Energy efficiency improvements across the US electricity sector could reduce consumption by over a tenth, but only if a major overhaul of current grid technologies and policies is undertaken.

That is the conclusion of a new draft report from energy trade group the Edison Electric Institute (EEI) and research body Electric Power Research Institute (EPRI), which argues that energy savings of between seven and 11 per cent could be achieved over the next 20 years as long as key barriers are addressed.

The report argues that a major overhaul of US energy policy to achieve these savings, including the adoption and enforcement of aggressive building codes and appliance standards, creation of utility business models that promote increased efficiency, and the adoption of electricity pricing policies that more accurately reflect the cost of providing electricity to consumers.

It also warns that "optimal electricity savings" can only be achieved if cutting edge technologies, such as smart grid systems that allow household thermostats and other appliances that respond automatically to electricity price or demand signals, are rolled out as a matter of urgency.

Diane Munns, executive director at EEI, said that such an upgrade to the US grid would require a significant up front investment, but insisted that it would deliver long term benefits. "Achieving efficiency improvements going significantly beyond those already in the pipeline will be a major undertaking, " she said. "No matter how you slice it, we’ll have to build significant new generation to ensure that we meet demand. [But] the greater gains we make in energy efficiency, the better off everyone will be, because we’ll have more cost-effective options for serving our customers."

The report argued that utilities should focus on delivering efficiency gains through the grid as the assumption that more efficient appliances would lead to a net reduction in electricity use is proving unfounded. It notes that while many larger household appliances have become more efficient over the years the proliferation of new devices such as plasma TVs and set top boxes means that electricity demand is still expected to soar by 30 per cent by 2030.