U.K. Risks Blackouts Without Incentives for Natural Gas

The U.K. risks blackouts this decade unless it gives industry details soon about the capacity auctions intended to spur the development of new gas-fired power plants, the executives at Spain’s biggest utility said.

The U.K. is “unlikely to see any significant investment” in combined-cycle gas turbines, or CCGTs, until it provides more details on how the capacity market will work, Keith Anderson, who heads Iberdrola SA’s activities in Britain, told reporters in London today.

The comments add to pressure on Prime Minister David Cameron’s government to advance work on a new energy law being debated in Parliament. The rules would pay power generators for back-up supplies usable when clean-energy generation falls short of demand.

“If the decision is not taken in a hurry, the decisions of investment will be delayed, and if the decisions of investments are delayed, the country can suffer blackouts during the decade,” Iberdrola Chairman Ignacio Galan said at the briefing. “That is particularly shocking. We require numbers.”

Galan follows the former U.K. government’s chief scientific adviser, Sir David King, in warning the country faces power outages unless the government hastens change to the energy industry.

Risks Rising

The energy regulator Ofgem estimated in October that because of power plant closures, the statistical probability of households losing power will rise to once in every 12 years by 2016 from once every 3,300 years now.

King said last March that a better strategy on new nuclear plants was required, or “the risk of the lights going off is very serious.”

Galan said Iberdrola’s Scottish Power unit has three planned CCGT plants that are “ready to start if the country requires and the terms are reasonable.”

Anderson said the government is keeping to its timeline for arrangements surrounding so-called contracts-for-difference. Those are a new payment system guaranteeing a long-term price for generating power. The current draft of the energy bill has those provisions.

“For the CFDs, the government have hit the timeline and the deadline, and we’re working on the assumption they will continue to do that,” Anderson said. “For CCGTs and the capacity auctions, that’s where we feel the government needs to accelerate that process.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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