Positive outlook forecast for Britain despite electricity crunch

The UK is not at risk of blackouts between 2015 and 2020, despite the retirement of old coal, oil and nuclear power plants during this period, because its continued economic slowdown will keep power demand low.

Analysis by Bloomberg New Energy Finance, published in a White Paper, shows that weak power demand, improving energy efficiency and lifetime extensions for nuclear plants will mean the country is on track to keep the lights on through this critical five-year period.

The new study finds that a combination of increased renewable energy capacity, along with already planned, additional gas fired capacity, will provide most of the additional electricity that the UK needs through to 2030.

In addition, the UK’s second dash for gas, which could see the addition of 15 GW of new capacity between 2010 and 2016 at a cost of GBP7.5bn, is likely to be the nation’s last.

Renewable energy, nuclear power, energy efficiency and retrofits to existing plants should be able to meet all additional needs from 2020 onwards.

These findings arrive as the UK embarks upon its comprehensive Electricity Market Reforms, with plans for a carbon price floor, an emissions performance standard, a low carbon feed in tariff and a capacity market. The reforms are designed to encourage a shift to a low carbon power sector whilst maintaining security of supply.

Until now, the government and other market participants have expressed concern that Great Britain (the Northern Ireland power market is linked to that of the Irish Republic, not the mainland) will experience a shortage of power supply as 12 GW of coal and oil fired plants close by 2016 due to environmental requirements. An additional 7 GW of nuclear is scheduled to close by the end of the decade.

Bloomberg New Energy Finance says that the main factors reducing the need for new power plants in the UK are weak industrial demand and declines in domestic usage. The recession and European debt crisis have caused electricity consumption to fall significantly, by 9 per cent from its 2005 peak.

Power demand may not return to prerecession levels within the next 20 years, as a full recovery in industrial production remains elusive, and energy efficiency improvements are taking hold. Even if electric vehicles take off, their impact on electricity demand will be limited, according to Bloomberg New Energy.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, said: “The black out plays an iconic role in British history, first with World War II and the Blitz, and then the industrial strife of the 1970s. The UK is embarking on an historic shift in its electricity supply, and commentators and critics have continually raised the spectre of the lights going out once again across Britain.

Our analysis shows that, barring unforeseen circumstances, it is not going to happen.”

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