* Bills headed for 18 percent rise by 2020
* Government says policies will trim 11 percent from potential 2020 bills (Adds analyst comment)
By Susanna Twidale
LONDON, March 27 Britain's government said household energy bills were headed for an 18 percent increase by 2020 but its policies promoting domestic energy efficiency, including its so-called Green Deal, would make the rise significantly smaller.
The average British household could face an energy bill of 1,496 pounds ($2,300) per year by 2020, according to a report published by the Department of Energy and Climate Change (DECC) on Wednesday, up from the 1,267 pounds it expects homes to pay this year.
If government schemes such as the Green Deal, which helps pay for energy saving home improvements, are successful, the average 2020 bill will be 11 percent cheaper than this forecast, the report said.
"With policies, bills are still going to go up, but they are going to go up by a lot less," energy and climate change secretary Ed Davey said at a briefing for journalists ahead of the report's publication.
The Green Deal is one of several government policies now in place that include plans to roll out smart meters - indicating which appliances use most power - replace inefficient boilers and encourage energy suppliers to help pay for roof insulations.
Overall these measures will knock 452 pounds from the average bill in 2020, DECC said, although this saving will be reduced to 166 pounds by the cost of other government schemes to boost renewable generation and levies on carbon emissions.
Some analysts doubted the government figures, saying DECC's reduction figures were hard to measure and that installation costs for energy efficiency measures had not been included.
"The reductions are virtually all down to energy efficiency measures, the impact of which are not certain, whereas the increases are pretty much guaranteed, and these calculations do not include the cost to the consumer of installing the energy efficiency measures," Liberum Capital said in a research note.
"The concern is that when bills really start to ramp up, future governments will renege on the returns promised to developers. This is exactly what happened in Spain, Italy," the investment bank said.
Britain's government came under criticism last year when each of the country's big six energy providers ramped up bills by up to 10 percent, blaming soaring wholesale gas prices.
British wholesale gas prices surged to a record high last Friday after one of its main gas import pipelines shut down unexpectedly. Davey said companies would not be able to use this as an excuse to increase the cost for households.
"We will make it clear to energy suppliers that this is just a cold, temporary snap and is no excuse for putting up energy bills," he said. ($1 = 0.6599 British pounds) (Additional reporting by Henning Gloystein; Editing by Anthony Barker)