Energy saving incentives urged
Under proposed reforms of the energy market, the Government is set to bring in "feed-in tariffs" which will pay fixed prices to power companies over the long-term for electricity generated by low-carbon means such as wind or nuclear.
But Green Alliance suggested an additional feed-in tariff paying businesses for the electricity savings they get consumers to make would avoid having to build some new power plants, saving billions of pounds on bills by 2025.
The scheme would allow new energy-saving companies to come into the market, with programmes such as encouraging people to change their behaviour to cut their bills, paying consumers to reduce energy use or funding them to upgrade inefficient appliances.
A report from the think-tank said the Government had plans for a 16% decrease in electricity demand compared to business-as-usual, but did not have policies to deliver the reduction.
A failure to achieve the saving - while cutting carbon emissions - would mean the need to build six extra new nuclear plants or power stations with carbon capture and storage technology (CCS) or 5,000 large offshore wind turbines, costing £70 billion to build and run between now and 2025.
But an efficiency feed-in tariff which would make payments up to 2025 would avoid around half that cost, delivering savings of £35 billion on energy bills by the middle of the next decade, according to estimates which the group described as "conservative".
Green Alliance said energy-saving programmes in the US, where a number are already established, are up to three-and-a-half times cheaper than new generation.
The report's author, Dustin Benton, said: "The electricity market is a one-way street: there are big incentives to produce more power, and very few to save energy."
© 2011 Press Association