Papers
Centre for Net Zero and Energy Systems Catapult launch a tool to incentivise demand flexibility at scale
Overview
Centre for Net Zero and Energy Systems Catapult are calling upon the Government to introduce a ‘Smart Building Rating’, designed to incentivise demand flexibility at scale across the UK. This builds on exciting consumer flexibility trials that took place last winter, which saw over a million households get paid to shift around the time when they used energy.
Backed by the Rt Hon Chris Skidmore MP OBE, Chair of the Independent Net Zero Review, and a cross-industry coalition of supporting organisations, the ‘Smart Building Rating’ (SBR) is designed to complement a reformed EPC, as part of a suite of metrics that can drive us towards an efficient and smart building stock.
Context
The future energy system will need buildings to be both energy efficient and able to provide energy flexibility. This combination will allow households to use less energy overall and shift their use to times when it is abundant, clean and cheap – cutting energy bills and reducing system costs for everyone. Demand flexibility could save the system between £9.6 to £16.7 billion in 2050, and save individual households up to 52% on wholesale electricity costs in 2040 (Sources: Carbon Trust, Cornwall Insight & Smart Energy GB). The prize is clear, yet no policy mechanism exists to drive the transformation needed.
Introducing the ‘Smart Building Rating’
The SBR is designed to fill this gap. By measuring a building’s capacity for flexibility, or its “smartness”, it places a value on flexibility that engages consumers and incentivises property upgrades. To prepare buildings for “smart” electrification, they need to be equipped with low-carbon technologies capable of delivering flexibility, such as EV chargers, heat pumps, smart thermal stores, batteries and solar.
The SBR is supported by a cross-industry coalition, including E3G, Energy Savings Trust (EST), the UK Green Buildings Council (UKGBC), the Royal Institution of Chartered Surveyors (RICS), the Association for Renewable Energy & Clean Technology (REA), Nesta, the Association for Decentralised Energy (ADE), the MCS Foundation, Thermal Storage UK and Good Energy.
Rt Hon Chris Skidmore MP OBE commented: “Decarbonising homes is at the heart of the UK’s journey to net zero. The future energy system will need buildings to be both energy efficient and able to provide energy flexibility. In placing a value on a building’s capacity for energy flexibility, the Smart Building Rating can help us to achieve this. It is a prime example of forward-thinking policy-making that aligns with a data-driven, digital future energy system.”
Lucy Yu, CEO of Centre for Net Zero, said: “Flexibility is not optional; it is essential to a net zero energy system. Whilst it comes in many forms, consumer flexibility is the lowest-cost way of keeping supply and demand in balance – but the current landscape is not conducive to rapidly scaling it. The Smart Building Rating is designed to confront this challenge head on, ensuring that we can unlock the benefits that a flexible energy system affords – from cheaper bills to cleaner, more secure energy.”
Guy Newey, CEO of Energy Systems Catapult, commented: “The Smart Building Rating would enable businesses, Government and other stakeholders to better target and incentivise uptake of the technologies needed to achieve flexibility from homes. It would also help to stimulate innovation, boosting the market for new flexible products and services, where the UK has some of the most exciting and high growth-potential companies. At Energy Systems Catapult, we look forward to working with Centre for Net Zero and others to develop this proposal further, so we can build an energy system that is inclusive, affordable and clean.”
Next steps
Centre for Net Zero and Energy Systems Catapult are calling on the Government to consult on the introduction of a new measure of demand flexibility, and work with industry on its effective implementation – alongside reforming EPCs. We will also be collaborating on the development and trial of a proof-of-concept SBR to demonstrate its policy value.
A copy of the full report is available on the right hand side, along with the letters to Government that we shared with the Department for Energy Security & Net Zero, and the Department for Levelling Up, Housing and Communities, calling on them to consult on the introduction of a demand flexibility metric.
