The chief executive of Centrica (LSE: CNA), Sam Laidlaw has told the Financial Times that the company is not in a position to build gas power plants in the UK for four years.

The energy supplier chief’s comments have added to growing fears about the country’s potential looming power shortage.
Sam Laidlaw
Centrica will only be able to build new plants once the government’s energy bill was implemented – a process that could take up to two years.

“We think by 2017-18 we’re going to see reserve margins become uncomfortably tight, which means you’d have load-shedding [rolling blackouts] at certain times of day if you have nuclear or other outages,” Mr Laidlaw told the Times.

The private sector is reluctant to move ahead with new plants when it is unclear how they will be paid for in the long term.

Mr Laidlaw said Centrica would only be able to make a final investment decision on a new gas-fired plant if it won a capacity auction, the first of which are expected to take place in 2015. With plants taking at least two years to build, a new one would not be up and running before 2017, he said.

“The investment will start when the legislation is complete – so that’s between a year-and-a-half and two years from now,” he said. “But it’s not going to actually start delivering power for two years after that.”

About a fifth of UK generating capacity is due to close over the next decade, much of it ageing coal-fired power plants that do not meet EU environmental standards.

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