Energy saving feed-in tariffs (ESFITs) are a relatively new concept and are designed to use the same principles as Feed in Tariffs for renewable energy (REFITs). They offer a promising way of improving electricity efficiency and reducing electricity demand, thereby decreasing carbon emissions.
The Electricity Market Reform proposals which form part of the 2012 Energy Bill provide a bias towards investment in new supply that could be addressed using ESFITs.
In the context of EMR, ESFITs offer a means of delivering decarbonisation with a lower impact on consumer bills.
Because ESFITs do not rely on energy companies, they would provide incentives for innovation in project delivery in a much wider range of actors including householders, community groups, local authorities and small businesses.
The concept of ESFITs is simple, but there are policy design issues that still need to be addressed.