The UK is facing the possibility of power cuts after 2015 unless radical changes are made to the energy market, the watchdog warned yesterday.
Ofgem said electricity and gas may become unaffordable for some businesses and households unless drastic action is taken to secure power supplies.
The regulator put forward plans for greater state control over energy markets, including the creation of a central energy buying agency, which would effectively reverse a decade of liberalisation in the sector.
Ofgem said staying with the current market model is “not an option” as the industry strains under the pressure of the financial crisis and environmental targets. Ageing power stations are not being replaced quickly enough and the growing dependency on imported gas means current supply is only “relatively secure” for another five years, according to Ofgem. It said £200bn of investment is needed in the next 20 years to ensure future supply.
The Association of Electricity Producers chief executive David Porter said: “Make no mistake, the electricity industry wants to invest, but, in order to attract investment on that scale, we must have clear and stable policy, which investors have faith in.”