This project studied how value can be delivered across a smart energy value chain - in the context of the UK. It built a clear understanding of how smart energy systems can deliver combined consumer value alongside commercial value for market participants - producers, suppliers, distributors.The analysis will help to make the commercial deployment of smart energy systems more likely. This £600,000 project was delivered by Frontier Economics, a leading economic consultancy.
The final report has 11 annexes. This is Annex 1b: Analysis of existing policy.
This annexe sets out the analysis of existing heat and energy efficiency policies underlying our analysis of barriers and solutions.The annexe is structured as follows.We first summarise our findings.We then review existing heat and energy efficiency policies in the UK and internationally, analysing how far policies have overcome barriers to uptake, and their wider effectiveness (e.g. in terms of cost, or impact on industry confidence).Summary of findingsNo ‘silver bullet.’ Our analysis has shown that there is no ‘silver bullet’ that effectively addresses all barriers at oncAbsent mandating, overcoming or bypassing interest barriers is a prerequisite for policy success.The Green Deal has had little success in this area to date.Supplier obligations have been successful in driving energy efficiency take up but they may not result in the most effective delivery.Mandating can be an effective last resort.To minimise the cost of mandated standards, they should be set in as broad a way as possible. Setting broad mandates also helps avoid adverse outcomes.If financial incentives are high enough, many other barriers can be overcome.Alignment with long-term decarbonisation goals has not always been achieved.To be effective, financial incentives must be designed with awareness and interest barriers in mind.Consumers’ tendency to focus on near term costs and benefits and credit constraints could also be driving low take up of financial incentives that are not paid up front.Upfront grants may be a more cost effective way of driving uptake than ongoing payments.Green Deal loans have not been a success.District heat development internationally has relied on a range of enabling policy measures.Experience with district heat also highlights the importance of supply side and competition policy.This report was initially produced in March 2015.The detailed information and analyses documented within may be out of ...
The final report has 11 annexes. This is Annex 1b: Analysis of existing policy.
This annexe sets out the analysis of existing heat and energy efficiency policies underlying our analysis of barriers and solutions.The annexe is structured as follows.We first summarise our findings.We then review existing heat and energy efficiency policies in the UK and internationally, analysing how far policies have overcome barriers to uptake, and their wider effectiveness (e.g. in terms of cost, or impact on industry confidence).Summary of findingsNo ‘silver bullet.’ Our analysis has shown that there is no ‘silver bullet’ that effectively addresses all barriers at oncAbsent mandating, overcoming or bypassing interest barriers is a prerequisite for policy success.The Green Deal has had little success in this area to date.Supplier obligations have been successful in driving energy efficiency take up but they may not result in the most effective delivery.Mandating can be an effective last resort.To minimise the cost of mandated standards, they should be set in as broad a way as possible. Setting broad mandates also helps avoid adverse outcomes.If financial incentives are high enough, many other barriers can be overcome.Alignment with long-term decarbonisation goals has not always been achieved.To be effective, financial incentives must be designed with awareness and interest barriers in mind.Consumers’ tendency to focus on near term costs and benefits and credit constraints could also be driving low take up of financial incentives that are not paid up front.Upfront grants may be a more cost effective way of driving uptake than ongoing payments.Green Deal loans have not been a success.District heat development internationally has relied on a range of enabling policy measures.Experience with district heat also highlights the importance of supply side and competition policy.This report was initially produced in March 2015.The detailed information and analyses documented within may be out of ...