Ofgem predicts energy price hike

The UK may need to invest up to £200bn to secure energy supplies and meet environmental targets, according to energy watchdog Ofgem.

In a report reviewing Britain’s energy markets, the regulator said that consumers may face steep energy price rises as gas and electricity supplies become increasingly unstable due to volatility in the global gas market and power stations approaching end of life.

The group outlined four potential scenarios to assess the energy risk to the UK in the next 10 to 15 years. It forecasts that if global businesses experience a strong recovery whilst missing carbon-reduction targets, energy prices could increase by more than 60 per cent by 2016.

The scenario with the smallest price increase sees energy bills rise 14 per cent by 2020 following the execution of green initiatives and a slow economic recovery.

However, Ofgem argued that if gas and electricity prices remain low in the short term then incentives to invest in renewables and nuclear will be reduced.