Ofgem, the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain, has published a report entitled Project Discovery revealing a range of potential risks to Britain’s energy supplies up to 2015. Furthermore, Ofgem identifies the need for investment of up to £200 billion in power plant and other infrastructure over the next ten years to secure both energy supplies and climate change targets. The need for this investment arises at a time of volatile world energy prices and Britain’s increasing dependence on gas imports.
Ofgem has drawn up four energy scenarios of the next 10-15 years with reductions in carbon emissions of between 12% and 43% (from 2005 levels) and increases in energy infrastructure investment of between £95 billion and £200 billion. However the four scenarios would result in increases in domestic energy bills of between 14% and 25% by 2020 (from 2009 levels) – with the possibility that wholesale price spikes could lead to an increase in domestic energy bills of up to 60% in the interim. Gas import dependence increases in all four scenarios but in two of them imports stabilise from the middle of the next decade.
60% rise in fuel bills if 2020 objective is missed
The worst scenario for renewable power and the economy sees a rapid economic recovery and an acceleration in the building of conventional thermal power plants and subsequent increase in fuel imports. This scenario would only see renewables contributing 15% to the electricity mix (half the 2020 objective). “Competition between countries for energy resources results in tight gas supplies and high fuel prices,” says Ofgem. “The effect on domestic consumer bills is an increase of more than 60% by 2016 before falling back”, it concludes.
“These are big challenges. Consumers are already enduring high energy prices,” said Ofgem chief executive Alistair Buchanan. “Our scenarios suggest that Britain faces a tough challenge in maintaining secure supplies whilst at the same time meeting its climate change targets. However, there is still time to act. Ofgem will be putting forward proposals in the New Year… to ensure that Britain’s energy industry can meet the challenges ahead.”
“Putting our faith into fossil fuels could irreparably damage the environment and still not save us any money, said Maria McCaffery, BWEA Chief Executive. “Wind, wave and tidal energy can deliver both energy security and price stability,” she added. The BWEA also emphasised that no other low carbon technologies apart from wind, wave and tidal will be available in quantity within the timescales required.
Carbon capture and storage, also known as ‘clean coal’, is yet to be tested on a large scale, while any new nuclear power stations are unlikely to be ready before the end of the next decade. It must also be borne in mind that while ‘clean coal’ and nuclear have low carbon credentials, neither use sustainable resources and both are set to further increase fuel costs.
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