Ofgem predicts power blackout risk to increase in the UK

27 June 2013 (Last Updated June 27th, 2013 18:30)

Energy regulator Ofgem has warned that the danger of power shortages in the UK is expected to increase towards the middle of this decade as ageing power stations begin to close.

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Energy regulator Ofgem has warned that the danger of power shortages in the UK is expected to increase towards the middle of this decade as ageing power stations begin to close.

Ofgem said the margin of electric capacity over demand could narrow to between 2% and 5% by 2015 and 2016.

The energy regulator said the probability of such disruptions would increase from one in 47 years now to around one in 12 years for 2015/16.

If the projected decline in demand does not materialise, margins could fall to 2%.

Ofgem said the findings illustrate the need for timely implementation of the Department of Energy and Climate Change's (DECC) capacity market.

The regulator has been working with DECC and National Grid to explore options that would offer consumers with additional safeguards against the increased risk to mid-decade security of supply.

Ofgem chief executive Andrew Wright said the latest report highlights the need for reform to encourage investment in generation.

"This is why Ofgem welcomes DECC's commitment to introduce a capacity market that will provide a longer term solution to this problem at a time when Britain's energy industry is facing an unprecedented challenge to secure supplies," Wright said.

Wright noted that the regulator'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," Wright added.

UK Cabinet Ministers has earlier announced new details of reforms to keep the lights on and emissions and bills down.

"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."

DECC said the Energy Bill, which is currently before the parliament, will introduce vital market reforms and bring huge investments in the energy infrastructure.

UK Energy and Climate Change Secretary Ed Davey said no other sector is equal in scale to the British power market, in terms of the opportunity that it offers to investors, and the scale of the infrastructure challenge.

"Our reforms will renew our electricity supply, attracting up to £110bn investment in a mix of clean, secure power and demand reduction, and will support up to 250,000 jobs up and down the supply-chain," Davey added.

Reacting to the government infrastucture plan CBI chief policy director Katja Hall said the energy plans are a big step forward and should unlock the private investment needed.

"The renewables strike price and capacity mechanism will enable investors to take their plans off the drawing board and on to building sites," Hall said. "The Energy Bill's passage has dragged on long enough, the big task now is to get it on the statute book as soon as possible."


Image: Ofgem said the margin of electric capacity over demand could narrow to between 2% and 5% by 2015 and 2016. Photo: courtesy of FreeDigitalPhotos.net.

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