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New Government Faces Potential Energy Crisis, Warns Expert

Andrew Critchlow, The Daily Telegraph

New government will have to address capacity shortfalls to avoid blackouts. Critics argue that a focus on renewables has left Britain’s power network now dangerously short of spare capacity.

Avoiding a power blackout will be one of the first priorities for whoever forms the next government, a leading consultant has suggested.

Ahead of the results of one of the closest elections in decades, Simon Virley, UK chair of energy and natural resources at KPMG, has warned of tight energy capacity in 2015 and 2016.

“The next couple of winters are expected to be among the tightest this decade in terms of electricity capacity margins due to announced plant closures; while Britain’s overall dependence on imported energy is soaring as North Sea production declines,” he said.

According to KPMG, the margin for power generation this winter could be even lower than the 4.1pc winter outlook provided by National Grid last year following the potential closure of plants at Killingholme and Longannet.

Blackouts have been a persistent concern for UK business. Last year National Grid was forced to unveil a series of measures to keep more power generation in reserve in an effort to boost spare capacity to 6pc, a level perceived to be a safe threshold.

National Grid’s forecasts show that without the emergency measures an exceptionally cold winter last year could have cut the margin to 2.8pc, assuming full imports of power from the continent, and eaten into reserve margins if imports were unavailable.

“This is a challenging in-tray for whoever takes on this brief in the new government, even before the overlay of new policies or a spending review, which will be tough for unprotected departments like DECC,” said Mr Virley.

Meanwhile, plans for Britain’s first new nuclear plant in a generation at Hinkley Point still depend on receiving final investment approval from French utility EDF. The company said last year it wanted to decide on the £24.5bn project in Somerset by the end of March but that deadline has now slipped.

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