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Energy saving

By Dave Elliott

A Department of Energy and Climate Change (DECC) report last year, Capturing the Full Electricity Efficiency Potential of the UK, identified a potential for cutting energy demand by 40% by 2030, 155 TWh in all, of which current policy is estimated to capture ~54 TWh (~35% of total potential). They focused on three key sectors, and in each case they looked at the 3 largest categories of abatement measures per sector, which together are estimated to deliver ~127 TWh of savings (~80% of total potential).

Residential: The top 3 measures’ saving potential is ~58 TWh: CFL lighting, appliances and better insulation, of which ~75% is expected to be captured by current planned policies (primarily Products Policy)

Services: The top 3 measures’ saving potential is~45 TWh: better insulation, lighting controls & HVAC, of which ~15% should be captured by current/planned policies

Industrial: The top 3 measures’ saving potential is ~24 TWh: pump, motor and boiler optimisation, of which ~5% is expected to be captured via current/planned policies

In 2020, the abatement potential is estimated at ~115 TWh of which ~60% should be captured by current policy.

Subsequently DECC produced a new energy efficiency strategy. It was couched in quite general terms. It outlines the existing energy saving programmes, including the Green Deal, and proposes some possible new developments and areas for study, aiming to ‘strengthen the evidence base.’ But there are no new major policy commitments.

There is no question that it is hard to be sure which areas of intervention are most cost effective, and that making effective savings in some areas is problematic- e.g. in solid wall housing. There is also the problem that once the easy and cheap savings have been made it costs more to make further savings- and commitment can falter. The DECC Strategy report warns that ‘The impact of current policies that reduce energy demand are assumed to taper off in impact after 2022, (the fourth carbon budget period) and by 2030 the share of energy efficiency policy impact falls to 31%.’

However, it does look at ways to do better. It suggests that larger savings could possible if projects were funded on the basis of a social discount rate i.e reflecting social and environmental criteria and well as conventional economic criteria. It estimates that ‘through socially cost-effective investment in energy efficiency we could be saving 196TWh in 2020, equivalent to 22 power stations’, with the potential after that being even greater.

The wider social criteria certainly come to the fore in the domestic sector- depending on how it is done. Consumer Focus says that investing money raised through carbon taxes in a major energy efficiency programme could cut household energy consumption by 5.4% by 2027 and overall carbon emissions by 1.1%, while creating 130,000 jobs and reducing fuel poverty.

However not everyone likes carbon taxes- they are a blunt instrument and hit the energy poor hardest, even if the resultant energy saving may also benefit them longer term. A report published by Green Alliance and WWF-UK, Creating a market for electricity savings: Paying for energy efficiency through the Energy Bill, argues for an energy efficiency Feed In Tariff to create a ‘market’ for ‘negawatts’ (saved energy) allowing new and existing companies to compete with each other to find innovative ways to help consumers across the economy save electricity.

Drawing on international experience the report demonstrates how the UK can learn from energy demand reduction programmes abroad; schemes in the USA show that it is much cheaper to reduce demand when compared with building new supply. For example, replacing inefficient appliances with new efficient ones costs on average £33/megawatt hour (MWh) compared with the cheapest low carbon supply costing £83/MWh.

The report said that the EE FiT would complement other energy saving policies such as product labeling and, if designed appropriately, the EE FiT would also have the potential to work well with the Green Deal, thus maximising energy savings from homes.

Sadly the Electricity Market Reforms do no address energy efficiency, a point noted by the Economist.

However, in parallel with the EMR, the DECC launched a new consultation on energy efficiency, looking at possible way to stimulate uptake of energy efficiency measures in all sectors, including the idea of Feed In Tariff for energy saved via investment in efficiency as proposed by WWF/the Green Alliance. In addition, the EMR did include a new Capacity Market for ensuring balanced and secure energy provision, and it is possible that energy saving measures could be eligible for long term contracts, alongside low carbon supply project, within that.

We certainly do need a more effective approach: so far the much touted Green Deal commercial loan system seems to be something of a damp squib, barley touching the huge potential. We really ought to do better. The report ‘Less is More: Energy Security after Oil’, published by AECB- the sustainable building association- pointed out that investment in energy efficiency can result in major energy reductions for the least cost, and remove the need for expensive investment in new generating infrastructure.

According to the report’s principal author, AECB’s energy expert David Olivier, ‘Energy efficiency remains as important an opportunity for us as the discovery of a new series of giant oilfields, but without their global warming impact. Many energy efficiency measures save energy worth more than the cost of the measure, so not only do they pay us to save energy, we also save CO2 at a profit.’

AECB CEO Andrew Simmonds said. “Efficiency really is the gift that keeps on giving. Efficient use of energy saves on bills now. And it saves the capital cost of all the new extraction, generation and transmission technology that our current levels of energy consumption will demand in the future. We can stick to the cheaper, safer options for new energy, and do without the riskier, pricier ones. None of the energy efficiency measures cited in our report would cost the UK more than about 3p per kWh electricity saved. Who wouldn’t want electricity at 3 p/kWh, when most consumers currently pay 8-13 p/kWh?”

Maybe can do better. For an interesting study on energy saving options in housing, focusing on Europe, Japan, and the USA, see the International Council of Chemical Associations ‘Building Technology Roadmap’, which claims by 2050 ‘tighter new building standards combined with a more ambitious renovation rate could result in a 23% reduction in energy use and GHG compared to 2000’, rising to 41% if energy supplies are decarbonised, with net emissions falling by about 70%. (

• As I’ve noted before, there is also a lot of potential for energy and cash savings in the industrial sector:

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