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Blackout fears as energy bill is delayed again

Coalition row further stalls projects to replace aging infrastructure

The Government has again delayed its long-awaited energy bill after fundamental disagreements between the coalition partners look set to push its publication into next month.

In a move that increases the prospect of the lights going out, the bill, due to be published this week, has been postponed after George Osborne and his Conservative allies were unable to resolve differences with the Liberal Democrat energy minister Ed Davey and his party.

Mr Davey told The Independent on Sunday that the bill would be published "very soon" but declined to be more specific. Sources suggested it is likely to be pushed into December.

The sources said the disputes centred on the ideological differences between a Tory party determined to keep costs to a minimum and champion the use of gas, and the Lib Dems, for whom a green agenda is a defining characteristic.

Among other things, the two sides are understood to be at loggerheads over whether to include a legally binding target to make electricity generation almost entirely green by 2030 – which Mr Davey backs and Mr Osborne opposes.

The delay will heap further pressure onto Britain's energy network, particularly after last month's warning from the regulator Ofcom that Britain faced a 50 per cent chance of blackouts by the winter of 2015.

The country's energy infrastructure needs an estimated investment of £200bn by 2020 – and of £330bn by 2030 – as aging coal and oil plants prepare to close, in part to comply with EU environmental legislation.

However, potential investors will not commit to new infrastructure projects until they have a clearer idea of their likely returns, which can only be determined after new legislation on key issues such as subsidies is enshrined in the bill. Once the bill is published, it is expected to take at least a year to make its way through both Houses of Parliament to gain Royal Ascent – making it law.

Dominic Nash, an analyst at Liberum Capital, said: "The whole thing's a joke. The lights are going to start flickering around 2015 or 2016, so even if it gains Royal Assent in the fourth quarter of 2013 there can be no new power station until 2017.

"The later the bill is put in front of parliament, the later it will go through. Frankly it's getting a little bit close for comfort," he added.

Mr Nash's comments came a fortnight after an alliance of The Carbon Capture and Storage Association, the Nuclear Industry Association and Renewable UK wrote a letter to the Government which warned: "It is essential that the Energy Bill should proceed without delay, with Royal Assent as early as possible in 2013. Any significant slippage could result in investment being postponed, with major implications."

The Tories are also grappling with how the bill will deal with energy tariff comments made by the Prime Minister David Cameron, which were at odds with plans announced by Ofgem and appeared to surprise Mr Davey.