Wales should also aim to meet all of its energy needs from renewable sources and, in the context of the need to reduce carbon emissions by at least 80 per cent by 2050, set a target date for achieving this, says a National Assembly for Wales committee.
Locally and community produced energy should be a central part of Wales's future energy plans according to the Committee.
The Environment and Sustainability Committee also wants to see annual targets set to reduce energy demand and help people to use it more effectively.
The recommendations are contained in a new report, A Smarter Energy Future for Wales, which looks at issues including low carbon energy supply, energy demand management, and energy storage.
The Committee wants to see building regulations urgently revised to ensure that all new houses are built to 'near zero' energy standards. It also believes the Welsh Government should explore linking the cost of stamp duty land tax to the energy performance of a house to start to increase the value of energy efficient homes. This could be looked at under new revenue-raising powers set to be devolved to Wales.
"Limiting future climate change by radically reducing the amount of carbon released into the atmosphere is one of the greatest challenges faced globally, and yet addressing this challenge also presents opportunities to significantly enhance the well-being of current and future generations," said Alun Ffred Jones AM, Chair of the Environment and Sustainability Committee.
Inquiry into a smarter Energy Future for Wales video
"Underpinning the moral case for reducing Wales's carbon emissions are international and domestic commitments to limiting average global temperature rises.
"In Wales we have taken a further step by establishing a legally-binding emissions reduction target.
"Wales's only chance of meeting this target is to transform the way we all think about energy; its generation, distribution, storage and conservation.
As part of its inquiry the Committee visited the state of Baden-Wurrtemberg in south-west Germany and met with communities and policy makers to see how the energy transformation - the Energiewende - had taken hold there.
"What we saw in Germany reinforced the case for change and showed us what was possible if the right mix of leadership, policy and regulation is applied," said Mr Jones.
"We saw many inspirational examples of what could be achieved if policy makers are brave enough to take hard decisions and when communities start to control the shape of their future."
The Committee makes 19 recommendations in its report, including:
- Establish a clear vision for future energy policy, including a central role for local energy;
- Set annual targets to reduce demand for energy and help people to use it more efficiently;
- Urgently revise Building Regulations to ensure that all new houses are built to 'near zero' energy standards; and
- Set up an 'umbrella' not-for-profit energy service company. Under this umbrella local authorities, city regions or communities can offer energy supply locally.