Consultation: Developing a Market for Energy Efficiency

Consultation: Developing a Market for Energy Efficiency

  • 22 Aug 0

The Government is seeking views on market barriers to energy efficiency in the UK. The Department for Business, Energy and Industrial strategy (BEIS) is looking at how it can create new markets for energy efficiency, develop the wider energy market to contribute to flexibility, deliver a robust network infrastructure and provide reliable alternatives to distributed generation.

The conclusion of the Electricity Demand Reduction (EDR) pilot, including publication of the final evaluation report, and the recent changes in electricity systems and technologies, presents an opportunity to re-evaluate. The EDR pilot evaluation concluded that energy efficiency projects are not yet ready to enter the UK Capacity Market.

Previous stakeholder engagement, such as the ‘Helping businesses to improve the way they use energy’ and ‘A smart, flexible energy system’ calls for evidence, has improved a greater understanding of the potential for energy efficiency and the barriers to implementation. This Call for Evidence will help the Government to understand these issues better at a wider energy market level.

Clean Growth is one the four major challenges for the UK Government’s Industrial Strategy. It is one of the most cost-effective mechanisms to helping us meet our net zero by 2050 target and has a range of benefits including; peak and non-peak network demand reductions, rapid deployment compared to some generation, potential for lower wholesale energy prices, and air quality improvements.

In parallel, energy systems are being transformed by rapid adoption of renewables at all scales, the anticipated increase in electric vehicles, and a range of new technologies including battery storage and advanced metering. Energy efficiency has an important role in this energy system transition as it can help avoid or reduce the need to build new generation and reinforce electricity networks. However, its impacts are rarely measured in a way that allows its contribution to be appropriately valued by the market and by network operators. Its facilitation can help to solve future challenges of a more distributed and low carbon electricity system at least cost and lowest risk as part of a more open and accessible market.

The Government reports that there is considerable potential for further action, with 40TWh of energy efficiency potential in commercial and industrial buildings, as well as 10TWh of potential in industrial processes. Homes are responsible for 13% of the UK’s carbon emissions, rising to 22% accounting for electricity use, improving energy efficiency is key to reducing these emissions. However, there are market barriers to this potential, such as measure and verification, permanent nature, barriers to accessing multiple revenue streams, high transaction and implementation costs, and behaviour change.

We are specifically focussing our feedback on the following questions:

•  How can we overcome the market barriers to energy efficiency investment?

•  How we can create new markets for energy efficiency?

•  What can we learn from other countries’ electricity systems from an energy efficiency perspective?

•  How should the Government support behaviour change?

The consultation closes on 25th September 2019 We are formulating our response to the consultation and would welcome your feedback to incorporate into this. To have your say, please email the compliance team at compliance@carbon2018.com or alternatively complete the contact form. To discuss this further please call Melanie Kendall-Reid on 01252 87 87 22.


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