Think-tank calls for energy saving measures

Under proposed reforms of the energy market, the Government is set to bring in “feed-in tariffs” which will pay fixed prices to power companies over the long-term for electricity generated by low-carbon means such as wind or nuclear.

But Green Alliance suggested an additional feed-in tariff paying businesses for the electricity savings they get consumers to make would avoid having to build some new power plants, saving billions of pounds on bills by 2025.

The scheme would allow new energy saving companies to come into the market, with programmes such as encouraging people to change their behaviour to cut their bills, paying consumers to reduce energy use or funding them to upgrade inefficient appliances.

Green Alliance said while efforts to save energy would not be free, an energy efficiency feed-in tariff would cost just half what it would to generate the electricity consumers otherwise use.

A report from the think-tank said the Government had plans for a 16% decrease in electricity demand compared to business-as-usual, but did not have policies to deliver the reduction.

A failure to achieve the saving - while cutting carbon emissions - would mean the need to build six extra new nuclear plants or power stations with carbon capture and storage technology (CCS) or 5,000 large offshore wind turbines, costing £70bn to build and run between now and 2025.

But an efficiency feed-in tariff which would make payments up to 2025 would avoid around half that cost, delivering savings of £35bn on energy bills by the middle of next decade, according to estimates which the group described as “conservative”.

Green Alliance said energy saving programmes in the US, where a number are already established, are up to three-and-a-half times cheaper than new generation.

The report’s author, Dustin Benton, said: “The electricity market is a one-way street: there are big incentives to produce more power, and very few to save energy.

“This means we spend more on energy than we need to. Getting a low-cost, low-carbon transition means paying for energy saving, and creating new competition between power producers and energy savers.”

Because the feed-in tariff model is already outlined in plans to reform the energy market, a similar scheme for savings would be relatively quick and easy to get off the ground, he suggested.

“We know that consumers are desperate about energy prices now. The fundamental argument by Government is that we need a diversification strategy to find the cheap low-carbon energy of the future, but that’s a long term solution.

“We need a short-term solution, and energy efficiency is the only one we have,” he said.