Energy and climate change secretary Ed Davey has announced a £20 million energy efficiency scheme designed to help commercial entities reduce energy bills by improving energy efficiency and reducing energy demand.
The new scheme will see businesses compete for funding to implement energy reduction methods. The first tranche of funding will see interested companies bid for a slice of a £10 million pot of funding.
Announcing the scheme, Davey said: “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.”
The Department of Energy and Climate Change (DECC) has modelled that electrical efficiency could equate to savings equivalent to 9% of total demand by 2030. DECC hopes that the electricity demand reduction scheme will help test whether projects that deliver peak energy savings can compete with generation, demand side response and storage in the upcoming Capacity Market.
The electricity demand reduction pilot will run for two years with DECC interested in projects that can deliver a minimum of 100kW of savings through the winter peak.
DECC claims that more than 300 companies have already expressed an interest in bidding in the first auction. Expressions of interest for the first auction open 29 July.
In addition to the electricity demand reduction scheme, Davey announced new measures designed to tackle investment barriers in energy infrastructure. DECC will remove current rules that stop companies from investing and exercising rights in both generation and transmission networks at the same time. Instead, Ofgem will be given the powers to judge each application on a case-by-case basis.
Davey commented: “By stripping away barriers to investment in our energy market, we’ll make attracting capital investment cheaper and easier – meaning real benefits for the British economy and British consumers.”