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Ofgem head warns of energy gap

Capacity issues ‘will lead to increased fossil fuel imports and rising bills’

Ofgem head warns of energy gap image

The UK is facing a drop in electricity production that will lead to increased imports of fossil fuels such as gas and force up consumers’ power bills.

Ofgem chief executive Alistair Buchanan will warn in a speech later today that the UK is to be hit by a prolonged lack of spare production capacity, in part due to the slower than expected development of sectors including renewables in the years to 2020.

He said in a preview article written for today's Daily Telegraph that because an older generation of power plants is being phased out in the next three to five years, some 60-70% of generation may have to come from gas by 2020. That coincides with forecasts of an increasing global demand and drop in UK production of 25%.

Buchanan highlighted the need for increased efficiency and said that in the longer-term government reforms are essential to 2030 and 2050. He said the financial crisis derailed what was otherwise a visionary approach to energy based on wind, water and nuclear.

Reacting to the comments, DECC said: "As Ofgem highlights, we cannot afford to be complacent and may face a looming energy gap. We have legislated to introduce a Capacity Market that will help guard against blackouts and ensure there is sufficient supply when margins get tight.

“Our reforms will incentivise a record £110bn of private sector investment in new clean power generation – in renewables, new gas, nuclear and carbon capture and storage. Investing in a diverse energy mix will help us to insulate consumers from the high price of wholesale gas, which drives up bills."

Image:  Alistair Buchanan predicts trouble for the UK energy mix (Ofgem)

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