The UK Government claims to have “defused the ticking time bomb” of an energy crunch.
It says its plans to buy vast amounts of power back-up will add just £2 to householders’ electricity bills.
The scheme, unveiled yesterday, is expected to add 53.3 gigawatts of electricity generating capacity.
It also means energy equivalent to the output from 17 new nuclear power stations, or more than 80% of UK peak demand, will be available if needed to keep Britain’s lights on.
The government hopes the scheme, known as the capacity market, will secure the UK’s energy supplies for the rest of the decade.
Energy providers will be able to bid in an auction for payments in exchange for them providing electricity capacity when the system needs it.
The cost of the scheme, which will be passed on to consumers in their bills, will not exceed £4billion, although officials indicated it was likely to be closer to £2billion.
It will lead to an estimated increase of £2 on the average annual household electricity bill between now and 2030.
Energy Secretary Ed Davey said: “There was a real risk back in 2010 that an energy crunch would hit Britain in the middle of this decade and lead to damaging power cuts.
“But the excellent news is that with today’s announcement we have the final piece of the jigsaw of our detailed energy security plans, and can now say with confidence that we have defused the ticking time bomb of electricity supply risks we inherited.”
He said the UK was a world leader in energy security, adding: “Today’s announcement – coupled with our record amounts of investment in renewables and electricity infrastructure, our revival plans for the North Sea and the most healthy pipeline of investment projects in new generating capacity and interconnectors ever – means we will remain a world leader.”
National Grid confirmed earlier this month that it would put in place measures to tackle the energy crunch the UK faces over the next two winters when the capacity margin – how much the UK’s total generating capacity outstrips the expected peak demand – is expected to shrink to as little as 2%.
Payments will be made to large energy users which can reduce their power use – for example, by switching to back-up generation – during peak evening hours in winter on weekdays between 4pm and 8pm.