UK energy gap will be larger, closer and more expensive: report

London (Platts)--21Nov2006

The UK's forecast energy gap could be larger, closer and more expensive
than previously reported, according to a report published Tuesday by energy
services company LogicaCMG. The report says that by 2015 the gap could cost UK
businesses GBP108 ($204.5) billion 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 GBP7.9 billion, 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 avilable in time to prevent the
problem. 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.

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