Britain faces energy shortfalls in three years, warns Ofgem

Tough European environmental laws will also contribute to a decline in the spare capacity within the UK’s energy system, according to a hard-hitting report from Ofgem.

The report predicted total spare capacity – the amount of electricity generated to keep power supplies “alive” in the event of a power-station breakdown – could plunge from the current historic high of 14 per cent to just 4 per cent in 2015-16.

Such a decline would leave the UK at risk of significant shortfalls, the Ofgem report said.

Energy experts last night said the report’s findings suggested Britain would become more reliant on imported energy from Norway and Russia.

However, the Scottish Government said the shortfall created opportunities for the country’s renewable industries.

Ofgem’s report, its first annual electricity capacity assessment, comes three years after the regulator’s Project Discovery study, which warned energy supply shortfalls would lead to higher bills for customers.

Ofgem said in 2009 that bills might need to rise by 14 per cent to 25 per cent to pay for investment to increase Britain’s energy systems by developing more low-carbon power stations.

Ofgem chief executive Alistair Buchanan 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.”

The new report reveals the UK could be left with a shortage equivalent to 1,000 households in 2015-16 – and up to 9,000 households in extreme circumstances.

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.

Tony Mackay, an Inverness-based energy economist, said: “We will certainly need to make up this deficit and I think the Ofgem report is quite realistic.

“Coal- and oil-fired power stations are likely to close very soon. That means we should look at a mixture of more wind power and importing more gas from Norway, where we are already importing a lot of gas from. There is also the possibility of looking to Russia.”

The power workers’ union Prospect said more nuclear stations should be part of the mix to overcome the energy shortage.

In Scotland, the SNP government has ruled out building more nuclear facilities. Energy minister Fergus Ewing said ensuring an adequate energy supply in future represented an opportunity for Scotland’s renewable industry.

“This report underlines the huge potential for Scotland to export energy to meet the security-of-supply gap that’s been identified by Ofgem,” he said.

“In 2010, Scotland exported  21 per cent of its electricity generation and we will keep pushing for the acceleration and delivery of the grid reinforcement projects between Scotland and England in both onshore and offshore.”