No bailouts for energy companies despite likelihood of more failures, says business secretary

The business secretary admitted that the sector ‘may well see companies going out of the market’ in the near future

The energy industry pledged to reach a net zero power system in the 2030s (PA)

UK government will not bail out failing energy companies, the business secretary has insisted, despite the industry warning of more supplier failures in the coming weeks.

Speaking at Energy UK’s conference on Thursday, business secretary Kwasi Kwarteng repeated his pledge to “not bail out failing companies”. He said “they cannot be rewarded for irresponsible management of business”.

However Mr Kwarteng admitted that the sector “may well see companies going out of the market” in the near future, saying “it’s going to be a difficult time”.

Opening the conference, chief executive of Energy UK, Emma Pinchbeck, warned that “we’ll see more businesses fail in the coming weeks”. Speaking about the recent energy crisis, she said: “I don’t think we are by many means through this period… it’s an extraordinary time.”

Their comments come in light of a new report about the state of the country’s energy supply from the National Grid.

The electricity system operator said on Thursday that the UK is facing tight electricity supplies because of rising demand and capacity constraints.

They warned of a greater risk of blackouts and “significant price spikes” in the coming months.

Mr Kwarteng, responding to the report, said that “we are absolutely confident in the security of our supply”. He added: “It shows that as far as energy security is concerned the UK is an excellent place.”

He also pointed to decarbonisation as a means of protecting consumers from volatile fossil fuel prices.

Ahead of the Cop26 climate conference in Glasgow, he said: “The UK so far, as many of you know, has made great progress in diversifying our energy mix. But we are still very dependent, perhaps too dependent, on fossil fuels and their volatile prices.”

He said the government’s pledge to decarbonise the electricity grid by 2035 would help consumers.

Pinchbeck also announced on Thursday that the industry believes that it can create a net-zero power system in the 2030s.