The Coalition’s plans to keep Britain’s lights on with green electricity have a “high risk” of failing, the Major Projects Authority has warned.
Up to six flagship projects have been classified as “high risk” by the spending watchdog, including new nuclear power stations and key reforms of the electricity market.
The authority, set up by David Cameron last year, has described the Coalition’s plans to encourage more wind farms and nuclear power stations as “feasible”.
However, the watchdog is “doubtful” that Britain can have a reliable energy supply from green sources and keep energy bills affordable under the current plans.
Ed Davey, the Energy Secretary, yesterday defended his reforms as “the right thing to do”, as MPs on the energy committee argued they were “not fit for purpose”.
Under the plans, Britain will start switching its energy supply from fossil fuel power plants to more nuclear stations and wind farms.
However, the Major Projects Authority fears that unpredictable energy prices and high construction costs could jeopardise the £110 billion of new power plants and networks.
The damning concerns emerged in a report published by the National Audit Office, looking at the challenges facing the Department of Energy and Climate Change. It raised concerns about the energy projects as far back as October 2011.
David Pitchford, director of the Major Projects Authority, warned the Department of Energy and Climate Change will need special help to deliver its green plans.
“They have got an obligation second only to the Ministry of Defence, but an operational capability probably smaller than every other department,” he told a hearing of MPs on the Public Accounts Committee.
One of the Treasury’s most senior civil servants also raised concerns about the “complex, difficult and untested” issues faced by the department.
“It’s a department seeking to improve itself quite significantly,” said Sharon White, the Treasury’s director general of public spending. “Alongside the Minstry of Defence, it has the set of most innovative, complex and difficult untested issues. Whether it’s carbon capture and storage, smart meters, or trying to build a nuclear power station with no public subsidy.
“One of the things that’s become very clear is that it has departmental-wide challenges. The issue is does the department have the commercial capability?”
The National Audit Office’s report also noted the “uncertainties” surrounding the Coalition’s energy policy.
It pointed out that a fifth of Britain’s power plants will have to close over the next decade and must be replaced. The UK must also reduce its carbon emissions by 80 per cent over the next four decades.
The £110 billion cost of delivering these two aims will ultimately have to be met by consumers through energy bills and the higher cost of goods produced by companies.
A spokesman for the Department of Energy and Climate Change said: “The achievement of security of supply, decarbonisation and affordability are all absolutely vital as we undertake the most major reforms of our electricity system since privatisation.”
In a separate blow for the UK’s energy policy, Ayrshire Power has withdrawn its plans to built a “clean” coal station in Scotland, which would have created 1,800 jobs.
The company blamed the economic slowdown and uncertainty about funding for its decision to pull out of building a station at Hunterston.
The experimental plant would have siphoned off carbon dioxide and stored it underground, making coal power more environmentally friendly.