fossil fuels for another decade or so. This indicates a clear need for innovation to help householders avoid distress purchases that prevent them from transitioning to low-carbon heating when the opportunity arises.

The speed test

We began by honing our idea. We decided to investigate the possibility of a temporary heating system that could take the place of a failed gas boiler while the householder prepared to transition to a low-carbon alternative: interim boilers. These would be gas or electric boilers installed in the place of the broken system for a period while the home was readied for a heat pump. That way, the new low-carbon system could be designed and installed without urgency at a time convenient to the householder.

An interim boiler from a library of new and reused boilers would be installed as speedily as a permanent one and the householder would pay a monthly fee to rent it. For the householder, this would offer the opportunity to change their mind and stick with fossil fuels if they wanted to. It would also buy time, letting the heat pump market mature with the potential for price decreases or improved installation practices over that time period. For the installer, there would be benefits too. Rather than estimating heat loss with a clunky survey, the time between boiler rental and heat pump installation would allow for sensors to be installed around the property to gain accurate readings of heat demand enabling improved system design.

We then set about building a business case. We quickly wrote off electric boilers because of the high running costs (for each kw of electricity used, heat pumps deliver three to four times more useable heat than direct electric heating like electric radiators or boilers). We spoke to gas heating engineers to understand the costs and barriers of temporary boiler installation. Assuming that boilers in a library remain in service for about 10 years (moving between several different homes in this time) then at around £1,500 upfront, the boiler itself generates a monthly cost to consumers of about £12.50. Its installation is also around £1,500 but this is per household. Passing this cost on to householders would cost £125 per month were the boiler in place for a year, or less if it were in place longer. People are used to paying monthly fees for their boilers, for instance boiler insurance, but the fees of this service would be considerably higher.

However, when we spoke to a panel of four consumers currently interested in transitioning to low carbon heating, the view was positive. As one stated, “without this, I wouldn’t change to a heat pump if my boiler failed”. A trustworthy organisation delivering the scheme was vital to consumers. Interestingly, though the scheme would require reconditioned gas boilers to pass between several households, consumers felt confident that these would be sufficiently tested and safe. There may be some regulatory issues around gas boiler reinstallation that would need to be overcome.

Conclusions and next steps

We ended the crash testing process feeling positive about the scheme’s potential. There is a latent demand for this kind of service, though accessing consumers could be challenging given existing gas engineers tend to be the first point of call for householders when their boiler breaks. A lean startup model could be one way to start the business, using existing rental companies, engineers and manufacturers, although the incentive to do this is less obvious.

However, the forthcoming market-based mechanism for accelerating heat pump adoption could act as an incentive for manufacturers. Were the UK Government to permit the awarding of credits for deferred heat pump installations as well as immediate ones, we could see advantages for manufacturers engaging with such a scheme and indeed covering some of its costs.

Outstanding questions still remain as to the form of the business model and the way to communicate the idea to consumers, particularly in making the offer attractive, trustworthy and uncomplicated. There is also the potential to pivot the idea: a low-fi model of cheap oil-filled heaters and electric water heating might be quicker and easier to supply, and incur lower running costs than the required monthly fee for a boiler rental. Crucially, though, the business model is only effective if a heat pump is seen as desirable by consumers.