Paying for comfort rather than kilowatts
In many sectors the way we purchase products has completely changed. Subscription and goal based contracting have become part of everyday life both corporately and domestically. Paying for a service rather than owning assets is becoming hugely common with co-working spaces like Wework growing and growing along with other rental models for printing, IT, vehicles and more.
So what does that mean for energy? With increasing digitalisation and easier data communication all things become possible. Why couldn’t you subscribe to have a warm office building or factory – after all what you really want is for your building to be around 20 degrees when your team are in (the rest of the time you are not too bothered). Similarly, you just want the hot water from taps and showers to be hot when you want it… what it does when no one is in is really of no concern. So could you subscribe to comfort rather than pay for kilowatts?
Subscribing to be warm changes our relationship with energy. The energy supplier starts to become much more interested in digitalisation, insulation and simple nudges. Installing sensors which optimise systems in the background such as occupation monitoring becomes an absolute must for the energy provider just as looking to improve building fabric. Similarly, an investment in improving hot water outlets or improving roof insulation becomes incredible interesting to the energy provider. Let’s be honest 99% of companies don’t get as excited about a good mixer tap or a weather compensation system as myself and my colleagues do!
In the future the relationship between supplier and consumer changes. Consumers may have to give up a little bit of control whilst trusting an outcome based contract to deliver. Suppliers have to take risks on what improvements they can make… whilst communicating in a proactive way with end users having to ensure that the promised outputs are being achieved. Joining the two together can really achieve a win-win… the client is left to focus on their core business with known costs whilst the supplier of ‘comfort’ gets on with prioritising energy optimisation.
Energy performance contracts are not uncommon in the commercial sector now… however typically they need scale. As our experience of managing comfort grows the relationship between consumers and suppliers interact will inevitably become increasingly interlinked potentially with some really positive benefits.
John Armstrong is Head of Operations for E.ON’s District Heating business in the UK, leading the team who maintain heating, cooling and hot water to over 30,000 residential and commercial customers. John’s experience includes city quarter solutions, power generation and engineering safety. He is a chartered Engineer and Fellow of the Institute of Mechanical Engineers.