1013. The Review has shown that there are many challenges to decarbonising homes - from a lack of information, to high upfront costs and difficulty accessing skills and supply. Energy suppliers could be harnessed to provide more holistic solutions for households. Government could encourage energy suppliers to bridge the current gaps by providing households with multiple choices at once. Some options are:
• Information on low-carbon heating/storage assets and their benefits to the household and the environment
• Liaising with finance providers and government to ease the administrative burden of accessing a green mortgage and subsidies
• A low-carbon heating system, supported by a government subsidy or mandate for a specific proportion of installs to be, e.g. heat pumps
• A guarantee of a new heating system provided to the household when the old heating system breaks
• Energy efficiency measures paid for by the energy provider (because this reduces their costs of providing heat to the home)
• Solar panels
• Batteries/thermal storage
• Smart vehicle charging
1014. The above would help to coordinate the demand response, as the amount of shifting provided by an individual household is not comparable to the bigger demand response provided by many homes collectively. The supplier could capitalise on this by selling this back to the grid at peak times. Octopus Energy offer a 'smart tariff', which allows customers to save money by shifting their energy usage to lower cost times of the day, when demand is lowest.
1015. One way of providing this would be via a heat as a service scheme, where suppliers offer a contract for customers to get the heating profile of their choice in exchange for fixed- monthly price. This could include multiple elements which are cost saving and so provide a solution to the problem of upfront capital. The risks of this approach would include monopoly power on the part of the supplier, increased vulnerability to cybersecurity risks, and difficulties in monitoring the suppliers - all of these would have to be actively guarded against by active policy.
1016. Other solutions would see the supplier solving the initial demand coordination problem but not going as far as to own the assets. This can be observed in the Polish heat pump market. There, heat pump suppliers provide the information, access to finance (via explicit partnerships with banks), and administration of applying for the government subsidy of circa £5,000 for a heat pump and £6,000 for a heat pump with a solar panel and thermal storage. The process of obtaining all the changes at once is made much easier, as evidenced by the record growth in heat pump deployment in 2021. In this model, the household still owns the assets, pays its own electricity bill, and gets money back for the electricity produced from its solar panels and sold into the grid; the suppliers' active role helps to break down the barriers between demand-side response, storage, renewables, low-carbon heat and retrofits.