Towards Zero Carbon Buildings: An Ai-Based Pay as You Decarbonise (Ai-PaYD) Business Model for Residential Customers

Ai-PaYD is an innovative first of a kind (FOAK) solution and a multifaceted AI-based software application that is designed to assist vulnerable residents (elderly, disabled, single parents etc.) who are homeowners' in seamlessly interacting with financial underwriters and innovative SMEs/retrofitters to access capital needed to achieve (near) zero-carbon status for their homes over a timeline. Ai-PaYD actualises guaranteed emissions and energy costs reduction through retrofitting of vulnerable \[persons\] households by indexing the retrofitting loan repayment to accruable emissions and energy costs reductions over a timeline. Ai-PaYD operationalises emissions and energy cost reduction as a reward tool (potentially through certified carbon credits) for SMEs and financial institutions by incentivising innovative approaches to: (1) decarbonise housing stocks (especially for vulnerable persons), and (2) improve their energy efficiency while benchmarking the contribution of their services/activities to the overall goals of emissions/energy costs reductions and 2050 Net-Zero targets.

Ai-Pay as you decarbonise (Ai-PaYD) is an innovative program that leverages low-cost and sustainable financing in providing vulnerable households with patient capital to undertake energy and emissions reduction retrofitting actions with loan repayment tied to the potential savings accrued. Ai-PayD indexes loan repayment with potential savings accrued (capped at a reasonable ceiling) ensuring that vulnerable households do not get to exceed a fixed portion of their household income in meeting their loan obligations. Ai-PaYD thus disincentivises potential waste of financing by ensuring that participating retrofitters undertake actions that can result in significant reductions and offset their costs over a reasonable timeline. In undertaking Ai-PaYD, three assumptions are made. First, that energy prices will in the medium to long-term continue to increase. Second, that transition related policies by government will result in emissions related surcharges for households to encourage uptake of low-carbon initiatives, and third, that the rate of increase of these emissions related penalties will outpace the rate of increase of energy increment.

Particularly, Ai-PaYD is focused on vulnerable persons who own their houses and will investigate the maximum emissions reduction that can be achieved from different households which would inform retrofitting activities.