CASE STUDIES
Defining a competitive business model to manage high upfront capital costs

Client: Sharp Labs of Europe Ltd (SLE)

THE CHALLENGE

Sharp Labs of Europe (SLE) wanted to understand what factors persuaded heating systems installers to promote renewable energy heating systems to customers. Specifically, SLE needed to assess how much importance installers put on the system’s upfront costs and payback times.

THE OUTCOME

Through interviews with key stakeholders, CLT determined that the financial payback time for the system was the most important issue that might persuade installers to use SLE’s Photovoltaic-Thermal & Heat Pump (PVT-HP) system. CLT used this evidence to develop pricing strategies for SLE that offset the high initial cost of their product.

SLE’s biggest commercial challenge was to overcome the high upfront cost of their system due to its technical specificity and complexity. It needed new ways to try to improve the commercial attractiveness of its product.

CLT interviewed a range of heating installers to understand how they ranked different costs and what factors influenced their recommendations to end customers. Using insights from the interviews, CLT helped SLE develop a new business model to finance the system that reduced upfront costs by allowing customers to pay a monthly fee.

CLT recommended that SLE ‘lease’ the systems to households in a way that reduced total monthly household costs by ensuring that the fees for the system were cheaper than the gas and electricity bills they replaced. To further reduce upfront costs, the business model was structured so that SLE’s manufacturing partners would receive government’s additional Renewable Heat Incentive payments.