Risk of UK blackouts has tripled in a year warns Ofgem

The potential of future blackouts has trebled in the last year as Britain is facing an energy crunch that will push up bills, the energy regulator has said.

Ofgem warned there could be energy shortages in the middle of this decade as the UK has failed to build enough new wind farms and nuclear powers stations to replace old fossil fuel plants.

Ministers are so concerned that factories and large businesses may be asked to switch off their power during energy emergencies in return for compensation from bill-payers.

“Without timely action there would be risks to security of supply,” Ed Davey, the Energy Secretary admitted.

“If we didn’t do anything, if we allowed this supply crunch to happen, we would see spikes in energy prices and that would be very damaging for the consumer. This intervention is meant to keep the lights on, which it will, but it’s also meant to protect consumers from those price spikes.”

The supply crunch is the result of Britain forcing old coal and oil plants to switch off in favour of new green wind farms and nuclear plants.

Government Ministers are trying to encourage companies to spend more than £100 billion on new green energy infrastructure by offering huge subsidies.

However, the new powers stations will not have arrived in time to avert the possible squeeze in 2015.

Ofgem said that the risk of blackouts in that year has trebled from the one-in-12 it estimated in October to just one-in-four, if Britain’s energy demand remains at current levels.

It said any “tightening” of the electricity market would lead to an “increase in wholesale prices”.

Over the past year the situation has deteriorated as power companies have announced that they will mothball more gas-fired power plants because they are currently not profitable to keep open.

Ofgem says that no new gas-fired power plants are expected until 2016 and it expects the equivalent of just one to start generating before the end of the decade.

If Britain substantially reduced its energy demand in line with new National Grid forecasts, then the risk of blackouts could remain close to Ofgem’s previous estimates at around one-in-12.

However Ofgem cast doubt on those forecasts saying there was “uncertainty over projected reductions in demand”.

National Grid’s revised estimates would require big improvements in energy efficiency through programmes such as the Green Deal, which has seen just four households sign up since its launched.

The attempt to prevent power cuts would involve handing National Grid new powers to pay factories to switch off and pay mothballed power plants to come back online.

National Grid said one of the new proposals involved “seeking large consumers to reduce electricity use during times of high demand in return for a payment”.

Manufacturing group EEF said it could cost big industrial users millions of pounds to switch off and that for the largest energy consumers the process would take several days.

The other National Grid proposal would see the company “contracting with generators that would otherwise be closed or mothballed” to keep them available as back-up reserves.