The UK government says the UK needs to build more gas-fired power generation capacity as it works to wean its energy system off fossil fuels to meet climate targets.

It has also pushed ahead with proposals for regional electricity prices, where households and businesses in different parts of the country could be charged different prices – although other options are still being considered.

Demand for electricity is increasing as the UK electrifies things like heating and cars, and as the population grows.

Officials have been looking at how to ensure supplies meet demand, are reliable and reach the right parts of the country.

Today the Department for Energy Security and Net Zero said it was clear the UK would need new spare gas capacity to provide electricity that could be switched on on demand for days when the wind is not blowing or the sun is not shining and power is not available from renewable sources.

This is also because some natural gas plants will be decommissioned in the coming years.

The decision had been long anticipated and the energy industry welcomed the reassurance on how to guide its investments.

But some analysts warn that extra gas is not a wrong solution to the problem of how to meet growing demand and provide flexibility, saying it reflects failures in other areas of energy security policy.

“We have to be realistic”

In a speech at Chatham House today, energy security secretary Claire Coutinho is expected to say the UK risks “blackouts” without new gas power stations.

“There are no easy solutions when it comes to energy, there are only trade-offs,” she would say.

“So as we continue to move toward clean energy, we have to be realistic.”

Prime Minister Rishi Sunak said: “I will not bet on our energy security. I will make tough decisions so that no matter what we face, we always have electricity coming from Britain to Britain.”

Labour’s shadow energy secretary Ed Miliband said the plans were needed because of “fourteen years of Tory energy policy failures”, including an effective ban on onshore wind, energy efficiency and slow progress on energy efficiency. Offshore wind auction failed last year.

However, he added that Labor would also be open to some new gas-fired generation if older capacity needed to be replaced.

Mr Miliband said: “Of course we need to replace decommissioned gas stations as part of a decarbonised electricity system that includes carbon capture and hydrogen playing a limited backup role in the system.”

The government believes the move is in line with its climate commitments to reduce fossil fuel emissions because although gas generation capacity will increase, overall operating hours will decrease because gas generation will not remain unburned but can be scaled up and used as backup. .

‘Government missed opportunity’

Juliet Phillips, head of the UK energy program at think tank E3G, said the UK had been a “clean energy leader” given the “continued exponential growth of renewable energy”.

But the government’s “policy failures” and “missed opportunities” on offshore wind and grid connections have forced it to announce new gas generation today.

New gas capacity “must have strict conditions so that new plants can be retrofitted with green hydrogen or carbon capture and storage in the future,” she said.

The government hopes to increase gas production capacity by adjusting capacity market rules at the expense of payers – who will foot the bill for any spare capacity.

It is also considering extending existing rules for new plants to be able to switch to low-carbon alternatives, such as by adding carbon capture technology to capture and store emissions.

However, it did not confirm how much new gas capacity would be needed.

Kisha Couchman, deputy director at UK Energy, said the electricity system was undergoing “significant changes” as source diversity and flexibility became more important.

She added: “The challenge is to propose changes to support this objective while providing the certainty necessary to drive long-term investment – ​​so it is also right to look at the role that existing mechanisms can play.”

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Need a “no regrets” choice

Climate and energy think tank ECIU said cheaper and greener forms of backup power could be used, such as using electric vehicles to feed the grid and battery storage.

The announcement comes as the government releases an update on its Review of Electricity Market Arrangements (REMA) consultation.

It abandoned its previous proposal to stop linking electricity prices to natural gas prices.

It is subtly putting forward a proposal to introduce regional pricing for wholesale electricity, which could incentivize industry to build in areas where power is cheaper and attract new power projects where demand is greatest.

However, critics have raised concerns about the fairness of the proposal, with ministers yet to decide whether households will be subject to a “postcode lottery” with different fees in different areas.

Another option for continued regional pricing remains.

“The only way to achieve a green electricity system in a timely manner and without increasing electricity bills is to move to a market that reflects local supply and demand,” said Guy Newey, CEO of Energy Systems Catapult.

“The government’s proposal to send stronger location signals in wholesale markets is an important step forward,” he said.