Feed-in tariff for energy saving: thinking of the design

Financial incentives are important for the adoption of energy efficient technologies and overcoming certain market barriers to improved energy efficiency. Such incentives are broadly used in various environmental and energy fields and are usually associated with specific technology support, rather than a general sustainable behavioural change. While the declared goal of financial support schemes is to save energy or reduce harmful emissions rather than to foster new technologies per se, it is very often encountered that such financial support for energy efficient technologies does not ensure real energy savings due to the rebound effect and remaining barriers. It is common for financial support to be given to power producers for the verified production of renewable electricity, in the form of a guaranteed financial incentive (feed-in tariff). In the energy efficiency policy research little attention has been paid to the possible use of a feed-in tariff, in the form of a fixed financial incentive based on the kWh saved by the end-user. This paper discusses the possible setup of a feed-in tariff for energy savings. The paper first explores the rationale behind and the possible functionality of a feed-in for energy savings, giving examples of similar policy tools implemented or planned. The paper looks into additionality and persistency of energy savings and explores core interactions between the feed-in and existing tools for energy efficiency. Finally, key advantages and complexities related to a feed-in tariff scheme for energy savings are discussed, intending to open a discussion and foster further research on the topic.