ENERGY giant SSE yesterday warned that the UK could face a “lights out” situation due to a lack of power generation, as it announced plans to cut unprofitable capacity and hold back on investment in gas-fired electricity in the UK until at least 2015.
“It appears the government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result,” SSE chief executive Ian Marchant said yesterday, sounding a note of caution to the government.
Marchant called on the coalition to take “swift action” to provide greater clarity on electricity market reforms.
Last year, Ofgem warned that the UK faced a growing risk of power blackouts as electricity capacity contracts thanks to the mothballing of power stations. The energy regulator said spare capacity margins are set to tighten to as low as four per cent, compared with around 14 per cent now.
SSE, one of the UK’s big six utilities, said it will reduce its thermal generation capacity by about 2,000 megawatts over the next year as part of a review of its assets. The cuts will affect SSE’s power stations at Ferrybridge, Keadby, Slough Uskmouth and Peterhead.
“The amount of spare power available today is currently comfortable. As old infrastructure closes over the coming years, we expect this margin to reduce but we will make sure it stays manageable,” countered energy minister John Hayes yesterday.
The announcement comes as chancellor George Osborne yesterday announced tax breaks for shale gas exploration in the UK, giving the seal of approval to unconventional gas exploration.