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‘Ultra-cheap energy for every household’: could a different kind of tariff change everything?

Rising block tariffs and national energy guarantee systems are almost unknown in Europe – but are flourishing elsewhere

By Matthew Taylor, 2Aug 24

More than half of the world’s population lives under an energy system
that its advocates say can tackle fuel poverty, improve crumbling housing
stock and reduce energy demand. And to cap it off – when properly
designed – it would not cost the taxpayer anything.

The so-called rising
block tariff or national energy guarantee system (NEG) are almost unknown
in Europe but operate successfully in many other countries and regions –
from Japan, South Korea and China to Bangladesh, India and California.

The idea is simple: the first block of energy, which is calculated to meet
essential needs from heating to cooking and lighting, is either given at a
reduced rate or free. The cost a unit then rises in additional blocks,
meaning wealthier homes with excessive or non-essential consumption pay
more.

According to its champions, the benefits that flow from this system
are numerous: fuel poverty is reduced or eradicated with those on the
lowest incomes getting affordable energy to cover the essentials – from
heating to cooking and light. Excessive consumption – overwhelmingly
linked to wealthier households – is charged at a higher rate, subsidising
the cheaper tariff. And everyone is incentivised to reduce consumption and
improve their homes through insulation, smart technology and other energy
efficient measures in an effort to stay within the cheapest block.

A further advantage, its backers say, is that the lowest tariff could be
directly linked to the rollout of renewable energy. In this scenario cheap
wind and solar power would determine the size of the lowest tariff, which
would then be split between all consumers, giving the public a direct stake
in the transition to a low-carbon energy system.

 Guardian 2nd Aug 2024

https://www.theguardian.com/environment/article/2024/aug/02/ultra-cheap-energy-for-every-household-could-a-different-kind-of-tariff-change-everything

August 3, 2024 - Posted by Christina Macpherson | ENERGY