Baxi’s Heat-as-a-Service model holds the key to sustainable energy

Across all areas of our lives, there is growing appetite for service solutions. Be it individuals or businesses, attention is turning from owning products to securing outcomes. The as-a-service revolution is changing mindsets and fuelling innovation in design, technology, and business solutions. Focusing on outcomes is not only helping our companies boost competitiveness and exploit new avenues for growth but will be key to tackling the world’s biggest problems. UK manufacturer Baxi- BDR Thermea, is rising to the challenge, helping drive emissions reduction through its new service offer.

Achieving Net Zero will require a fundamental change in how we source and consume energy. Key to that transition are new business models which move the focus away from buying fuel to offering Heat-as-a-Service (Haas). The service-led approach incentivises suppliers to drive efficiencies, allows customers to focus on warmth rather than cost, and meets the needs of people, profit, and planet.

Warwick-based manufacturer Baxi – BDR Thermea has responded to the challenge by developing a “fit and forget” solution which changes the focus from selling energy in kilowatt-hours to selling warmth. The outcome-based offer is set to help the business stand out from the competition and drive the adoption of low carbon technologies.

Servitization, the process of competing through services rather than relying entirely on the sale of products, allows manufacturers like Baxi to shift their value proposition. Customers are offered warmth rather than the commodity of fuel through a more tailored Heat-as-a-Service solution. The manufacturer has successfully trialled a Heat Plan that bundled a new heating system, servicing, maintenance, and energy for a fixed monthly price.

Supported by a £1.7m of Innovate UK funding, Baxi is working with Aston Business School’s Advanced Services Group to develop a Digital Servitization Demonstrator. Designed to drive adoption of advanced services., the demonstrator will combine advanced services and digital servitization technologies to create a digital model of Baxi’s manufacturing and service business.

Servitizing energy provision is starting to generate interest across the sector. Comfort as a Service will be a key theme at Servitization Live, a business event exclusively exploring servitization and advanced services solutions. The three-day event, hosted by the Advanced Services Group at Aston Business School, runs between 4th and 6th October delivered online and in person at the ICC Birmingham. It will showcase how the as-a-service trend is affecting our daily lives, and how they can help address some of the biggest challenges our planet has faced, including climate change, a growing and ageing population and health crises.

Servitization Live offers a platform for businesses to share experiences and best practice. Keynote speaker Oliver Moffat, Innovation & Product Manager at Baxi Heating, will discuss the potential of HaaS. Baxi’s Servitization Demonstrator will not only help the business make the transition to a service provider but show the industry as a whole what can be achieved by thinking beyond selling fuel as a product.

Securing a sustainable future

Servitization holds the key to digitalising and decarbonising our energy systems. Changing the focus from selling energy to supplying comfort will play a pivotal role in securing a more sustainable future for businesses across the sector. The commitment of manufacturers such as Baxi to focus on outcome-based rather than transaction-based business models, promotes more energy efficient practices.

By focusing on advanced services, energy providers are incentivised to save energy and are free to trial and exploit low-carbon technology without requiring the consumer to pay up front. Providing more heat by consuming less energy is now the name of the game and it is service levels and efficiency that determines profit margins.

Shifting the focus

Decarbonising heat is one of the greatest challenges we face in our so-called Green Revolution. The energy sector is responsible for around 75% of greenhouse gas emissions and The International Energy Agency (IEA) insists that we turn our back on fossil fuel boilers to hit Net Zero 2050.

The UK government has responded by announcing a ban on gas boiler installation in all new homes by 2025. It marks the first step in a phased transition to low carbon alternatives such as heat pumps and hydrogen-ready boilers. Heating homes accounts for 14% of total UK emissions and it is hoped the ban will help guarantee a more sustainable future.

Which? Estimates that the cost of installing an air source heat pump in a medium-sized home is around £8,000, going up to £14,000 for a ground-source heat pump. This can be more than five times the cost of a gas boiler. Rather than expecting homeowners to bear that financial burden, the government should let servitization change the dynamic.

HaaS offers the opportunity for homeowners to use a heat pump without purchasing it and focus on outcomes rather than inputs. Servitization promises to overhaul our outdated energy system and break the link between levels of fuel consumption and profitability.

For consumers, fuel is a means to an end, and it makes far more sense for utility providers to sell warmth rather than energy. Investment in digitisation and disruptive business models opens the door to selling heat as a service, offering consumers a full-service solution. They pay for hours of warmth whilst the provider takes responsibility for owning, fuelling, and maintaining the system that delivers it.

The work of manufactures like Baxi will pave the way for others to embrace servitization as a means to gain competitive edge and put sustainability at the heart of our energy sector. Servitization Live will offer the ideal opportunity to learn more about what businesses are doing to exploit outcome-based solutions.

Servitization Live

Servitization Live is the business event solely dedicated to servitization and advanced services. Taking place 4-6 October 2021 at the ICC Birmingham and Online, it brings together the global community of leading industry executives and servitization researchers for sharing real servitization strategies and journeys, showcasing the technologies that enable advanced services and presenting the latest research on servitization.

For more information and to register visit: https://www.servitizationlive.com

The three-day event is sponsored by Servitly, Capgemini, Allsee Technologies, Senseye, DEAS+, IFS, Xait CPQ and DLL, and supported by Field Service News.