Tuesday 23 July 2019

Energy efficiency: What are the barriers and routes to market?

Energy efficiency: What are the barriers and routes to market?

The government is inviting views on barriers to energy efficiency in the UK and how new markets could be created.

It has launched a consultation, which will run until 25th September 2019, to secure the role of energy efficiency in the wider energy market, contributing to flexibility and becoming a “reliable alternative” to increased generation and network reinforcement.

The government says energy efficiency has an important role in the 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 measures in a way that allows its contribution to be appropriately valued by the market and network operators.

A pilot conducted between 2014 and 2018 to test if permanent electricity demand reduction (EDR) could be viable as part of the Capacity Market - currently suspended by the EU - found energy efficiency projects are not yet ready to enter the auction scheme.

Under the Capacity Market, generators are offered financial incentives for ensuring power plants are kept on standby and are ready to provide back-up electricity when demand is at its peak, especially during the winter months.

The government suggests 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 – and improving energy efficiency is key to cutting 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.

BEIS is therefore seeking views on the market barriers to energy efficiency and how they could be addressed to help inform future policy.

The announcement follows the Environmental Audit Committee (EAC) warning the UK “stands no chance” of meeting its emissions reduction targets as well as the 2050 net zero goal without urgent action on energy efficiency.

Written by

Bruna Pinhoni

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