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Analysis by Ofgem published today for the Department of Energy and Climate Change as required by the Energy Act (2011) forecasts a reduction in electricity generation margins* over the next four years.

The report shows that electricity margins, the amount of spare generation capacity on the system, could fall from 14 per cent today to 4 per cent in 2015/16. Coal fired-generation is likely to close earlier than expected under EU environmental legislation and the risk of a shortfall in electricity is highest in 2015/16.

Ofgem’s Project Discovery report in 2009 identified the problems that Britain faced of an unprecedented combination of the global financial crisis, tough environmental targets and the closure of ageing power stations would increase the risk to consumers’ energy supplies and could lead to higher bills. Today’s report shows that these problems have not gone away.

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