Bromley & Sevenoaks
Higher Energy Costs
Friday, 5th February 2010
Europe
Ofgem warns of power blackouts and soaring energy bills to meet EU rules
The Times reports that energy regulator Ofgem has warned of power blackouts and spiralling consumer prices, and raised the prospect of partial renationalisation of the industry in order to maintain the UK's energy security. Alistair Buchanan, Ofgem's Chief Executive, said that the crisis had been compounded by an "unholy trinity" of factors - including the impact of the recession on energy industry investment, Britain's growing reliance on imported gas as North Sea supplies are depleted and the closure of nine ageing coal-fired and oil-fired power stations by 2015 in order to meet EU pollution laws, a move that will scrap almost a third of UK generating capacity.
The FT notes that Ofgem's report concludes that European targets for cutting greenhouse gas emissions and developing renewable energy will create a huge demand for investment over the coming decade. The £200bn needed to achieve the most ambitious goals for renewable energy would mean doubling the rate of investment seen over the past 10 years.
The Ofgem report notes that investment in low carbon technology is being hampered by uncertainty over the carbon price. The EU's emissions trading scheme is supposed to achieve the right price to encourage investment and reduce carbon emissions but Ofgem has suggested that the UK may have to introduce its own minimum price in order to promote the required investment to meet EU renewables targets: "Although a minimum carbon price would best work as part of a European wide scheme, if this did not happen it may be necessary to consider a minimum GB carbon price. By reducing uncertainty about the price of carbon it would encourage investment in low carbon technologies."
The Mail reports that Ann Robinson, of the price comparison website uSwitch.com, said energy bills could reach around £5,000 by 2020 in order to cover the required investment.
Meanwhile, the FT reports that, after a power struggle between the Commission and member states, the EU has reached an agreement that the Commission and the European Investment Bank will have a final say as to which projects receive funding to test carbon capture and storage technologies across Europe. Although it is not compulsory, member states are expected to contribute to the test projects, potentially resulting in billions of additional euros.
Le Figaro Ofgem press release Ofgem report Open Europe research Sun Express Express: Leader Telegraph Guardian WSJ FT City AM Times Mail Mail 2 FT 2 EUobserver EurActiv
