UK urgently needs new gas plant, warns Ofgem boss

The UK urgently needs new gas plant to replace retiring oil and coal generation, according to the chief executive of Ofgem.

In a speech today, Alistair Buchanan will warn that Britain’s gas generation capacity will need to at least double to ensure there is enough spare capacity to keep the lights on.

Buchanan will warn that 10 per cent of the current generation stock is going offline next month due to the Large Combustion Plant Directive.

This will contribute to capacity margins falling from 14 per cent to less than 5 per cent.

He will urge the government to recognise the role that gas generation will have to play in the short to medium term in maintaining a security of supply.

This is because new nuclear plant are not expected until after 2020, carbon capture and storage has not been proven on a commercial scale, and investment in wind has suffered following the financial crisis.

However, while saying we need more gas plant to meet the UK’s energy demands, Buchanan will also warn that we could face rising energy bills due to the need to import more gas.

This is due to rising global demand and a domestic gas supply that will fall by 25 per cent over the next seven years combining with a period when gas could make up to 70 per cent of the generation mix.

Angela Knight, chief executive of Energy UK, said the capacity squeeze is a “very real concern” and the transition from the current generation mix to a renewable and nuclear future requires “close attention”.

She added a mechanism is needed “that allows for steady phasing out of old plant as new technology comes on stream to maximise stability and give confidence to customers and to generators.”