Innovating towards a ‘fair’ net zero transition for vulnerable customers

Britain’s cost-of-living crisis has seen inflation swell to 5.4% – its highest level since March 1992 – before an expected peak of close to 6% by April, according to Bank of England forecasts. On top of this, Ofgem recently announced that the price cap on default tariffs will rise by £693 in April to £1,971 following the quadrupling of wholesale energy prices over the last year – a measure affecting an estimated 22 million households.

This comes after more than 2.1 million households found themselves behind on energy bills at the start of 2021, with more than one million said to be struggling to pay their water bills in May of the same year, according to Citizens Advice. The same research found that around 50% of UK households’ savings would not support a shock bill of more than £300. Against this backdrop, Northumbrian Water – which serves close to three million people across the north east – and partners at Newcastle University, National Energy Action, Procter & Gamble and Northern Gas Networks are due to start work on a scheme to slash water use and energy emissions for customers by December 2025 in an effort to cut both costs and carbon.

Finding the right partners

Chosen as one of the winners in Ofwat’s £36m Water Breakthrough Challenge and awarded £3.8 million ahead of a 1 April start date, Northumbrian’s research and development manager, Chris Jones, explains that the project aims to “transform” customers’ lives by co-creating new products and technology-based solutions, encouraging behavioural change and funneling them into integrated “pathways” to fair and sustainable utilities.

“The idea is that we come up with this menu approach that already exists in healthcare – a hugely complex digital tool that you can log onto and look at different care pathways for different ailments,” he tells Utility Week Innovate. “The idea is that it’ll be a web portal encapsulating all the knowledge and know-how that we’ve captured through the project, and make that available for anybody to understand their options, technologies and where we think they fit in terms of somebody’s life.

“The longer term aspiration is a live tool so as new technologies are developed, or as we gain more understanding, we can add to that knowledge base which becomes something that the likes of National Energy Action and utility service providers can tap into and understand what they do to serve particular customers or communities,” he adds.

This chimes with Northumbrian’s goals to eradicate water poverty in operating areas by 2030, reduce per capita consumption from 156 litres per person per day to 118 litres by 2040 and be carbon neutral by 2027. “The idea is to support customers in a fair transition to net zero – taking energy, water, affordability, and health and wellbeing all together in one consideration, rather than dividing those outcomes up,” Jones continues.

“At the end of the day, these are all the same customers – whether they’re an energy customer, a water customer, or a consumer of other services, if they’re having a hard time they’re vulnerable,” he adds. “If they’re looking to change the way they live their lives to be more carbon or water efficient, then we can support them to do that. “The big idea of the project is to bring all of those pieces together and find the right partners to enable us to do that.”

Disrupting home energy use

Born out of a sprint held in tandem with Northern Gas Networks at the 2020 edition of Northumbrian’s innovation festival, Fair Water Project partners will use the former’s InTEGReL specialist research facility as a testing ground for all aspects of customer energy use. According to Jones, a sizeable initial chunk of Ofwat’s funding will be allocated to an open innovation programme to explore what technology already exists, which solutions are not only suitable for new builds but could also be re-engineered and redeveloped for retrofit properties.

´This will provide a platform for the development of more emerging technologies and products at Northern Gas Networks’ facility, which offers the ability to research different decarbonisation solutions in a “real world setting”, according to the firm’s head of systems development, Keith Owen.

“This means we can do quite disruptive stuff, show that to people, and work with technology developers to find ways of retrofitting technology into properties where it may not be possible at the moment,” Jones adds. “Then we’ll start to bring some of those technologies and products into real customers’ homes, and again, understand through monitoring how they use those products and technologies the benefit that they’re delivering.”

Working with customers

Yet, according to Jones, the breadth of collaboration within the Fair Water project – namely the involvement of Procter & Gamble, the 181-year-old consumer goods multinational behind home care brands such as Ariel, Bold, Febreeze and Fairy – is the scheme’s most distinguishing feature. “Procter & Gamble work with and touch the lives of billions of people across the world every day because their products are so ubiquitous,” he says.

“Many of their products are directly involved in daily tasks that involve water and energy use – from laundry to dishwashing to personal care. They recognise in the work that they’ve already done, and their involvement with initiatives like the ’50 Litre Home’, that it’s very difficult just to expect people to change their behaviours. How long have we seen the ‘wash at 30 degrees’ signage on washing powder and how many people wash at 30 degrees? Probably not many.” As such, part of the value offered by collaborating with Procter & Gamble is the insight into customer behaviour during energy and water intensive tasks that they bring to the table.

“They can design products that will enable behavioural change and offer just as good a quality and outcome for customers at lower temperature, using less energy, using shorter washes, whatever it needs to be,” Jones says. “As part of their product design process, they’ll work with customers and see how they’re using products during daily tasks.” As an example of the sort of challenge faced, Jones outlines the thought process of chasing energy efficiencies in home cleaning. “If you’ve got more than eight dishes to wash, it’s actually more energy and more water efficient to run in the dishwasher – providing you’ve got a decent dishwasher and a decent cleaning product in there,” he says.

“So you think ‘well, everybody should have dishwashers, then’ – but everybody can’t have dishwashers because they’re expensive, or they don’t have the right plumbing or space in their kitchen. “So how do we take the insight that ideally everybody would have an energy and water efficient dishwasher and put that into somebody who’s maybe in a turn of the last century two up, two down with a tiny kitchen – maybe they’re a wheelchair user? How do we make that technology work for that person in those circumstances so that they can enjoy the benefits?”

Enabling behavioural change

In terms of broader project partners, Jones explains that working with National Energy Action has provided “important perspective” into customer vulnerability, while harnessing the expertise of Newcastle University’s Behavioural Science Unit – part of its Business School – has added insight into what motivates people to change, how you support them through the process, and helped build “unique customer journeys”.

“National Energy Action talk to these people all the time and hear really heartbreaking stories about the lives people are living and the hardship they’re facing,” he says. “They’re supporting people on a daily basis initially with energy, but we’re now working more closely with them on water poverty as well. They have insight into the struggles that some of these people are facing and what we might be able to do to support them differently. “Newcastle University has a big Behavioral Science Unit as part of their Business School so they provide understanding across many fields about what motivates people to change, what their triggers are, how you support them through change and design a journey that that will take somebody from where they are now through various changes in attitude to the point where they buy in.”

Ultimately, Jones explains that combining these tools and techniques with the product design and customer insight from Procter & Gamble can bring, the project will nudge behaviours towards being more water and energy efficient by providing well-researched new products that support cost and carbon friendly behaviour. “If you just tell somebody to behave differently they probably won’t, but at the same time if you give someone a new product they’ll probably use it in the same way that they use the old product – so the two have got to go together,” Jones continues. “The products will enable behavioural change and behavioural change will enable people to get the best out of those products.”

Falling on hard times

Owen concurs that, while collaboration is integral to the new product development, having customer voices at the heart of the Fair Water Project is “essential”. Yet he caveats that the potential for these voices to change over the coming year also presents one of the sector’s biggest challenges, explaining that customers may slip into vulnerable circumstances amid the ongoing financial squeeze.

According to recent research by YouGov, four-in-10 Britons expect their finances to get worse in the next 12 months, with just 5% of Britons describe themselves as being ‘very comfortable’ financially. The same piece of research flags that just one-in-seven (14%) say they can only just afford their costs and struggle to make ends meet with 3% claiming they cannot afford their costs at all and often have to go without essentials, like food and heating. “Anyone can fall on hard times and need help and we need to be aware that people may not wish to class themselves as vulnerable so we reflected on using different language to ensure everyone who needs help feels comfortable asking for it,” Owen says.

“You’ve just got to read the press at the moment, certainly on the energy side of things – this is really difficult stuff where great minds from regulators, government and industry are trying to figure out how we manage this.”

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