Energy boss warns of blackouts as competition probe 'stops investment in power plants'

Speaking to BBC Radio 4's Today programme, Mr Laidlaw said there was an increased risk of investing "if you might have to divest in couple of years" but denied the comments were tantamount to blackmail, insisting the company was seeking to invest.

Asked if the lights could go out, Mr Laidlaw said: "We're working hard to see if there's a way in which we can actually solve this equation. But it's just become more difficult, clearly, because we're now going to have to wait until we see the outcome of the review."

Pressed on whether British people could see their electricity supplies running out, he said: "Well we hope they won't. There is an increasing risk now.

"I think a lot can be done in terms of demand management but actually building new gas-fired power stations does take four years and that's the time pressure we're now up against in that we've added another two years to this so it's potentially going to be six years."

Ed Davey, the Energy Secretary, said that Mr Laidlaw was "absolutely, utterly wrong".

Peter Atherton, energy expert at Liberum Capital, has warned it was “pretty inconceivable” that the companies would invest in new power plants needed to keep the lights on.

“It is likely in our view that the hiatus in power generation investment we have seen in recent years will continue and probably deepen. This means that the so-called generation crunch which is now unavoidable for winters 2014/15 and 2015/16 may now extend for at least two more years,” he said.

Energy regulator Ofgem has forecast that Britain's spare electricity capacity – the difference between power station output and peak demand – could fall as low as 2 per cent by 2015-16 , meaning a heightened risk of blackouts on cold, windless days.

Mr Atherton said ministers hoped new power stations, including gas-fired plants and wind farms, would be built ready to start generating and ease the problem in 2016-17.

But that investment is already in doubt because of policy uncertainty and “a CMA inquiry would put another very substantial dampener on the big companies’ enthusiasm to invest,” Mr Atherton said.

He said the companies covered by the inquiry would “substantially rein in their UK investment plans” until they knew the CMA’s findings and that the uncertainty over the future shape of the energy market “would also likely dampen investment from those corporates not directly involved in the inquiry”.

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