UK faces looming energy crunch, says new research

The UK could be facing an energy crisis as a result of a growing shortfall between UK electricity generation and demand as ageing power stations close and new, cleaner stations are yet to be built, according to a new report, The Energy Crunch, published today by the law firm Bircham Dyson Bell LLP.

The report provides comprehensive statistics on the large number of power stations that are now closing and the substantial amount of capacity that will be lost as a result. Alongside this is research on how many power stations have been granted consent to be built, what capacity they will add to the grid and whether they are progressing to construction. 

Combined, the twin pressures of power station closures and fewer new stations being built means that there will be 18,615MW less capacity available to the grid by 2030. To put the figures into context, 1,000MW produced by a coal fired power station is enough to power one million homes. The report highlights the real prospect of an “energy crunch”, where demand outstrips supply.

The report’s research is supported by two polls – the first of 100 businesses and the second of 1,000 members of the general public – to gauge awareness of a potential energy crunch, energy use habits and how energy use might change. The surveys reveal that businesses are much more aware and prepared for possible energy shortages than consumers: 66% already have contingency plans in place to respond to instances of blackouts. In contrast, only 13% of the general public are aware of a potential shortage of electricity supply.

Key findings of The Energy Crunch research include:

• 13,767MW UK generated electricity capacity has been lost since 2012 due to power station closures
• A further 6,827MW capacity will be lost up to the year 2020 and beyond that an additional 18,009MW will go – the total loss of capacity between 2012 and 2030 is 38,603MW
• This March three major power stations will close resulting in the loss of over 5,000MW
• Only one out of the 22 new electricity generation projects to have been granted consent since 2011 – an offshore wind farm extension – has been built, two others have started to be constructed while work on four projects has stopped
• Emergency measures will keep the lights on, but it is likely this will result in price spikes for both consumers and businesses
• Energy industry experts point to highly inefficient government policy intended to encourage the required investment in energy infrastructure as the cause of the likely crunch

The surveys of businesses and the general public reveal:

• Only 13% of the general public are aware of a potential shortage of electricity supply in the next 12 months. When asked if a shortage of supply is likely in the next five years this figure is 36%
• Awareness amongst businesses of an energy crunch is much higher with over half (58%) of those surveyed aware of a possible energy shortage in the next five years
• The main factor that would encourage consumers to reduce the amount of electricity they use is the potential cost-saving (68%)
• Smart Meters are the energy efficiency initiative that most consumers are aware of (68%)
• 66% of businesses have contingency plans in place in preparation for electricity shortage or power cuts
• Of most concern to businesses if a power cut occurs is loss of earnings (39%), followed by business interruption (34%) and then security of premises (18%)
• Almost half (46%) of the businesses surveyed expect their energy use to increase, 33% expect it to stay the same and just 21% predict it to decrease

Commenting on the findings, Angus Walker, partner and head of the government and infrastructure team at Bircham Dyson Bell, said: “We have observed increasing concern in recent years that as old electricity generation comes offline, new power generators are not being built at a rate that is keeping pace. Our research establishes the hard facts of how serious the situation is, finding that on current projections this is likely to result in a shortfall between supply and demand – in summary an energy crunch.”

Walker said that despite this prospect, there is still time for action. “With the implementation of the Planning Act 2008 the government introduced an extremely efficient planning regime which enables applications for new power stations to progress quickly. It must now replicate that in its policies to support investment in the energy sector to enable the new era of energy generation to progress.”

Brian Galloway, director of energy policy at Scottish Power commented: “Scottish Power does not envisage a scenario in which the lights actually go out, however National Grid will need to use all of the tools and options at its disposal to ensure that doesn’t happen. It is a far from ideal situation. Managing next winter (2016-2017) could be very challenging - Longannet and over half of Eggborough are scheduled to close, which could mean we lose 4% of current firm MW GB capacity. A cold winter would exacerbate the situation.”