The UK faces an energy crunch leading to much higher electricity and gas bills within three years because power companies are shelving investment plans, the chief executive of Centrica has warned. Sam Laidlaw also told the Sunday Observer that unless the government increased the level of financial support available for offshore wind farms soon, the UK would have little chance of meeting its 2020 renewable energy targets. Laidlaw said the “big six” energy suppliers were in talks with government officials about how to make the economics of offshore wind power work. EDF is understood to be in favour of special rates known as “feed-in tariffs” for offshore wind farms, which guarantee operators a higher fixed price for the electricity they generate. He said: “If we have a long hiatus (because of the credit crunch) of more than a year, then it’s going to be a bigger challenge to meet our renewable targets to ensure we have security of electricity supply. We have to find some solutions in the next few months.” He added: “Investment is starting to fall off quite quickly. The big fear I have is that in two or three years, the next cycle (of high energy prices) will repeat, and security of supply will go right back to the top of the agenda, and we will be even less prepared to cope with it unless we make the investment now.”

Today is the deadline for bids for licences to operate the third round of offshore wind farms, which would cost about £50bn to build. But existing projects are already at risk of being scrapped.

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