UK energy gap will be larger, closer and more expensive

Nov 21, 2006 01:00 AM

The UK's forecast energy gap could be larger, closer and more expensive than previously reported, according to a report published by energy services company LogicaCMG. The report says that by 2015 the gap could cost UK businesses £ 108 ($ 204.5) bn a year.
Kieron Brennan, managing director of LogicaCMG's energy and utilities business, said: "Action needs to be taken now to reduce the energy gap. We are not trying to scaremonger but our job is to provide guidance to the businesses we work with and help them understand and manage their future energy requirements. We all need to use energy more efficiently and the Government will have to take steps to resolve this issue. If this doesn't happen, it is almost certain that the power will go off and businesses will lose money."

The UK Government's energy review, published in July, said that by 2025 energy demand in the UK could exceed supply by 30 %. But LogicaCMG's report says that the gap could reach 23 % a decade before this, in 2015. The services company said the gap was widening far quicker than anticipated, and would have a significant impact on UK business and households.
"The widening of the energy gap is a major issue as potential solutions like nuclear power simply can't be built in time to close it," it added. By 2010, the gap could "potentially" be 5 %, the company said. This would require energy intensive industries to shut down at peak periods, causing a cost to business of £ 7.9 bn, LogicaCMG said.

The problem will not just occur during the winter months, it said.
"If the effects (or assumed effects) of climatic change continue, longer hotter summers will mean that electricity consumption through the hottest months will increase as more air conditioning and cooling systems are used. We are not just looking at dark winters, but stifling summers as well," the company said.
LogicaCMG said a new generation of nuclear power plants, which the UK Government has said it supports, would not be available in time to prevent theproblem.

Brennan said: "While nuclear, which some people hope will plug the gap, may be a viable solution for the 2020 period it is not going to be ready in time for 2015 so a range of actions need to be taken."
He said other technologies should be considered.
"Companies in the UK will also need to look at the use of clean coal, increasing energy efficiency, through smart metering and energy reduction technology; and the energy industry will need to move to a distributed energy model, relying on more bottom-up rather than top down energy provision," he said.

Source: Platts
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