The introduction of electricity efficient feed-in tariffs (ee FiT) could reduce the UK’s electricity demand by 40 percent by 2030, saving in excess of £10 billion per year, according to a new report published by Green Alliance and WWF-UK.  

The report, titled Creating a market for electricity savings, criticises the current draft Energy Bill for its lack of clear policy designed to tackle energy demand. At the moment, the Department of Energy and Climate Change (DECC) predicts that it will only deliver a third of the total potential savings identified in a recent McKinsey report. Instead, the draft Energy Bill focuses on encouraging the development of new low carbon supplies, such as renewable generators.

The paper theorises that the introduction of a new ee FiT would help stimulate the market for ‘negawatts’ – the paper’s term for saved energy – allowing new and existing companies to compete in the market to effectively help consumers reduce their electricity consumption.  

Green Alliance’s Director, Matthew Spencer, explained: “The Coalition can show it cares about hard pressed families by making sure the energy system rewards energy saving as much as energy production. An electricity efficiency feed-in tariff is the simplest way of doing this, and evidence from the USA suggests that it will incentivise a wave of new energy saving amongst business and households. The Energy Bill offers the opportunity to support negawatts as well as megawatts, and to do so at a lower cost to the UK economy.”

The report is critical of the current approach of the Energy Bill that rewards the building of relativley expensive power stations ahead of pursuing energy reduction methods. For example, the cost of generating a MWh of wind-generated electricity is predicted to be £83; replacing inefficient light bulbs with efficient ones costs £22 per MWh of electricity.

David Nussbaum, Chief Executive of WWF-UK said: “Energy efficiency is the obvious ‘win-win’ in the upcoming reform of our electricity market; keeping a check on rising energy bills while also reducing our dependency on fossil fuels. Thus far the draft Energy Bill has failed to recognise this gilt-edged opportunity, and energy efficiency is conspicuous only by its absence.

“The Green Alliance/WWF report released today demonstrates that the case for implementing an Electricity Efficiency feed-in tariff in the Bill is overwhelming. WWF urges Government to ensure that when the Energy Bill is published it includes options to adequately incentivise energy efficiency.”