Payments for each kilowatt-hour saved by anyone installing energy efficiency measures have been put forward by the Department of Energy and Climate Change.
Working in a similar way to the Feed-in Tariff, homeowners would be paid per unit of electricity they do not use (negawatts) in a bid to reduce our demand for energy.
DECC estimates that this would be cheaper than paying for increased generation capacity and that a realistic reduction target of 26 percent could be expected by 2030, saving £4bn.
Climate change minister Greg Barker said: “Cutting the amount of electricity we use not only saves money on bills and reduces the need for new generation capacity, its makes good business sense too.
“We have schemes already in place but there are more avenues to be explored and that’s what these ambitious proposals, a first for the UK, are designed to do.”
DECC is seeking views on a number of proposals as part of its electricity demand reduction consultation which closes on 31 January 2013.
Other key initiatives include voluntary schemes and better energy efficiency information, an energy supplier obligation in the non domestic sector to compliment the Energy Company Obligation which is targeted at households and including a demand reduction element in the Capacity Market as part of Electricity Market Reform.