Ofgem warns of power shortage risk by 2015

Posted on 5 October 2012

Analysis by Ofgem based on joint modelling with National Grid shows tightening margins for electricity generation over the next four years

The report shows that electricity margins, the amount of spare generation capacity on the system, could fall from 14% as it is today to 4% in 2015/16.

Ofgem blames the risk on coal-fired power stations being closed sooner than expected.

Ofgem’s Project Discovery report in 2009 identified the problems that Britain faced of an unprecedented combination of the global financial crisis, tough environmental targets and the closure of ageing power stations would increase the risk to consumers’ energy supplies and could lead to higher bills.

Today’s report shows that these challenges have not gone away.

Ofgem said this would leave Britain relying more on imported gas, which would make price rises more likely.

The Government now has an Energy Bill to address these issues and to encourage the investment into Britain to build new generation capacity.

Edward Davey, Secretary of State for Energy and Climate Change said: “I am grateful to Ofgem for providing to Government their first annual Electricity Capacity Assessment. It provides a comprehensive analysis of the security outlook and Government will consider carefully the implications. We will respond formally before the end of the year.

“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.”