Energy bills may have to increase by £30 a year in order to ward off winter blackouts as Britain faces a power crisis, MPs have warned.
A report called Electric Shock: Will The Christmas Lights Go Out Next Winter? has been published by the British Infrastructure Group (BIG) of MPs, chaired by Grant Shapps.
Within it they claim that government targets for closing coal power stations and expanding renewable sources to hit climate change goals have rapidly reduced the UK’s generating output.
This, they say, has allowed prices to shoot upwards and slashed capacity margins which are “so tight that National Grid’s emergency power deals have become the norm”.
Mr Shapps said the report focuses on the “dangerously small electricity capacity margins” that have been “left in the wake of a decade of target-led, interventionist energy policy”.
“While nobody questions the noble intentions behind these interventions, it is clear that a perfect coincidence of numerous policies designed to reduce Britain’s carbon dioxide emissions has had the unintended effect of hollowing out the reliability of the electricity generating sector,” he added.
Findings within the report claim that in recent winters the country’s spare electricity margin has fallen from around 17% during the winter of 2011-12 to around 1% this winter.
The MPs say “there is a sustained danger of intermittent blackouts for the foreseeable future”, and that this is down to “dwindling base capacity and freak weather events”.
And that in order to plug the capacity gap household bills by 2020 could increase by as much as £30 a year – nearly double government estimates.
The report also states that the National Grid has been given the go ahead by the Government to pursue emergency measures to cover peak demand and prevent blackouts.
Measures to stop the country’s lights going out during peak periods include restarting old coal power stations, according to the report.
Power intensive businesses such as factories are also paid to “detach” from the grid and run from their own energy sources such as emergency diesel generators.
The procurement of contracts with power stations not trading in the normal energy market, who are paid an “exorbitant sum” to be kept in standby mode over winter, is also a measure.
Last winter National Grid paid £33.9 million for this emergency power, with £122.4 million set to be shelled out for the cold months of 2016-2017.
The BIG report says these costs are “spread across the network and picked up by consumers in the form of higher bills”.
“Consumers, both domestic and business, having once reaped the benefits of tumbling prices after the 1990s market reforms, are now resigned to paying ever-higher electricity bills,” the report adds.
Mr Shapps said: “A radical rehabilitation of electricity markets is required to bring both consumer prices and capacity concerns under control in the short term.”
In the longer term he said the Government should “work to make it profitable for private companies to invest and innovate in our electricity markets once again”.
The report states that if Britain is to “make the shift to cleaner, electrically powered economy of the future, its electricity generating sector must be able to provide cheap electricity in abundance, respond rapidly to new demands and shoulder its own risks and rewards”.
Daniel Mahoney, head of economic research at the Centre for Policy Studies, said: “Mismanagement of energy policy – both from the European Union and the UK Government – has left the UK with desperately narrow capacity margins.
“In her first major campaign speech, Theresa May made a welcome declaration that she wanted to see an energy policy that promotes the reliability of supply and lower costs for users.
“This report re-emphasises the need for this commitment to be delivered.”
A spokesman for the Department for Business, Energy and Industrial Strategy said: “Keeping the lights on is non-negotiable for this government.
“We currently have a surplus margin of 6.6%, which is even higher than last year.”
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