Consumer Charge Promotes Energy Savings

Summary: 

 

Legislators may want to consider funding electricity saving projects through a small levy on electricity consumption. The Danish Electricity Saving Trust was established by the Danish government in 1997 to implement energy saving projects to promote energy efficiency in households and public buildings. The Trust is funded by a small levy from domestic customers and public institutions. The goal was to save an annual 750-800 GWh by 2007. An external evaluation in 2004 concluded that the goal had already been met and that annual electricity savings by 2007 may be as much as 1,000 GWh, i.e. 28% above target.

 

The idea: 

Legislators seeking to increase energy efficiency in households and office buildings can learn from the success of The Danish Electricity Saving Trust. The Trust was established in 1997 by the Danish Government as a means of promoting energy efficiency and electricity savings in accordance with wider environmental and socio-economic considerations. The Trust is a politically independent body funded by a small levy paid by both domestic customers and public institutions and collected by the distribution companies. The levy is set at 0.08 Euro-cents per kilowatt hour, which generates to a yearly budget of about 12 million Euro.

The objective of the Trust is to reduce electricity consumption over 10 years by 750 - 800 GWh/year. The Trust does this by:

  • Stimulating the conversion of electric heating to district heating and natural gas.

  • Organizing campaigns in cooperation with manufacturers, retailers, and electricity network companies to stimulate the use of low energy light bulbs, energy saving white goods and promote equipment with low standby consumption etc.

  • Concluding agreements with municipal, county and state institutions to procure low-electricity consuming (A-label) equipment, lightning equipment and to use efficient building management and design.

  • Promote development and market-introducion of new efficient technologies and product.

 

The overall goal of the Trust was to achieve annual electricity savings of 750 to 800 GWh by 2007. However, an external evaluation of the Trust in 2004 concluded that the Trust had met its objectives to a very great extent, and the evaluation estimated that annual electricity savings in 2007 could be as high as 1,000 GWh, which is 28% more than expected. Sensitivity analyses show that this may vary between approximately 700 GWh and approximately 1,350 GWh.

Seen from the consumer's point of view, the electricity savings charge has been used efficiently. The electricity savings are assessed at Dkr 7.8bn, or more than ten times the charge collected from the consumers. On average, the value of the savings which can be ascribed to the activities of the Trust amounts to Dkr 0.04 per kWh saved, equivalent to a total socio-economic gain of Dkr 338m. Saving electricity also means that society has saved money.

The fact that the Trust is independent from political management and strongly mandated with power and freedom to work on and with the market is considered as the most important single factor behind its huge success.

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