The report, "Smarter, Greener, Cheaper: Joining up Domestic Energy Efficiency Policy" by leading UK think-tank Policy Exchange, suggests a number of policy tweaks by the government to boost energy efficiency and reduce energy waste in the domestic sector. This comes as UK policymakers focus on cutting carbon emissions and assisting households in reducing the size of their energy bills.
The report's two main recommendations are: Promoting behavioural energy programmes which encourage people to use less energy at home and communicating the benefit of rolling out smart meters.
Behavioural energy programmes, said the report, encourage people to use less energy in their homes without installing any new equipment and can range from measures as simple as turning off the heating when one leaves the home or washing clothes at a lower temperature. These programmes include "nudging" schemes that compare a household's energy use to a more energy-efficient neighbour and community schemes to cut energy use by a group of households. International examples, stated the report, show that comparative billing can deliver cuts in energy use, while a rigorously-tested but still small-scale UK example of comparative billing combined with energy-saving advice has cut gas use at a cost of just £11 per MWh.
While evidence on the potential of such behavioural programmes is limited, particularly on a national scale, their potential should be explored.
As for smart meters, these will allow for more rigourous testing and expansion of the above-mentioned programmes. These meters will offer households real-time feedback as to whether the changes they have made to energy consumption have made a difference. But first, the benefits of these meters need to be better communicated to the public. Currently, there are concerns about what savings can actually be realised, whether technology is advanced enough to make smart meters a success, and whether detailed data on a household's energy usage should be made available to energy companies.
For both recommendations to be implemented, several things need to be put in place, stressed the report. Currently, subsidies have been given to households that adopt energy efficiency measures such as insulation. But behavioural energy programmes which can demonstrate real savings in electricity and gas demand in homes should also be eligible for subsidies under the Energy Company Obligation policy, the report argued.
This, it said, could encourage the development of rigourous methodologies on how energy savings can be verified and will also allow policymakers to discover which techniques for changing behaviour work and, importantly, how much they cost.
Specific messages targeted at different groups are also needed in government communication of the benefits of smart meters. For instance, the smart meter roll-out can be positioned as an important infrastructure upgrade and an opportunity for people to save money on energy bills. An additional message would be that such technology is enabling people to help the environment.
While the report stated that there is significant potential to reduce energy demand in UK households, admittedly, it remains to be seen if this can be realised on a large scale. Still, the report noted that a 5 percent annual reduction in energy use could lead to customer savings of £7.8 billion over the next two decades.
Policy Exchange is an influential British conservative think tank based in London.