Britain needs to spend £200bn to make up a looming shortfall in electricity generating capacity, energy watchdog Ofgem said last week.
Its review of Britain’s energy sector calls for £200bn to be spent on new power stations and on upgrading the National Grid.
Investment in new nuclear power and carbon capture and storage will be essential if Britain is to end its reliance on gas, said Ofgem chief executive Alistair Buchanan. “Early action can avoid hasty and expensive measures later,” he said.
Ofgem’s most optimistic scenario predicts a 14% rise in consumer energy prices. Its most pessimistic scenario predicts a 60% rise due to increasing fossil fuel costs.
“The problem is understood but the means to a solution are underestimated.”
Simon Harrison, Mott MacDonald
Consultants said that a huge effort would be needed to plug the capacity shortfall. “The problem is understood but the means to a solution are greatly underestimated,” said Mott MacDonald energy director Simon Harrison.
Employers body the CBI was less pessimistic than Ofgem. “In July we published research showing that around £150bn of private sector investment will be needed,” said the CBI deputydirector general John Cridland.
ICE director general Tom Foulkes said more effort had to be directed at finding ways to fund energy investment.
“We need to look at alternative funding models,” he said, citing the proposed infrastructure bank as a solution (News last week).
The idea of an infrastructure bank has been picked up by politicians across the political spectrum in recent weeks.