Reports that France will see a power shortfall by as soon as 2013 will put greater pressure on the UK’s dwindling supply and force up prices according to UK energy consultancy M&C Energy Group.
France is facing a growing dependency on electricity imports as demand outpaces supply, particularly at peak times.
M&C Energy Group energy analyst David Hunter believes that energy will become a scarce commodity resulting in increased prices and real risks of blackouts.
“At a time when the UK is facing its own looming energy gap, the news that our neighbours across the channel are likely to demand imported power from us is likely to both drive up peak prices and tighten our own supply margins further,” said Hunter. “The UK market is linked to the continent’s via interconnectors, and so that extra power will most likely go to the highest bidder.”
“The irony is that French electricity giant EDF is one of the UK’s major energy providers - but is owned by the French government. The French taxpayer also owns 35% of Gaz de France (GDF), which is looking to take over International Power, the operator of several UK power stations. The UK could have little say in where energy produced here will go. Only in May the OFT announced a stock-take of the UK’s economic infrastructure - they will have their work cut out to keep up with the rate of change and resulting implications.
“Earlier this year the UK National Grid announced a series of Gas Balancing Alerts demonstrating the precarious position of the UK’s energy market. Our power stations are old and overdue for replacement.
“The challenge for the new government is to reduce dependency on imports however, while there is much talk, there seems to be little progress. In fact it has been announced that they are reconsulting on the UK’s energy policy with an announcement not due until the autumn - while our nuclear policy is not expected to be ratified until April 2011.
“With nuclear new build, reshaping the markets to deliver investment, a robust planning system and cleaning up fossil fuel power to be considered, the real issue is that £200bn of investment needs to be found in the next decade to secure Britain’s energy future. The state of the public finances means that the funding will have to come largely from the private sector and it is likely that we will be competing with France for this investment.”
M&C Energy Group is calling on the government to accelerate preventative action to avoid an energy crisis and protect the UK’s national energy interest.