On the back of Amber Rudd’s announcement today, energy consultants Inenco are warning that unless investment conditions for gas change, we could see coal plants close earlier than 2025 leaving the UK with even tighter supply margins.
Matt Osborne, Principal Risk Manager at Inenco Group, said:
“Today’s announcement by Amber Rudd MP could lead to tighter margins, by closing down plant without doing enough to encourage new investment in future energy generation. The decision to phase out coal within ten years will likely accelerate the closure of coal plants before 2025, as owners seek to reduce exposure to stranded assets that are already uneconomical to run. This could have a negative impact on already tight supply margins as new investment is simply not coming forward to replace old coal plants.
“Ten years is too short a timescale to rely on new nuclear, and conditions are not favourable enough to bring forward new investment in other forms of generation. If coal is phased out and renewable investment dries up, the UK could find itself over reliant on gas, exposed to fluctuations in the global commodity markets, and with far tighter margins. Businesses and consumers could find themselves footing the bill in future years for decisions being made today.”