Calls for an energy saving Feed in Tariff

The Feed in Tariff was introduced back in 2010 in order to financially compensate and reward those who installed a photovoltaic system.

An energy supplier pays for each kilowatt of energy produced under the generation tariff, and any additional energy generated not used and exported into the national grid also generates and additional payment under the export tariff.

Now the Green Alliance, an environmental think tank, and the World Wildlife Fund (WWF) have called for the introduction of a Feed in Tariff (FiT) to incentivise energy efficiency.

The proposed tariff – the Energy Efficiency FiT (EE FiT) – would see households rewarded for every unit of energy saved, or negawatts. The report, entitled 'The power of negawatts', suggested that the UK could reduce electricity demand by around 40 per cent through the introduction of this scheme which would in turn save in excess of £10 billion per annum.

The Green Alliance has called the report a "one-off opportunity to save money".

Energy Minister Greg Barker said he welcomed the report, commenting: "Energy efficiency is the huge national opportunity we have ignored for too long. The coalition is determined to put that right but we need action across the whole economy, not just one sector.

"However, improving the efficiency of the electricity sector is key. That is why we will be launching our own comprehensive consultation on electricity demand reduction this autumn to inform the latest Energy Bill. So I greatly welcome this report and its ambitious ideas as a contribution to this process."

The report also offered a solution to the steadily rising costs of energy stating that the current market structure is biased in favour of high cost supply: because customers pay per unit of electricity consumed, profits only increase if electricity use increases.

As it stands, companies can’t make money by helping consumers to use less energy, but the introduction of a tariff such as the EE FiT would see companies competing to find the best ways to cut electricity use in order to generate valuable negawatts.