Britain faces possible blackouts and even higher electricity prices by 2015, Ofgem report warns

| October 6, 2012 | 0 Comments

By
Adrian Lowery and Peter Campbell

08:19 EST, 5 October 2012


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08:27 EST, 6 October 2012

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Britain will soon be at serious risk of letting the lights
go out, the energy watchdog warned today, as it forecast a possible electricity
supply shortfall within three years.

Rigid European Union environmental laws and the closure of
oil and coal power stations are cutting off supplies and slashing spare
capacity in the UK power system, an Ofgem report said.

The regulator predicted that by 2015/16 there will be just a
4 per cent buffer in UK energy supplies, compared to the current level of 14
per cent spare capacity.

London's skyline at night: First to lose power in an emergency would be businesses before the nation's homes

London’s skyline at night: First to lose power in an emergency would be businesses before the nation’s homes

This will make the country ever more reliant on imported gas – which will probably lead to price increases at the same time as risking Britain’s self-sufficiency.

The ‘alarming’ findings have left
senior figures in the energy industry desperately worried, sources say,
as the vast scale of the challenges facing the UK’s energy future
becomes clear.

If the report’s predictions come true,
Britain could be left dependent on an unreliable undersea cable line
with France for its emergency energy supply.

Audrey Gallacher, Director of Energy at Consumer Focus, said
of the report:

WINTER WARNING

Household
fuel bills could soar this winter, with firms set to increase profits
from each home by almost 50 per cent, from £45 to £65.

SSE will raise the price of a typical dual fuel bill nine per cent from mid-October, from £1,172 to £1,274 a year.

That rise will affect as many as 5million households.

And British Gas has told 10million households that their bills could go up by as much as £100 next year.

Earlier this month Scottish Power and First Utility also pulled their cheapest fixed rate deals.

The
removal of these tariffs has left consumers with a dwindling range of
options that offer both the peace of mind of a fixed price coupled with
no exit penalties.

Experts have warned the average annual energy bill could rise by £118 to a record £1,428 next year.

‘While there is enough generation capacity to mean that
widespread power-cuts are still unlikely, narrower margins mean the risks of
outages are higher and scarcity of energy could also feed into possible price
rises in future.

‘Consumers need protection from price spikes as well as
power cuts.’

Ofgem warned in 2009 that customer bills may need to rise by
14 to 25 per cent to pay for investment to increase Britain’s energy supply by
developing more low carbon power stations.

Alistair Buchanan, chief executive of Ofgem, said: ‘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.

Today’s report reveals the UK could be left with a shortage
equivalent to 1,000 households in 2015/16, or 9,000 households in extreme
circumstances.

It estimates the chance of network operator National Grid
having to cut power to customers would stand at one in 12 in 2015/16.

But National Grid would cut power to businesses and
industrial customers before households, which significantly reduces the risk of
families being left in the dark, according to Ofgem.

It also has contingency plans in place to avoid interrupting
supply to customers, by asking power stations to maximise generation and also
by importing more power from Europe.

The Government is also looking at plans to pay gas-fired stations
to ensure they are on stand-by to generate enough demand whenever required to
boost the spare capacity.

Didcot power station: The station will close in 2013, further reducing the UK's power independence

Didcot power station: The station will close in 2013, further reducing the UK’s power independence

The report warned that there ‘will be a
significant reduction in electricity supplies from coal and oil plants
over the period, primarily driven by closures required by European
environmental legislation’.

The most damaging piece of EU ‘green
tape’, industry insiders say, is a 2001 measure designed to limit
emissions for older power stations. The Large Combustion Plant Directive
forces all coal or oil-fired power plants built before 1987 to install
expensive emissions-reducing equipment or face closure by 2015.

It was spawned out of the Brussels
obsession with weaning all European countries off coal power. But
because of Britain’s rich mining heritage, it is a measure that hits the
UK harder than any other EU member.  Nine of the UK’s coal and
oil-fired power stations are destined to shut by 2015. This represents
about 15 per cent of the UK’s total generating capacity. This would
leave Britain dependent on imported gas – which comes with a notoriously
volatile price tag.

Dark future: Ofgem warned that due to the new EU rules closing power stations Britain may have to face 1970s blackouts by 2015

Dark future: Ofgem warned that due to the new EU rules closing power stations Britain may have to face 1970s blackouts by 2015

The Government welcomed today’s report and said it hoped
reforms as part of its forthcoming Energy Bill would ensure supply was secured.

Edward Davey, State for Energy and Climate Change Secretary,
said: ‘Security of electricity supply is of critical importance to the health
of the economy and the smooth functioning of our daily lives.

‘That is why the Government is reforming the electricity
market to deliver secure, clean and affordable electricity.’

Mike Clancy, general secretary designate at union Prospect,
said: ‘This report highlights how imperative it is for the Government to act
now and introduce electricity market reform that ensures the programme of new
nuclear build and other vital energy infrastructure projects, such as carbon
capture and storage, are attractive enough to secure the long-term investment
they require.’

But Greenpeace policy director Doug Parr said the report
‘sends out a clear warning that we need to reduce demand’ rather than build new
power stations.

ANALYSIS by ALEX BRUMMER

The
stark warning that  the lights in Britain could go out within three
years, as  a result of the country’s  mad dash towards a greener energy
policy, is a terrible indictment of the prevarication  and zigzags of
government policy  on energy.

Warnings
that Britain’s energy supplies were on a knife-edge were frequent
during Labour’s 13 years in office, but it was not until the dying
months of Gordon Brown’s administration that Downing Street finally
committed to new nuclear.

And
while the dithering went on, the European Union continually tightened
environmental standards, further undermining Britain’s energy security.

The
coal-fired power station at Drax, North Yorkshire, will have to come
off line, but plans to replace it with biomass or cleaner coal have
failed to come to fruition and new nuclear is still on the drawing
board.

As for
wind-power and coastal energy turbines, so favoured by the Coalition
when it came to office, the generous subsidies are being removed making
it a much less attractive investment for the big six energy companies.

Meanwhile,
so far the Coalition has failed to come up with a pricing policy that
makes development of a new generation of nuclear power stations
sufficiently attractive to the foreign investors on whom the UK is
relying.

Now, Energy
Secretary Ed Davey’s new ‘dash for gas’ is expected to be at the centre
of the Energy Bill due before the Commons shortly.

But
experts point out that some of the UK’s mothballed gas power stations
could take years to come back on line and new capacity will take upwards
of four years to build.

Most worrying of all, by placing so much emphasis on gas Britain exposes itself to the vicissitudes of the global energy market.

British-owned
Centrica has taken a number of steps to secure gas supplies through the
Norwegian Langeled gas pipeline and by securing long-term  liquid
natural gas contracts with  Qatar – a Middle East ally with some  of the
largest natural gas reserves in the world.

But
as the UK has found in the  past, when Russia closed off gas  pipelines
through Ukraine, power  supplies are at the mercy of events beyond our
control.

Unlike other
trading nations, such as Holland, the UK has failed to build sufficient
storage capacity to see us through a prolonged geo-political crisis.

The
most positive thing that can be said of the warning from Ofgem is that
it may finally galvanise Whitehall and a fractured government into
action.

Big global power
companies such as Electricite de France, which owns British Energy’s
nuclear stations, will have  to be offered a firm promise of a generous
base price if new nuclear is finally to go ahead.

But
it could be at least a decade  before that power comes on stream.  If
the interim solution is more gas,  consumers will once again find 
themselves at the mercy of market prices.

In
recent times wholesale gas  prices have started to come down because of
new American extraction techniques known as ‘fracking’. This  has made
the US almost self-sufficient.

That
ought to make gas supplies more plentiful. But relying on imported
energy, at a time when the Middle East is in flames, can hardly be
regarded as looking after the nation’s economic or national security.

The comments below have not been moderated.

Oh God, no!! As a small child in the 70’s I remember the power cuts. I also remember my big brother getting a torch and shining it under his chin to scare me to death, oh happy times!! lol

rio cha cha
,

Middlesbrough,
06/10/2012 16:26

When Mrs T sold off these companies in the 80s we lost all control. France and Germany had price rises of about 3% las year while ours were about 17%. What value has the ‘Goldern Share’ today? Our high prices are giving the French,German and Spanish Goverment large win-falls.

Nick
,

London, United Kingdom,
06/10/2012 16:07

Add back the 16.7 billion litres of car fuel a 12% drop since 2008 and the statistics would be showing growth not recession. Green is now revealed as they fantasy of our generation screwing our economy to a wall of darkness from which we may never recover. VED income has dropped like a stone because HMG said people should buy cheaper more fuel efficient cars and now Osborne has to increase VED and tax petrol and diesel more to get back the revenue he is losing by Cleggy and Cameron following Millibands deluded climate change act in order to try and win an election. Coal maybe 15% of our capacity – plated – but right now its producing 53% of our electricity demand, wind 1.3% at best. 30,000 wind turbines may on good days appear to be generating 8% of our demand but if Germany is an example they have 29GW of wind but their average is 5GW of supply. Germany is building 23 new brown coal generators and 15 new gas plants to cope with the grid instability caused by 29GW of wind, muppets!

wellington
,

Lincoln,
06/10/2012 14:42

Let me guess the response tthe only to avert this will mean a massive increase in the cost of energy for the plebs . The result the Government making another so called difficult decision and the Energy Companies making more profit. As far as the EU is concerned perhaps after enough plebs have frozen to death we can arrange for the EU parliament to be Prosecuted for the new crime of social cleansing…. along with the UK Government .

david
,

London,
06/10/2012 14:35

so now we know…if we didnt before ,the stratagy behind the evil EU DIKTATS as to how they intend to beat the UK into submission and to have their way with everything. that is to say we would be fleeced and threatened with energy supplys if we didnt toe the line.
95% 0f housholds would be existing just to pay their energy bills ,like so many trolls. what the EU amounts to ,and make no mistake about it is a dictatorship,european puppet states to have the strings pulled upon,totaly reliant on the diktats of brussels.
if you think this is a incorrect think again.. all in the name of green climate change rules,a weapon in its own right,no evidence to show it is man made,the world has always had climate change,and always will.
the government will need to have a in out referendum .but, even then whats is needed urgently is to source alternative trade from outside of europe,ie from turkey for example who will by then have pipelines running from iraq .

clubcat136
,

halifax,
06/10/2012 14:04

Good news the Goverment is going to do a White Paper on it next year!!! How many stories have we had about Nick’s 3.30PM cut off, the part-time George at No11, even the leader Dave has taken his eye off the ball, just think about his daughter being left at the pub?

Dave
,

London, United Kingdom,
06/10/2012 13:32

I suggest we go back to steam powered turbines, built in the houses of Parliment.
There is enough hot air spoken in there to power the City.

will
,

Flintshire,
06/10/2012 13:12

All predicted many years ago.

See my article ‘Renewable Energy, Our Downfall’ on WUWT, written in 2004. Google it.

Yet despite the many warnings, the Green pipe-dreamers at the Beeb and other media outlets have continued to champion the de-industrialisation of Europe, which will result in the impoverishment and death of millions.

.

rodders
,

Telford,
06/10/2012 13:07

The EU will try their all to bring down GB. Time to really make a stand surely?

Amparelli
,

London,
06/10/2012 12:11

GO TELL THE EU TO ******* AND GET THEIR OWN AFFAIRS SORTED FIRST

Sam
,

Berks, United Kingdom,
06/10/2012 11:52

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