UK could face power shortages by 2015 warns Ofgem

Ofgem forecasts that electricity demand in GB will stay relatively stable over the period 2012/2013 to 2016/2017. At the same time, UK energy supply is evolving.

Old plants are being replaced by a new wind and biomass generation. In particular, older coal and all oil plants will close due to requirements of European environmental legislation. In addition, some older combined cycle gas turbine plants have recently closed for refurbishment. Some nuclear generation capacity will also be retired over the period.

Ofgem therefore presents a base study with a number of sensitivities around it. One of the most difficult questions is whether new gas fired generations will be built over the next 4 years. It is also unclear whether power stations that have been taken out of operation will return.

The study takes a cautious approach assuming no net imports from Continental Europe, whilst maintaining exports to Ireland. In general, Great Britain would expect increases in the levels of interconnection to improve Britain’s security of supply.

Being part of a larger and more diverse electricity system is highly beneficial for the country. At the same time, GB will be exposed to risks from the actions of players beyond the control of the GB market.

The study results reveal that electricity capacity margins are expected to decline significantly over the coming four years. However, there will be a significant reduction in electricity supplies from coal and oil plants over the period. It is because of the closures required by European environmental legislation.

As a result, estimated margins decline from around 14% this year to just over 4% by 2015/2016.

The risk of electricity shortfalls is expected to be highest in 2015/2016 and 2016/2017. The expected volume of demand that may not be met because of an energy shortfall in 2015/2016 is around 3400 MWh. This volume equates to the annual demand of approximately a thousand households.