The UK can expect a severe power shortage as early as 2015. This is according to a report compiled by the UK’s energy regulator Ofgem.
The report, Electricity Capacity Assessment [pdf], predicts that the country’s spare energy generating capacity will drop from the current 14% to 4% within a three year period. As a result, the UK may be forced to rely more heavily on pricey oil imports. Reuters points out that this would not give the country much room to maneuver if any existing plants underwent unplanned outages or if there was a disruption in power imports from Europe.
According to Information Daily, the energy shortfall in 2015/2016 will be around 3,400MWh. This is equivalent to the annual demand of approximately 1, 000 households.
This is not the first supply warning. Three years ago, Ofgem’s Project Discovery report warned that electricity shortages may result in escalating energy costs.
Ofgem says the early closure of coal and oil-fired power stations and EU environmental legislation, aimed at reducing carbon emissions, is to blame for the impending power shortage. Nine UK-based coal and oil-fired plants, with a total generating capacity of 11.5GW will close by 2015. Four of these plants may be shut down as early as March 2013, writes Reuters. A few gas turbine plants are currently closed down for refurbishment and some nuclear generation capacity will be retired shortly.
The regulator suggests building new generating capacity. According to Information Daily, old plants are already being replaced by a new wind and biomass generation. Ofgem chief executive Alistair Buchanan explains that the UK’s energy industry needs investment to provide “secure, sustainable and affordable energy supplies” for its consumers. Buchanan adds that Ofgem has joined the government in an effort to reform the electricity market. The government insists that its Electricity Market Reform Bill will ensure a sufficient power supply. The Bill aims to provide support to investors in new low-carbon electricity such as nuclear and renewable generation. The support will come through so-called “contract for differences” (CfDs), which amounts to a long-term price contract for the electricity, explains Reuters. However, the government has yet to stipulate the contract value, making it difficult for investors in new plants to ascertain the projects’ economic viability.
Energy UK, which represents the energy industry, agrees with Ofgem’s findings. Its chief executive Angela Knight explains that the UK needs an investment of over US$240bn (£150bn) to replace aging power stations and infrastructure, maintain a reliable power supply and meet carbon targets. Knight points out that while these upgrades are being planned, the government must also ensure the affordability of power for its consumers. Audrey Gallacher, director of energy at Consumer Focus, agrees with this sentiment and says, “Consumers need protection from price spikes as well as power cuts.”
The BBC quotes Energy Secretary Ed Davey who says: "Security of electricity supply is of critical importance to the health of the economy and the smooth functioning of our daily lives.” He adds that the government will respond to Ofgem’s report before the end of the year.
Britain is currently adding renewable energy sources to its energy mix and nuclear power is also making a comeback. Power interconnections with other European countries will also help Britain to create a more secure energy supply.