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Energy saving in energy market reform—The feed-in tariffs option

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  • Eyre, Nick

Abstract

The use of feed-in tariffs (FITs) is now widespread for renewable energy and under discussion for other low carbon electricity generation, but not for energy efficiency. There is a small literature on FITs for electricity demand reduction, but not energy efficiency more generally. This paper considers the general application of FITs on the demand side and sets out the economic arguments in the context of changing energy markets. It then discusses the implications of some practical issues, including the definitional problems arising from the difference between energy efficiency and demand reduction. Using experience from historical energy efficiency programmes, it considers the public benefits, payment methods and policy scope that need to be considered and how these might affect policy design. It makes some provisional estimates of economically justified payments in the context of the proposed UK energy market reform. It concludes that FITs for energy saving might be a powerful tool for incentivising energy efficiency.

Suggested Citation

  • Eyre, Nick, 2013. "Energy saving in energy market reform—The feed-in tariffs option," Energy Policy, Elsevier, vol. 52(C), pages 190-198.
    • Handle: RePEc:eee:enepol:v:52:y:2013:i:c:p:190-198
    DOI: 10.1016/j.enpol.2012.07.042
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    7. Buckman, Greg & Sibley, Jon & Bourne, Richard, 2014. "The large-scale solar feed-in tariff reverse auction in the Australian Capital Territory, Australia," Energy Policy, Elsevier, vol. 72(C), pages 14-22.
    8. Safarzadeh, Soroush & Rasti-Barzoki, Morteza & Hejazi, Seyed Reza, 2020. "A review of optimal energy policy instruments on industrial energy efficiency programs, rebound effects, and government policies," Energy Policy, Elsevier, vol. 139(C).
    9. Ghaderi, A. & Parsa Moghaddam, M. & Sheikh-El-Eslami, M.K., 2014. "Energy efficiency resource modeling in generation expansion planning," Energy, Elsevier, vol. 68(C), pages 529-537.
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