£20m energy savings handout for business and organisations but little for households

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July 18, 2014

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Grants and incentives

The government is planning a £20 million handout to help business, industry and other organisations make energy savings this year.

Energy and Climate Change Secretary Ed Davey announced the move in his speech to the Confederation of British Industry (CBI) Energy Conference in London yesterday.

The trial scheme will help businesses and other organisations to make energy efficiency improvements, like replacing energy-guzzling light bulbs with LEDs or upgrading motors and pumps.

SaveMoneyCutCarbon has long argued for effective national funding to boost energy efficiencies but in this case why not use the money to help everyone through a UK “swap & save” initiative?

It would be relatively straightforward to have supermarkets and DIY chains offer LED replacements to the general public in exchange for their old bulbs, at nominal charge of £1 per bulb.

That seems fairer than effectively making us all pay more on our energy bills to give supermarkets and airports free LED lighting.

Mr Davey set out the details of the first £10 million Electricity Demand Reduction (EDR) auction from a £20 million budget for the full pilot.

Companies and organisations can compete for energy-saving funding in a reverse auction, which could cover the entire cost of the work or have it partially subsidised. They should then enjoy cheaper energy bills as a result, Mr Davey advised.

Reduced energy bills are something every consumer would want and we’re helping businesses and households do just that through LED lighting that cuts electricity consumption by up to 90%. Our water and pump efficiency solutions help cut utility bills by more than 50%.

Surely it would make more sense for the government to help fund household energy savings and water savings, while not neglecting businesses’ needs.

Save businesses money

Under the EDR scheme, businesses will compete for funding for projects that reduce electricity demand, where projects would not have happened without the funding. The projects will save businesses money on electricity bills as well as cutting carbon emissions and demand on the National Grid. Expressions of interest open on July 29th.

More than 300 organisations including hospitals, airports, local authorities, ports to supermarket chains have indicated that they are considering participating in the auction.

The EDR pilot is open to all sectors of the economy across Britain. It aims to test whether efficiency projects can compete in the forthcoming Capacity Market as well as bid for funding for projects to replace inefficient kit with new products.

This has carbon, security of supply and cost benefits. Organisations can bid in for money for their savings in winter peak 2015/16 but they will save money whenever they are using the new kit. The pilot will run for two years and will help the government decide how to design an enduring scheme.

The government will consider projects that can deliver at least 100 kilowatts of savings throughout the winter peak.

Mr Davey believes that electrical efficiency could mean savings equivalent to 9% of total demand by 2030 and so reduce the need for new power stations.

The government is testing whether projects that deliver lasting electricity savings at peak times could compete with generation, demand side response (DSR) and storage in the UK Capacity Market.

Keeping the lights on

Mr Davey told the CBI that the changes were part of the Government’s strategy to create an energy secure, energy efficient economy.

While the UK has one of the most secure energy systems in the world – ranked 4th by the US Chamber of Commerce, urgent action is needed to deal with the problem of tightening electricity margins up to 2018, which could lead to power cuts and black outs.

The Government has announced safeguards to ensure more electricity is available at peak times and to allow mothballed plants to be used if necessary but cutting consumption is essential.

Mr Davey told the CBI: “Our plan is powering growth and jobs in the UK economy. We are building a secure, sustainable energy system for the future, dealing with an historic legacy of underinvestment and neglect that threatened to undermine the whole economy.

“The funds we invest now in keeping the lights on could, in the future, be available to support cheaper projects that deliver lasting reductions in peak electricity demand.

“I want to unlock the untapped potential of better efficiency in electricity use – so that more efficient kit can compete with building new power stations in the future. Our £20 million pilot will fund schemes that will help reduce our demand – not only saving businesses and their customers money, but reducing the amount of electricity we’ll need to generate.”

We certainly hope customers get a benefit but would strongly urge the government to consider “swap & save” schemes to reduce household lighting and water costs. Then everyone benefits.

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