Lights out warning as SSE cuts its power generation

Embarrassment for Osborne after energy giant attacks Government's 'lack of clarity'

The danger of widespread power cuts in Britain mounted today when a leading energy producer warned it will reduce output by more than 15 per cent – enough electricity for 2 million people – over the next year.

SSE, the big-six energy provider, is cutting back or closing operations at five coal, gas and biomass-fired plants, including Ferrybridge in Yorkshire and Keadby in Lincolnshire, with the loss of 165 jobs. It blamed a new charge next month for emitting carbon, low profit margins and uncertainty around guaranteed payments to gas-fired power stations in the future.

In an embarrassment for George Osborne, who has placed gas power at the centre of his solution to Britain's looming energy crisis, SSE's chief executive, Ian Marchant, criticised the Government for giving a "lack of clarity" to investors and utilities looking to build new gas stations or extend the life of existing ones.

"It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result," said Mr Marchant, who called for "swift action to provide much greater clarity" to potential investors.

Mr Osborne wants to build as many as 40 new gas-fired plants in the next two decades, while in the Budget he promised incentives to kick-start the UK's nascent shale gas industry.

The SSE cutbacks are earlier and more severe than had been expected, and prompted the group to question whether an already-stark warning by regulator Ofgem in October – that the spare capacity in Britain's electricity system would fall from 14 per cent today to 4 per cent by 2015 – was severe enough. The utility formerly known as Scottish and Southern Energy supplies energy to 9.5 million British households and businesses. Its planned electricity cut represents 2.5 per cent of the UK's total usage.

At 4 per cent spare capacity, there is a one in 12 chance of a power cut if demand stays at normal levels, Ofgem has said. That rises to one in four if too much electricity is exported to Europe and one in two if there is a particularly cold winter.

Ofgem, which largely based its forecast on the looming closure of nine coal-fired power stations to help Britain meet targets to reduce emissions, said that it would revise its warning about the network's capacity in the light of SSE's announcement.

"The situation on likely available capacity has deteriorated since this report with more plants closing sooner than expected. We will be providing our updated statutory capacity assessment to government before the summer," an Ofgem spokesman said.

Mr Marchant wants the Government to bring forward from 2018 to 2014 the introduction of a proposed new payment scheme that would, essentially, give gas-fired power stations a fee for existing.

He also wants to know the final details of the proposal, known as the capacity mechanism or market, which he argues is crucial to determining the financial viability of future projects. "There is huge uncertainty regarding future revenue streams," SSE said.

The Energy minister, John Hayes, said: "We're alive to the challenge facing us. We're not complacent about this, which is why we have an insurance policy – the capacity market."

SSE's call for more financial certainty comes after the group reported a 38 per cent leap in profits in the six months to September. However, it said its energy supply arm operated on a profit margin of just 1.5 per cent over the period.

Arts and Entertainment
Armstrong, left, and Bain's writing credits include Peep Show, Fresh Meat, and The Old Guys
TVThe pair have presented their view of 21st-century foibles in shows such as Peep Show and Fresh Meat
Arts and Entertainment
Keys to success: Andrew and Julian Lloyd Webber
arts + entsMrs Bach had too many kids to write the great man's music, says Julian Lloyd Webber
footballMan City manager would have loved to have signed Argentine
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films

New essay by JK Rowling went live on Pottermore site this morning


Top Gear presenter is no stranger to foot-in-mouth controversy

Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’

New UK station Russia Today gives a very bizarre view of Britain

ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
Enner Valencia
footballStriker has enjoyed a rapid rise to fame via winning the title with ‘The Blue Ballet’ in Ecuador
Arts and Entertainment
A top literary agent has compared online giant Amazon to Isis
arts + entsAndrew Wylie has pulled no punches in criticism of Amazon
Arts and Entertainment
Charlie Sheen said he would

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Day In a Page

Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House

Bryan Adams' images of wounded soldiers

Taken over the course of four years, Adams' portraits are an astonishing document of the aftermath of war
The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities