EDF CEO: Another Energy Crisis is Coming

Britain is "walking into a second significant energy crisis", the boss of the country's largest electricity generator has warned. Simone Rossi, chief executive of EDF in the UK, told the BBC's Business Editor Simon Jack on the Big Boss Interview that household bills are forecast to rise by around 20% in January. Customers still owe more than £5bn from the last crisis, four years ago.

Gas is driving the rise. Gas prices are up 25%, while the electricity part of the price cap is 4% lower than in January. His advice is blunt: where you can, choose electricity over gas. He blames wars hitting the world's two biggest gas suppliers at once (Russia and Qatar), which he calls "almost unthinkable".

Closer to the UK, he is asked whether ministers should approve the Rosebank and Jackdaw fields, he says: "Green light. Absolutely. No doubt about it." With most homes heated by gas and most cars running on petrol or diesel, weaning Britain off fossil fuels will take decades. Until then, he argues, producing oil and gas at home keeps jobs and tax receipts in the UK and pollutes less than importing it. "It's a no-brainer."

Nor does he expect relief soon. Ed Miliband promised bills £300 lower by the end of this parliament. Mr Rossi expects them to stay stubbornly high until 2030. Britain built an energy system for rising demand, but demand fell even as the economy grew by 30% and the population by about 10 million. The cause, he says, is deindustrialisation. The fixed costs of the grid are now spread across fewer users, and "somebody's got to pay".

That explains the paradox of cheap renewables and expensive bills. Wind and solar are the cheapest power to produce, but cost is not the same as value. Electricity is hard to store and does not travel well, so every wind farm far from where people live needs costly cables, grid and storage. Last year Britain paid wind farms to switch off nine terawatt-hours of power while importing more than £40bn of fuel.

His answer runs against intuition: more demand means lower bills. Ten million electric vehicles, two million heat pumps and more data centres would spread those fixed costs more widely. He wants ministers to move more policy costs from bills into general taxation, extend the zero VAT rate on electricity beyond April, and introduce a proper social tariff. Bills, he says, have become "a tool to pay for a lot of stuff", and that makes them regressive.

Then there is the winter. Britain's gas storage is low, and relying on imports could mean "staggering" prices at peak times. "If we are caught short," he warns, "basically we are naked in front of the markets."

Presenter: Simon Jack
Producer: Ollie Smith & Olie D'Albertanson

01:15 Why UK energy bills are so high
04:11 Why cheap renewables don't mean cheap bills
07:30 Walking into a second energy crisis
12:33 Paying wind farms to switch off
13:48 Rosebank, Jackdaw and the North Sea
17:20 Bills stubbornly high until 2030
21:58 Clean power 2030 versus reindustrialisation
27:41 Hinkley Point, Sizewell C and the cost of nuclear
32:28 Low gas storage and summer grid scares