Subsidy scheme urged to save energy

The Government should introduce incentives for electricity-saving measures to help cut consumer bills, it has been told.

The forthcoming Energy Bill needs to include a subsidy scheme that would pay companies for the electricity they help people to save, for example by replacing their appliances with more efficient alternatives, Green Alliance and WWF-UK said.

Such a scheme would incentivise companies to help people cut their energy bills by using less electricity.

And because measures to reduce energy use cost less than building new infrastructure, it would be a cheaper way of meeting the Energy Bill's aim of cutting carbon emissions while keeping the lights on, they said.

As it stands, the Energy Bill will put in place subsidies for new low carbon power such as nuclear plants and wind farms to meet electricity demand, but does nothing to reduce the demand for power, a report by the green groups said.

Without amendment, it will reward the building of expensive power stations ahead of lower-cost energy efficiency, leaving people paying over the odds for their electricity.

They said the UK could learn from schemes abroad, such as ones in the US which include companies offering rebates on energy-saving appliances, replacing appliances for free for low-income consumers and providing no-cost finance for efficiency upgrades.

Bringing in an "electricity efficiency feed-in tariff" which pays for each unit of energy saved, or "negawatt", would encourage companies to compete with each other to find innovative ways to help consumers save energy and money.

Green Alliance's director, Matthew Spencer, said: "The coalition can show it cares about hard-pressed families by making sure the energy system rewards energy saving as much as energy production.

"An electricity efficiency feed-in tariff is the simplest way of doing this, and evidence from the USA suggests that it will incentivise a wave of energy saving amongst businesses and households."