The Electricity Act 1989 obliges Ofgem to provide the Secretary of State with a report assessing different electricity capacity margins and the risk to security of supply associated with each alternative. Ofgem’s capacity assessment report is to be delivered to the Secretary of State by 1st September every year, starting in 2012.
This document is Ofgem’s Electricity Capacity Assessment report to the Secretary of State. It estimates a set of plausible electricity capacity margins that could be delivered by the market over the next four years and the associated risks to security of supply.
We assess that the risks to electricity security of supply will increase in the next four years. In particular, we expect that electricity de-rated capacity margins will decrease significantly from the current historically high levels. In parallel, the risk of electricity customer disconnections will appreciably increase from near zero levels. This is primarily because of a significant reduction in electricity supplies from coal and oil plants which are due to close under European environmental legislation.