by Staff Writers
London (UPI) Oct 8, 2012
The closing of aging coal-fired power plants and tough EU environmental rules could lead to power shortages in Britain, regulators warned.
Britain's Office of Gas and Electricity Markets, or Ofgem, predicted in an analysis released Friday that electricity margins -- the amount of spare generation capacity on the system -- could fall from 14 percent currently to 4 percent in 2015-16.
The greatest risk of blackouts would come in 2015-16 as the country is left with a shortage equivalent to the supply to 9,000 households, the report said.
Ofgem, which is seeking "sweeping reforms" in the country's energy retail markets, also predicted consumers could see sharp price spikes in the years ahead as Britain phases out coal-fired plants and becomes more exposed to the uncertainties of the global gas market.
Ofgem Chief Executive Alistair Buchanan said the results of the latest analysis bear out the warnings the regulator made three years ago in its Project Discovery, where it looked at a range of scenarios to assess the energy security risks for British consumers over the next 10-15 years.
That report warned that consumers would face higher bills due to sharply increased levels of expensive natural gas imports, the need for new investments in nuclear and alterative energy, the closure of aging power stations and the need to meet tough EU environmental targets.
It said consumers could see energy price hikes from 14-25 percent as a result.
Another major concern is attracting much-needed foreign investors to finance a new wave of nuclear power stations and alternative power supplies at a time of global economic crisis.
The report came the same week as revelations that potential Chinese and French investors had pulled out of a bid to build a $13 billion nuclear plant in Wales.
"The unprecedented challenges facing Britain's energy industry, identified in Ofgem's Project Discovery, to attract the investment to deliver secure, sustainable and affordable energy supplies for consumers, still remain," he said. "Ofgem is working with government on its plans to reform the electricity market to tackle these issues."
British Secretary of State for Energy and Climate Change Ed Davey said the government would respond to the Ofgem report by the end of the year as the coalition government prepares its upcoming energy bill, which seeks to offer a fixed price for energy investors.
But Whitehall sources told The Telegraph it may be too late to avoid the risk of blackouts in the middle of the decade, since the building new gas-fired capacity could take four years.
"It may be that we will sail through the danger period without any problems," the source said. "But if things do start to go wrong, we may be in trouble."
There is "only a very low risk to householders" of possible blackouts, a spokesman for the Department for Energy and Climate Change told the newspaper.
"We would like to see slightly larger margins and this is why we're acting to bring more investment forward," the spokesman said. "Investment is already coming forward. New gas-fired power stations at Pembroke and West Burton are just coming online."
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