The government said a 10 per cent reduction in electricity demand could save around £4 billion in 2030, which would compensate for the cost of making efficiency investments upfront. Government said the 10 per cent reduction will cut carbon dioxide emissions by 4.5 megatonnes a year.
A consultation will set out a series of measures to boost energy efficiency investment, including paying companies for each kilowatt hour of electricity they save and introducing financial incentives for businesses and homeowners to help them replace lighting, pumps, motors, and other appliances with more efficient technologies.
Energy suppliers will also be asked to meet a target to deliver demand reduction in the non-domestic sector to complement the Energy Company Obligation to reduce carbon emissions that is targeted at households.
Energy Secretary Edward Davey said: “The coalition government is absolutely determined to help cut energy bills for consumers, reduce costs for businesses and bring down our emissions. We need to make our energy supply fit for the 21st century, and in a world of rising gas prices we must power our homes and businesses in a much more efficient way.
“That’s why today I am setting out economy wide, ambitious proposals to cut electricity demand. These build on our energy efficiency strategy published earlier this month and will help us lower bills and reduce the need for expensive new energy generation.”