Energy gap 'could cost Britain £108bn'

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Britain's looming energy gap could cost the country more than £100bn a year in less than a decade from now, a report published today warns.

The analysis by the business services group LogicaCMG estimates that by 2015 the shortfall of available generating capacity over demand could leave UK businesses nursing a bill of as much as £109bn, or £3,700 for every working adult.

The recent energy review said that demand could outstrip supply by 30 per cent by 2015 unless measures were taken to encourage the building of new power stations. But the LogicaCMG report says this energy gap could arrive much earlier. It says that by 2010 the shortfall could be 5 per cent, rising to 23 per cent by 2015. This could require energy-intensive industries such as steel, glass and chemical production to shut down operations at peak periods of energy usage, costing business as much as £7.9bn a year.

The report also warns that acute energy shortages could occur in the summer months as well as winter as worsening levels of climate change lead to more use of air conditioning and cooling systems.

Kieron Brennan, managing director of LogicaCMG's energy and utilities division, said that a new nuclear programme would be enough to plug part of the gap. But he warned that it would not come in time to prevent energy shortages within the next decade.

"We believe that the UK government is taking the right steps to try and create open international markets in energy, but that planning laws around the storage of energy resources and the construction of new generation facilities will need to be changed as a matter of urgency," he added.