Energy prices will continue to climb sharply over the next five years as the UK faces a supply crunch that leaves it increasingly reliant on imported gas.
That is the stark warning to be delivered this afternoon by Ofgem's chief executive Alistair Buchanan in a lecture on whether the UK's lights will stay on.
Writing in the Telegraph ahead of his speech, Buchanan said the phasing out of old polluting coal and oil power stations would leave the UK increasingly reliant on gas imports at a time when global demand and price for gas is rising sharply, this will lead to higher energy prices
Buchanan said efforts to plug the gap with renewables and nuclear had been undermined by the financial crisis, while carbon capture and storage technologies that would make coal-fired power stations compliant with carbon targets remains in its infancy.
"The big worry about gas for all consumers is what price will we have to pay to get it? Because just when we need more gas, world demand for gas is set to rise while our own supplies are predicted to fall by another 25 per cent by 2020."
Some ministers have expressed hopes that domestic shale gas projects could help plug this supply gap and deliver relatively low-cost fuel. But Buchanan said that while shale gas drilling may provide a new energy source in the medium term, it is unlikely to help bring down prices over the next five years.
The warning – which echoes a speech yesterday from chairman of the Committee on Climate Change Lord Deben that the UK risks being reliant on "Putin's Children" if it does not invest in domestic energy supplies – further highlights the importance of the government's wide-ranging energy reforms.
This all should provide a further signal to businesses and individuals to take action to protect themselves against likely energy price spikes through investment in energy efficiency and onsite power generation - Hey I think Caplor can help you with that (a shameless plug sorry)