Ofgem warns of possible UK power shortages

01 July 2013

Britain could face power shortages towards the middle of the decade, UK energy regulator Ofgem has stated, with spare electricity power production capacity falling as low as 2% by 2015. Ofgem said that the risk of blackouts that year has trebled from the one-in-12 it estimated in October to just one-in-four, if energy demand remains at current levels.

Ministers are trying to encourage companies to spend more than £100 billion on new green energy infrastructure by offering huge subsidies. However, the new power stations will not have arrived in time to avert the possible squeeze in 2015.

Ofgem says that no new gas-fired power plants are expected until 2016 and it expects the equivalent of just one to start generating before the end of the decade.

If Britain substantially reduced its energy demand, in line with new National Grid forecasts, then the risk of blackouts could remain close to Ofgem's previous estimates at around one-in-12. Some observers consider these forecasts to be over-optimistic.

Andrew Wright, Ofgem’s Chief Executive said: “Ofgem’s latest report on electricity security of supply highlights the need for reform to encourage investment in generation.

“Ofgem’s analysis indicates a faster than anticipated tightening of electricity margins toward the middle of this decade. Ofgem, together with DECC and National Grid, think it is prudent to consider giving National Grid additional tools now to procure electricity supplies to protect consumers as the margin between available supply and demand tightens in the mid-decade.”

One of the options proposed by National Grid is for businesses to consider reducing their energy usage between 4-8pm, i.e. during peak demand time in return for a payment.

A spokesperson said: “We have been working with DECC and Ofgem to consider what measures we can take and are proposing two new balancing services to help us manage the day to day operation of the power networks. We are consulting on these two services with the industry. This does not mean that disruption is imminent or likely but Ofgem, DECC and ourselves believe it appropriate to consider what measures could be taken in case margins deteriorate further”.

The news follows a recent survey that revealed 64% of the UK public is concerned about the possibility of blackouts.

Ofgem says the main reason behind then possible blackouts has been the UK failing to build sufficient new generating capacity to replace old fossil fuel plants.

It also believes demand for energy may not fall as much as originally expected, as fewer households are insulating their lofts and switching to green appliances than predicted.

Ministers are so concerned that factories and large businesses may be asked to switch off their power during energy emergencies in return for compensation from bill-payers.

"Without timely action there would be risks to security of supply,” Ed Davey, the Energy Secretary said.

"If we didn't do anything, if we allowed this supply crunch to happen, we would see spikes in power prices and that would be very damaging for the consumer. This intervention is meant to keep the lights on, which it will, but it's also meant to protect consumers from those price spikes.”