Why We Need to Shift Focus from Energy Supply to Reducing Demand

Mari Martiskainen asks whether it is time to have a real debate about moving our focus from energy supply to realising the benefits of energy efficiency.

The International Energy Agency (IEA) reported last week that the energy efficiency market was worth between $310 billion and $360 billion in 2011; thanks to energy efficiency improvements in buildings, transport and appliances, total final energy consumption in IEA countries has reduced by 60% during the last 40 years.

There is clear evidence that energy efficiency works, not only by reducing demand but also by contributing to a transition towards a more sustainable energy system. In the light of this, there is a clear need to have a more open debate about the role of energy efficiency in the UK’s energy policy.

On October 8th, the European Commission approved the UK’s venture of providing state support measures for a new nuclear plant at Hinkley Point. The decision means that developer EDF Energy will receive up to £17.6bn as a guaranteed ‘strike price’ for power output over 35 years, worth £92.50 per megawatt hour- almost double the cost of wholesale electricity in recent months. This decision has not surprisingly angered environmental groups such as Greenpeace, who have argued that nuclear as an established technology should not need subsidies.

To date, there is no new nuclear plant in Europe that would have been built to time and estimated budgets. One such plant is Olkiluoto 3, which began construction in Finland in 2005. The plant has been hit by repeated delays, soaring costs and disputes. The original start date was 2009, but it has now been delayed to at least until 2018. Teollisuuden Voima (TVO), the owner of OL3 project, was granted a licence to start constructing a second new plant OL4 in 2006. However, this year TVO asked the Finnish government to extend that licence by another 5 years, which inevitably was turned down by the government this past September.

Similarly, the building of Flamanville 3 plant by EdF in France has been hit by delays and increased costs.

On October 7th, Ed Davey, the Secretary of State for Energy and Climate Change announced an extra £100 million for the Green Deal Home Improvement Fund, aimed at improving the UK’s existing housing stock. Nevertheless, this seems like peanuts compared to the support the government is planning for the nuclear industry.

An important question, however, remains: do we want to keep committing UK’s energy policy to an energy generation technology that would inevitable lock us into uncertainty and economic risks? Instead of investing in technologies that may be operational in ten years’ time we need to look at the role that energy efficiency can have today, in reducing demand, reducing carbon emissions and helping the UK achieve its climate change targets.