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WP1 Economics, policy and behaviour

The International Energy Agency's submission to the April 2012 Clean Energy Ministerial showed that the UK and other developed nations are unlikely to meet their emissions targets. The need for low carbon heat in the UK has been highlighted in DECC's The Future of Heating: A strategic framework for low carbon heat in the UK which highlights many of the technologies covered by the other WPs in this proposal. This WP will focus on understanding how economic, policy and behaviour factors influence the successful introduction of the integrated, multi-technology solutions needed to achieve significant efficiency improvements in heating and cooling. Current experience on the deployment of renewable or efficiency measures have been mixed: some technologies are eagerly embraced by consumers, others less so or only with unsustainable subsidies. Ofgem's review of behavioural economics highlighted factors such as limited cognitive capacity, status quo bias, loss aversion and hyperbolic discounting as barriers to the uptake of energy saving technology and we will apply this approach to heating and cooling solutions. To achieve significant improvements in efficiency, we need commercially viable business models such that clear benefits and combinations of technologies perceived as easy to implement.

Working with the three Delivery Temperature Work Packages and target markets, we will investigate the following questions revolving around the successful introduction of new heating/cooling solutions to the industry and retail markets. First, what commercially viable business models are available to companies, working within appropriate and realistic policy frameworks? Second, what human factors must be considered to ensure the technology solutions fit within the current activities or lifestyle of the individual or organisation? Third, how can we ensure that users perceive the technology solution as involving minimal risk and responsibility? Fourth, what ancillary benefits will come from the technology, including enhanced reputation and self-esteem? Finally, how can adopting the technology solutions be as straightforward a task as possible?

Deliverables for this WP are structured as follows:



WP1.1 Review and synthesis of existing activities

Prof. Elmes (University of Warwick)

A systematic review of how economic, policy and behavioural factors influence the adoption of new technologies relevant to heating/cooling technologies. The methodology will follow established approaches concerning innovation ecosystem monitoring and development and incorporate evidence from a wide range of stakeholders through expert interviews and round table discussions with business, government, consumers, regulators and the third sector.


WP1.2 Business model typology

Prof. Elmes (University of Warwick)

Here we will answer two questions:

  1. First, what are the existing business models adopted by energy service providers in the UK, and what are the new alternatives under consideration by existing players and potential new entrants?
  2. Second, how do these alternatives match against the requirements for successful technology introduction identified in our review?


WP1.3 Behavioural insights – Case studies

Prof. Elmes (University of Warwick)

Where development of the business model typology identifies successful or unsuccessful business models, an in-depth case study approach will be used to identify how companies succeed or fail to build their understanding of customer needs and behaviours, develop relationships with those customers and provide propositions that customers adopt.

This phase of the project will monitor the development and progress of selected firms representing different categories in the business model typology. Where 1st Wave solutions are adopted in the marketplace within the timescale of the centre's activities, we will observe their progress in particular.


WP1.4 Behavioural insights – Experiments and focus groups

Prof. Elmes (University of Warwick)

Case studies and an overall synthesis of current activities have two limitations: limited coverage and limited control over causal factors. We will conduct focus groups followed by a series of experiments using conjoint analysis. This will provide converging evidence on a full range of possible business propositions, and provide vital data for zeroing in on precisely which proposition features are likely to lead to success or failure.

Latest progress

Click here to view the latest update of the work carried out by our research team presented in our last Workshop in March 2018 at Loughborough University.

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