Ofgem chief warns about energy prices and supply risk

Things are going to get ever more “tight” for consumers both for energy prices and energy supply, the boss of regulator Ofgem warned today. Alistair Buchanan believes that with coal […]

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By Vicky Ellis

Things are going to get ever more “tight” for consumers both for energy prices and energy supply, the boss of regulator Ofgem warned today.

Alistair Buchanan believes that with coal plants being ditched to fall in line with EU rules and the “financial tsunami” in 2008 delaying investment in renewable and nuclear energy, the country will be relying on gas for double the amount it does at the moment.

Speaking ahead of a lecture he is due to give this afternoon, Mr Buchanan told BBC 5 Live: “We did see this coming. Effectively what happened is that we, as a country, chose to go down a renewables and nuclear pathway. We made those decisions around 2004 to 2008 and of course those decisions were to create a green and pleasant land to live in.”

He said that coal plants have been flogged “as if it’s going out of fashion” so their operators don’t get EU fines, which spells problems for finding enough power to keep the lights on.

Mr Buchanan went on: “They are closing even earlier than we had thought so that within three to five years we are looking at a very tight supply-demand situation.”

Switching new gas plants on will be crucial, he suggested: “It’s going to be absolutely critical that we get those gas-fired plants on the system. We’re going to go from gas providing 30% of our power stations now to 60% within five years.”

There is going to be an inevitable impact on bills, he suggested, although he said nuclear power or shale gas won’t be “riding to the rescue this side of 2020”.

People should “look at bills” and work out where they can cut their energy use by being more efficient because although “it often sounds unsexy… it’s very important”, he added.

The watchdog chief’s comments have been criticised for being too alarmist in some quarters.

Nick Molho, head of energy policy at environmental group WWF-UK said it was “disappointing” Mr Buchanan seemed to imply that gas is the only solution, as too much gas “would almost certainly jeopardise the UK’s legally binding climate change goals.”

Juliet Davenport, chief executive of supplier Good Energy echoed the concerns: “We’ve got all the renewable energy resources we need right here in the UK to do that. We simply shouldn’t be in the business of having to import more and more gas to keep our lights on and our homes warm.”