When the energy regulator sounds the alarm over the risk of national power failure we should all listen. Yesterday Ofgem released a report warning of "reasonable doubt" over the security and sustainability of Britain's power supplies. It points to a combination of dwindling domestic gas reserves, a reliance on unstable foreign suppliers and a shortage of infrastructure investment. The regulator also reiterated a previous warning that without drastic action to expand supply many homes will soon find energy prices unaffordable.
The regulator rightly argues that the energy sector needs an overhaul if we are to meet this challenge. But what, precisely, is to be done? Ofgem has come out with some surprisingly radical proposals such as establishing a central energy buyer to set the amount and type of new power generation needed. It has even suggested that a "dramatic move away from competitive markets" might be necessary.
Yet before charging off down that road, the regulator needs to pick some of the low hanging fruits in front its nose. This means mitigating the impact of rising energy bills by ending the naked profiteering by energy conglomerates, as this newspaper has been pressing for many months. Another easy hit is energy efficiency. The Government could be doing much more to tackle the energy problem from the demand end by putting serious funding behind its schemes to insulate the national housing stock.
On the broader picture, the solutions to the shortage of infrastructure investment already exist. The problem is that they are not being implemented speedily enough. Greater government support for wind, solar and wave generation would address the challenge of energy security and carbon emissions at the same time.
Most importantly, a price needs to be put on carbon emissions, with a floor under which they cannot fall. If carbon-free renewable energy looks sufficiently profitable, the private sector will fill the investment gap. If the right framework is in place, there will be no need to throw out the market system. But that will require purposeful government intervention. We need to hope that this report helps to generate enough of a shock to jolt ministers into action.