‘Negawatts’ to compete with electricity generation

The Government is to incorporate electricity savings within the current Electricity Market Reform Bill. As exclusively revealed in the February issue of EiBI, Energy Secretary Ed Davey tabled an amendment in the final phase of debate in the House of Commons, to allow negawatts to compete with conventional electricity generation for the first time.

This means that energy saving investments can effectively have a double value. First, via lower expenditure on buying fuel for those whose premises or equipment is upgraded, And now, secondly, the kilowatt hours saved can then be sold into the electricity system – substituting for spending on new power stations.

Billed by the Times as “Government put Negawatts Not Megawatts in Energy Bill,” it was warmly welcomed by the Association for the Conservation of Energy. Director (and EiBI columnist) Andrew Warren said: “This is the culmination of a campaign which ACE has effectively been running ever since its formation 30 years ago. Throughout, we have sought recognition that investment in energy conservation can be a genuine – and mostly cheaper - alternative to investment in energy supply”.

Given the strong emphasis that government ministers have been placing on the cost-effectiveness of energy efficiency, many had initially assumed this measure would automatically be included within the new electricity market. The absence of any reference in the draft text of the Parliamentary Bill led to the creation of a widespread coalition of supporters, demanding its inclusion. Two Parliamentary select committees both criticised the government publicly for the omission (see EiBI Oct 2012).

This prompted DECC to launch a special consultation on the issue last December, ostensibly to decide the best mechanism to pursue.

In the Queen’s Speech on May 9, the government for the first time conceded that it might possibly be prepared to introduce the measures themselves in legislation. Then on May 21 Energy Secretary Ed Davey formally tabled changes to his own Parliamentary Bill, putting this into effect. These crucial amendments were approved by the House of Commons on June 4.

Warren though remains doubtful whether the precise mechanism proposed by DECC will stimulate the optimum amount of expenditure on energy saving measures. “We will therefore continue to campaign to improve the delivery mechanism, to tap the full potential for electricity savings in the UK, including promoting several test cases next year.”

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