Positive Energy: how renewable electricity can transform ... - WWF UK

Chapter 3 HIGH
RENEWABLES UK: HOW
DO WE GET THERE
Reducing demand should be on a
par with incentivising renewable
generation.
In addition to technological improvements, social and
lifestyle changes from now until 2050 could cut the cost
of delivering a low carbon energy system by up to £70bn,
according to a report by the UKERC 38 . Reducing demand
could also play a key role in cutting energy costs for
consumers and businesses. For example, CCC analysis 39
estimated that the cost of meeting the UK’s 2020 renewable energy target could increase
domestic energy bills by up to 4% by 2020. However, it also highlighted that energy
efficiency could reduce residential energy consumption by up to 14% by 2020 – more than
offsetting the costs of meeting the renewable energy target.
The difference between the costs and volume of generation capacity required in the
GL GH central and ambitious demand scenarios shows the huge benefits of reducing
demand. Behaviour change can reduce demand for electricity, but it could also be done
through incentivising energy efficiency. This could be achieved for example by introducing
policies which allow those seeking to help consumers, business and industry to cut their
energy use to compete with firms seeking to build new power generation.
Structuring the electricity market to allow demand reduction to compete on an equal
footing with the supply side could be a highly effective way of achieving tangible
reductions in demand. This could be done, for example, by providing bankable revenue
streams for demand reduction, similar to the long-term contracts proposed for low
carbon generators. This would incentivise large energy users to make the energy efficiency
investments needed to permanently reduce their energy demand.
The demand side is currently underdeveloped and relatively diffuse. There is no
established demand side industry because there has been limited market or revenue
certainty up until now for products and services in this area. To successfully drive demand
reduction, it has been suggested that an agency mandated to seek out and support
innovation would be required.
Policy recommendation: The UK must adopt ambitious absolute targets for reducing
electricity demand.
Policy recommendation: The government should make the take up of energy
efficiency measures happen by, in particular, investing an amount equivalent to the
carbon floor price revenues into energy efficiency support measures.
WWF-UK 2011 Positive Energy page 40