homenews and insights energy efficiency has been directly responsible for 25 of the uks economic

Energy efficiency has been directly responsible for 25% of the UK’s economic growth since 1971

GDP-growth graph

A recent policy insight by think tank 'The Green Alliance' is advocating government action in support of greater adoption of energy efficiency through the use of digital technologies such as smart sensors, IoT and analytics. In support of this, it cites an academic paper which claims that "Energy efficiency has been directly responsible for a quarter of the UK’s economic growth since 1971".

A smarter way to save energy1

”A smarter way to save energy” is a policy insight by The Green Alliance2, a think tank, which has been attracting a lot of attention in industry publications, on websites, and social media, most of which focus on headline-grabbing statistics such as…

Wasted energy costing businesses £60m a year in unnecessary bills3

However, the original document contains an even more dramatic statement, which seems to have been overlooked:

Energy efficiency has been directly responsible for a quarter of the UK’s economic growth since 19714

This is a huge claim! Digging deeper, the statement has been taken from a guest posting on the website carbonbrief. The authors, four academics from Leeds and York Universities, justify their central argument well, and the paper is fully supported by references. It goes on to discuss the implications of this when considering the need to limit growth in energy use5 whilst still continuing to grow GDP6.


The authors speculate that this result may also partially explain the much-discussed problem of the decline in output per worker in the UK despite efforts to reverse it, sometimes known as “The Productivity Puzzle”7. The reason for this may simply be that labour has a shrinking role in the economy against an increasing role for energy productivity, i.e. energy efficiency improvements.

This is in conjunction with the forecast that the Committee on Climate Change (CCC) estimates that total power demand could double by 2050 due to switching from fossil fuel to electricity for heat, transport, and industrial processes.

The authors propose three courses of action:

  1. To design energy-efficient policies that can lead to a decoupling of this effect by combining efficiency policies with intelligent pricing, such as carbon taxes
  2. To look at alternative ways to deliver energy services, such as communal heating, electric vehicles and LED/smart lighting
  3. To place greater emphasis on alternatives such as renewable energy technologies. This makes sense if improved energy efficiency does not deliver the carbon savings that were expected.

The policy insight stresses that better energy efficiency makes businesses more profitable and resilient, even when taking into account the initial cost of the investment8.

SMEs are responsible for over half the total business energy use across the UK9

By 2030 energy efficiency could save business around £6 billion a year, including £2.7 billion saving for SME’s10

The policy insight goes further stating that progress to date has been too slow, in part due to businesses being unwilling to accept payback periods beyond a couple of years and a lack of access to relevant finance and skills.

Having defined the problem, the bulk of the document describes how digital technologies provide the solution

  • Smart sensors providing more granular energy usage data and could cut electricity consumption across industry by 4%11.
  • Analytics and machine learning programmes offer further opportunities to adjust a building’s energy needs in -time.

Actual building emission rates were between 1.8x and 10x higher than estimates prior to construction12

Rather than relying on estimates, the increased use of data from measurement will help developers to understand how buildings are actually used and identify ways to reduce energy consumption.

Smart Solutions

The authors of ”A smarter way to save energy” propose that the Government should adopt the following:

Promote the use of digital technology

  • Support business adoption
  • Make equipment smart by default

Boost markets for smart energy efficiency

  • A new efficiency scheme for smaller businesses
  • Use data to increase investment

Avoid repeating poor design in new buildings

  • Learn from existing energy performance

Here at SSE Energy Solutions, we are fully behind these conclusions and are currently working with many customers along just such lines, through a combination of BeMS, IoT systems, and energy optimisation initiatives such as our Business Energy Intelligence (BEI) software.

If you would like to improve your business efficiency, through energy usage monitoring, better management of BEMS systems or through distributed energy systems, SSE Energy Solutions can help.

Call us on 0345 072 9529, or email us at info@sseenergyoptimisation.co.uk


  1. https://www.green-alliance.org.uk/a_smarter_way_to_save_energy.php
  2. https://www.green-alliance.org.uk/
  3. https://www.energylivenews.com/2020/01/22/wasted-energy-costing-businesses-60m-a-year-in-unnecessary-bills/
  4. J Barrett, P Brockway and P Taylor, 22 February 2019, ‘Energy efficiency contributed 25% of UK economic growth since 1971’, Carbon Brief
  5. EA Webinar: Energy Efficiency Market Report 2018
  6. “The Long View: Scenarios for the World Economy to 2060”, OECD Library, 2018
  7. “What is the productivity puzzle?” ONS Library, 2015
  8. BEIS, 2018a, op cit
  9. PwC & Energy UK B2B Survey: The transformation of how businesses manage their energy needs
  10. BEIS, 2018b, op cit; £5 billion of the £6 billion annual savings estimated in 2030 are from buildings; measures in buildings could include better insulation, improved lighting and control, and installation of building management systems in commercial and industrial buildings; for industrial processes, measures include heat recovery systems, and more efficient motors and high and low temperature processes.
  11. EEF, 2016, Upgrading power
  12. Innovate UK, 2016, Building performance evaluation programme: findings from non-domestic projects