27 November 2006 | Antony Barton
The government has insisted energy supplies will be sufficient and secure over the next few years, and described a warning of a 25 per cent shortfall as scaremongering.
Mind the gap - The black hole at the heart of the UK's energy supply, published last week by business and IT consultancy LogicaCMG, found electricity supply will meet only three-quarters of demand by 2015 unless the government encourages the creation of power stations and investment in those that already exist.
The firm has estimated that, in four years, the gap between supply and demand could be 5 per cent, which could require energy-intensive industries to shut down operations at peak usage periods with an immediate annual cost to UK business of £7.9 billion.
Ted Hopcroft, strategy director for energy at LogicaCMG, told supplymanagement.com the supply shortage would probably mean power prices remained high. He said there would be further disruption to energy supplies for people on interruptible contracts, whereby intermittent disruption is acknowledged in the supply agreement.
The government, however, believes many of the report's criticisms are unfounded. A DTI spokesman said: "Much of this research tells us what we already know - we need a new generation of capacity in the coming years and we also know this isn't going to happen overnight. That's what the Energy Review [the 2002 government report on energy policy] is about and why we need the right framework to make sure our energy is as secure and low carbon as possible.
"The market is coming forward with new investment in energy infrastructure that we need. This investment is across the board and the diversity will help ensure all of our energy eggs aren't in one basket."
Last Friday, trade and industry secretary Alistair Darling told oil and gas representatives in Aberdeen that the North Sea was "absolutely critical" in meeting the UK's energy needs.
At the meeting of Pilot, the joint government and industry working group, Darling announced the government had begun a consultation on plans for more offshore gas storage and new platforms for the unloading of liquefied natural gas.