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Implementing the efficiency first principle in the UK

Panel: 2. What's next in energy policy?

This is a peer-reviewed paper.

Authors:
Jan Rosenow, The Regulatory Assistance Project (RAP), Belgium
Richard Cowart, RAP

Abstract

The principle of “Efficiency First” has been adopted by the EU in the various parts of the Clean Energy for All Europeans package. It is a principle applied to policymaking, planning, and investment in the energy sector. Put simply, it prioritises investments in customer-side efficiency resources (including end-use energy efficiency and demand response) whenever they would cost less, or deliver more value, than investing in energy infrastructure, fuels, and supply alone.

Efficiency First has gained traction at the European Union (EU) level since the launch of the Energy Union Communication in February 2015 and the publication of the Winter Package, but also in some European countries such as Germany, where it has become an energy policy principle and is now an underlying principle of Germany’s Energiewende.

What is unclear so far though is how the Efficiency First principle should be applied across the energy system and what the implementation would look like.

In this paper, we identify key areas where we see opportunities for the Efficiency First principle to play an important role. We use the United Kingdom as a case study as there are many existing policy areas that demonstrate how Efficiency First could be applied. In particular, we assess the potential for Efficiency First in the context of policy decisions that will be made over the next years, including the design of a new able-to-pay energy efficiency programme, energy network regulation, infrastructure spending, revisions of the capacity mechanism, and the levy control framework.

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