Energy boss warns of blackout risk

Written By Unknown on Kamis, 21 Maret 2013 | 19.21

21 March 2013 Last updated at 08:21 ET

The boss of the energy firm SSE has warned that "there is a very real risk of the lights going out" in Britain.

Ian Marchant said the government was significantly underestimating the scale of the capacity crunch facing the country.

He was commenting on the company's decision to cut back on power generation at five sites.

The energy regulator, Ofgem, has also warned of an increased risk of a blackout.

SSE points out that the regulator did not take into account its plans to cut power generation when the warning was issued and that therefore, Ofgem's warning is even more stark.

Mr Marchant added that the government "can reduce this risk significantly by taking swift action to provide much greater clarity on its electricity market reforms and bringing forward capacity payments for existing plants from 2018 to 2014".

The company is reducing its energy generation by 2,000MW over the next year. The power stations affected are Ferrybridge, Keadby, Slough Uskmouth and Peterhead. It is also postponing further investment in gas-fired electricity generation until at least 2015.

About 150 jobs are affected by the news, but the company is confident that most employees will be redeployed.

More warnings?

Peterhead has been named as one of two preferred bidders in the £1bn competition to encourage the development of carbon capture and storage technology. The announcement will have no impact on these plans.

SSE is one of the UK's six big power companies.

It says despite efforts to cut costs in generating power, costs have increased over the past year, meaning that they are in some cases losing money. SSE thinks is is unlikely to be the last energy company to warn about the tight capacity situation.

"The kind of decisions SSE is taking, to close existing generation plant on the one hand and delay investing in new plant on the other, is likely to be reflected across the industry in the coming months," said Paul Smith, managing director of SSE.


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