World Energy Outlook 2006

Box 8.4: Energy Savings Programme in the UK Residential Sector
The Electricity Act 1989 and Gas Act 1986, as amended by the Utilities
Act, make provision for the government to set energy efficiency targets on
energy suppliers. In the 3-year period from 2002 to 2005, the government
set a target of cumulative energy savings of 62 TWh. Electricity and gas
suppliers were required to achieve these energy savings through the
encouragement of efficiency measures among their customers in the
residential sector.
The cumulative energy savings achieved surpassed the target and amounted
to 38 TWh of electricity and 53 TWh of fossil fuel, of which an estimated
90% is gas. The total cost of the programme, including the direct and
indirect costs incurred by the energy suppliers, contributions from
households and contributions from other parties amounted to 690 million
pounds ($1 190 million).
The net present value of the benefits to households, after deducting their
direct contributions and the energy suppliers’ total costs, is estimated at
about $5.2 billion. The total cost of saving a delivered unit of electricity or
gas was 2.2 cents per kWh and 0.9 cents per kWh respectively (Lees, 2006).
The greater part of the savings was achieved by a relatively small number of
measures, including wall and loft insulation, installation of higher-efficiency
freezers and washing machines, and replacement of incandescent lights by
compact fluorescent lamps.
The programme has been followed up by a second commitment period that
is to run from 2005 through 2008. The overall target for this next phase is
130 TWh. This follow-up programme is taken into account in the
Alternative Policy Scenario.
residential and commercial sectors in non-OECD countries is more than four
times higher than the additional investment required.
A similar set of benefits and costs is observed in the transport sector. In both
OECD and non-OECD countries, the savings in spending on fuel by
consumers more than offset the incremental capital cost (Figure 8.8). In
OECD countries, the value of fuel savings is more than twice as high as the
additional capital expenditure. In non-OECD countries, it is almost three
times higher. As the lifetime of light-duty vehicles (LDV) is usually from
8 to 15 years, most investments in more efficient vehicles would be profitable
to the consumer (Box 8.5), although the gradual payback over time may
208 World Energy Outlook 2006 - THE ALTERNATIVE POLICY SCENARIO
© OECD/IEA, 2007