UK electricity system ‘wastes billions’

The ageing UK electricity system wastes a staggering £9.5bn per year from the loss of energy before it reaches homes and businesses, according to a new report: Less Waste, More Growth: Boosting energy productivity published by a coalition of 14 organisations, including representatives of  industrial manufacturers such as EEF, environmental groups such as Greenpeace, and the Energy Institute.

The report calls for an increase in government ambition on energy productivity and sets out three recommendations which, if implemented, could transform wasteful inefficiency into a huge growth opportunity for the UK economy. The analysis, led by the Association for Decentralised Energy (ADE, formerly the CHP Association), concludes that the total loss of energy is worth the equivalent of £354 per household, more than half the average UK annual electricity bill (£592).

The report outlines a number of cost-effective ways of reducing the waste, which could save the equivalent of £116 on every householder’s energy bill; a total of over £3bn a year. Inherited from the public system of the 1960s and 70s, less than 10% of UK power stations currently recover waste heat, and this represents a missed opportunity to save £2 billion annually. And the UK could save the equivalent of £23 per household just by upgrading electricity network efficiency to match that of Germany’s.

The report outlines three main recommendations:

•          Government should aim to improve energy system productivity year-on-year as is done in competitor countries like the US and Germany, with the purpose of reducing energy costs for users.
•          Electricity generators, networks and businesses should be able to contribute to a strong, more productive economy. For business, this means combining a revised energy tax regime with clear and investable policy to leverage improvements in energy productivity.
•          Government should enhance the natural market direction with a more solution-based approach to its energy policy assessments, allowing the demand side and the supply side to compete equally.

Tim Rotheray, Director of the ADE, commented: ‘The fact that we waste enough energy to pay half the electricity bill of every home in Britain should be a national embarrassment. Wasted energy reduces our productivity, undermines efforts to create a competitive economy on a global level and causes unnecessary emissions.’