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UK must reap 'huge' benefits of demand reduction: Business Green Article by Edward Davey

29 November 2012 In a world of rising energy prices, pressure on resources and economic uncertainty we simply cannot afford to miss the huge…

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

29 November 2012

In a world of rising energy prices, pressure on resources and economic uncertainty we simply cannot afford to miss the huge opportunities offered by greater energy efficiency. That is why the coalition government is acting now to make Britain’s energy supply fit for the 21st century, helping to create lower bills for consumers, reduced costs and greater opportunities for businesses, and lower carbon emissions.

We are already making real, tangible progress in this area. The revolutionary Green Deal will be up and running in the new year, helping households and businesses improve the efficiency of Britain’s housing stock by enabling them to pay for exciting and innovative energy-saving measures through savings on bills. The Energy Company Obligation will provide help towards those who need it most. And smart meters will help raise awareness of our energy usage, putting consumers back in control.

Together these measures will transform the way we use energy, and have the potential to create a new £10bn market in energy efficiency, boosting jobs and helping stimulate supply chains in a way that can really drive economic growth.

Earlier this month, we published the UK’s first comprehensive energy efficiency strategy.

This sets out our plan to completely change the way energy is used over the coming decades. Five new university-led energy research centres are being created, and next year we will be trialling a new approach to energy efficiency labelling with the retailer John Lewis.

There is still more to be done though - more savings to be made and more economic growth to be unlocked in a growing market. We need to place the UK at the forefront of the growing global market for energy efficiency goods and services. There is already a range of international examples of schemes to help people reduce the amount of electricity they use, such as one run in New York State that provides rebates for efficiency savings made.

It’s time Britain took advantage of these opportunities too. So today we will launch a consultation on how further electricity savings can be secured. Our proposals complement existing policies like the Green Deal and signal our clear commitment to reducing demand by encouraging and supporting greater efficiency in the way we use electricity.

The benefits are hugely significant. A 10 per cent reduction in electricity demand could lead to cost savings of around £4bn in 2030, more than compensating for the investment made upfront. The amount of electricity saved is comparable to that generated by five power stations. Cutting the amount of electricity used in Britain’s homes, businesses and industry can be much cheaper than paying firms to supply it.

We are putting forward a range of options - some that are economy wide, others which are more targeted. One idea is to reward the energy saved by households and businesses who make efficiency improvements. Another is to offer targeted financial incentives for replacing older technologies with new more efficient equipment. We are also proposing a scheme to support the installation of efficient control systems for lighting or air conditioning.

In terms of ambitious, economy-wide options, one of our proposed electricity market reforms in the Energy Bill is a capacity market to ensure that power remains available even at times of high demand. Today’s consultation looks at whether there is the possibility for people to participate in this market by committing to permanent reductions in electricity use.

We are also exploring what role electricity suppliers could play in reducing use, for example by encouraging their customers to install measures to improve electricity efficiency.

We want to hear views on all of our proposals and the incentive is clear - lower bills for consumers, lower emissions, less dependence on new energy generation and the potential for businesses to grow and create jobs. This is an exciting opportunity to really do something positive with our energy use; now and in the future. Let’s make sure we grab it with both hands.

Published 29 November 2012