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U.K. Renewable Energy Push May Prevent Electricity Crisis

U.K. Push for Renewable Energy to Prevent Power Crisis
Construction workers erect solar panels at Weighbridge, Wheal Jane, Baldhu near Truro, England. A ceremony was held to mark the connection of the 1.4kw solar farm, which on a 6.2 acre plot is the first in the South West and biggest in the UK as of July 2011, using 5,680 panels. Photograph: Matt Cardy/Getty Images

Feb. 29 (Bloomberg) -- Britain’s policies encouraging renewable-energy use will prevent the country from suffering an electricity crisis leading to blackouts toward the end of the decade, Bloomberg New Energy Finance said.

The U.K. will build more than 30 gigawatts of power generation capacity by the end of 2016, two-thirds of it in solar, wind and biomass and the rest largely fired by natural gas, according to forecasts from the research company. That will help the nation cope with closing 19 gigawatts of fossil-fuel and nuclear power stations over this decade.

The findings suggest Prime Minister David Cameron’s government may avoid power shortages that blighted the U.K. during World War II and the 1970s, requiring industry to scale back operations and leaving millions of homes in the dark.

“The U.K. is embarking on an historic shift in its electricity supply, and commentators and critics have continually raised the specter of the lights going out once again,” said Michael Liebreich, chief executive officer of New Energy Finance. “Our analysis shows that, barring unforeseen circumstances, it is not going to happen.”

U.K. utilities need to spend as much as 200 billion pounds ($320 billion) to replace aging power plants and upgrade the electricity grid by 2020, according to the regulator Ofgem. About a third of Britain’s fossil-fuel power stations are due to close in the next three years to meet European Union rules on emissions, including plants run by RWE AG, EON AG and SSE Plc.

Dash for Gas

RWE and Electricite de France SA are due to switch on new gas-fueled power stations this year, and in total 11 gigawatts of gas plants may be built through 2016, according to New Energy Finance. The research company predicts 2 gigawatts of biomass plants, about 11 gigawatts of wind and 8 gigawatts of solar power will be installed in the five years through 2016.

While the intermittent nature of wind and solar power means the new capacity won’t fully offset the smaller capacity of fossil-fuel and nuclear plants that are being retired, a decline in domestic usage and industrial output following the recession means U.K. power demand may not return to the peak levels of 2005 within the next two decades, New Energy Finance said.

Britain’s oldest reactor at Oldbury, southwest England, closes today. Other atomic plants may shut in the next decade as they reach the end of their working lives.

Cameron on Feb. 17 signed a civilian nuclear cooperation agreement with French President Nicolas Sarkozy, paving the way for the construction of a new generation of power stations in the U.K. The British premier took office saying he wanted his government to be the “greenest” ever.

EDF, in partnership with Centrica Plc, is among six utilities planning to build atomic stations in Britain. While EDF plans to have its first new plant up and running in 2018, that timeframe may slip, said Brian Potskowski, a power analyst at New Energy Finance.

“The long lead times for building new nuclear plants and uncertainty over how they will be subsidized means that the recent agreement between the U.K. and France on nuclear cooperation has little impact on whether the lights stay on in the 2015 to 2020 timeframe,” Potkowski said.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Catherine Airlie in London at cairlie@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net; Stephen Voss at sev@bloomberg.net

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