A key government programme designed to reduce people’s energy bills is doomed to failure unless the coalition overhauls it, one sector body has claimed.
According to the Association for the Conservation of Energy (ACE), the electricity demand reduction programme unveiled by energy and climate change secretary Ed Davey is unlikely to have the monumental impact on lowering energy bills that the government hopes.
The ACE represents some of the country’s leading industrial companies, including Honeywell, Carillion and E.ON, and has written to Mr Davey asking for him to raise energy saving targets.
The group believes that this would be a more effective means of saving power and ultimately helping to drive down fuel bills, as opposed to the capacity mechanism which involves organisations being paid to provide back-up power systems to lower their electricity needs.
Currently, participants have to bid in auctions, but the ACE feels it is too complicated for smaller users to engage with and has instead proposed the introduction of an electricity efficiency feed-in tariff that is similar to the solar power feed-in system used by many UK homes and businesses at the moment.
“We feel that your department continues to treat electricity saving as a low priority, and fear it will miss the opportunity to reduce the UK’s electricity bills. We would urge you to aim higher and use the Energy Bill to create a step change in the UK’s energy efficiency,” the ACE said in its letter to the energy secretary.
According to the organisation, a feed-in system is not only a proven method, but would directly reward decreased energy use and provide greater clarity for organisations hoping to enter the field of energy saving.
Matthew Spencer, director of the Green Alliance, which is backing the move, told the Guardian that the Department of Energy and Climate Change has not applied the same “reforming zeal” to reducing energy bills as it has to supporting new power stations.
“The government is missing the biggest opportunity in a generation to create a new market for electricity saving and stimulate a new wave of business activity,” he said.
Meanwhile, Chris Shearlock, sustainable development manager at the Co-op, said he is “acutely aware” of the potential that energy efficiency offers, particularly as his company has reduced its own emissions by more than 40% in the last six years.
Currently, the capacity mechanism detailed in the Energy Bill would be allocated £1 billion to persuade energy firms to construct new plants, and incentivise them to reduce power.
However, Mr Shearlock said: “The Energy Bill needs to go much further in offering incentives for businesses across the UK to save energy, rather than blindly paying for spare capacity in new power stations.”
According to the ACE, Green Alliance and global conservation organisation the WWF, this type of programme has been rolled out in the US and only 3% of all the cash has gone to energy efficiency initiatives.
The groups added: “If this were to happen in the UK we would be £970 million short of the funding needed to reduce energy demand by 10% each year.”
The solution, they urged Mr Davey, is to introduce an electricity feed-in-tariff that would bring down energy bills, as well as generating new business opportunities and driving new, innovative ways of saving energy.