Improving energy efficiency backed as solution to UK's energy security

Lindsay Edwards of Pinsent Masons, the law firm behind Out-Law.com, said that there are new funding models being developed to encourage commercial and residential property owners to adopt energy efficient measures. The incentives for adopters are the lowering of their carbon footprint and long term reduction of their energy costs, she said.

Steps have already been taken to make the UK's energy generation more 'green'. Improving energy efficiency of properties is an equally important step towards strengthening energy security in the country, she said.

Edwards was commenting after National Grid last week issued a 'Gas Deficit Warning' which called on gas suppliers to make additional gas supplies available for distribution. The warning was issued on Thursday morning as the UK experienced extreme weather conditions, with heavy snowfall across many parts of the country. The warning was withdrawn early on Friday morning. Domestic gas supplies were not impacted by the warning and National Grid did not instruct businesses to use less gas, it said.

"Improving the energy efficiency of the UK’s housing stock and public and commercial buildings is of critical importance to the future of the UK’s energy system," Edwards said.

"On the generation side, the UK is moving towards a flexible system, powered increasingly by intermittent renewable sources of electricity backed by various methods of electricity storage. Good progress has been made in this regard: for the first time, more than half of the UK’s electricity was generated from low carbon sources – renewable and nuclear – in 2017. The other side of the coin is reducing the amount of energy that we consume, largely through energy efficiency improvements. This will be essential if we are to move to a low carbon future, where all of our energy needs are supplied from low carbon sources." 

Edwards said that, to-date, however, progress on that front has been slow. This is despite the potential for "'no regrets' gains".

"The UK has notoriously energy inefficient buildings which, if improved, would save consumers money over the long term, as well as reducing the amount of energy we use," Edwards said.

Traditionally, energy efficiency schemes have required property owners to make "substantial capital investments" at the outset to achieve "incremental year-on-year savings", Edwards said. Such schemes can sometimes prove "unattractive for investors", she said. 

Developments in the energy efficiency market have also been impinged by a lack of support from government, with the 'Green Deal' scheme scrapped in 2015 and not replaced since, Edwards said. Despite this, she said there is now growing interest from businesses in the market.

"We are aware of recent 'pay-as-you-save' funding models aimed at both commercial and residential markets, for example," Edwards said. "There has also been some uptake of energy performance contracting, whereby energy efficiency measures are paid for by a guaranteed level of energy savings, in the public sector. Much remains to be done, however."

"We expect to see increasing private and public sector engagement with energy efficiency, as private sector offerings become established in the market, and government initiatives that target hard to treat areas are implemented, including the ambition to bring homes up to a minimum energy band C by 2035, as set out in the government's clean growth strategy," she said.