Britain’s energy watchdog has called for an investment of up to £200 billion over the next decade in power plants and other infrastructure such as biowaste plants to secure supplies and meet carbon reduction targets.

The report is called Project Discovery: Energy Market Scenarios and it states “The need for this investment arises at a time of volatile world energy prices and Britain’s increasing dependence on gas imports.”

Ofgem has drawn up four possible scenarios for the next 10 to 15 years. They would result in increases in domestic energy bills of between 14 per cent and 25 per cent by 2020.

One possible scenario sees global economies bouncing back strongly from the recession, which could lead to renewable and carbon targets being missed.

Another scenario sees a rapid economic recovery and a significant expansion in investment in green measures, where domestic renewables targets are met and energy efficiency measures are effective.

Waste management consultancy AEA’s practice manager Adam Read said that technologies such as anaerobic digestion, combined heat and power and energy-from-waste plants had a role to play in helping secure the UK’s energy future.

He said: “Waste is a resource that is under utilised in many respects and it is often in the wrong place at the wrong time. Putting it in the right place at the right time can harness energy content from that material.”

Read added that local communities could benefit from heat and power from AD facilities. He said that technologies such as AD plants could make up ten per cent of the renewable energy solution.

Ofgem chief executive Alistair Buchanan said: “Our scenarios suggest that Britain faces a tough challenge in maintaining secure supplies whilst at the same time meeting its climate change targets. However, there is still time to act. Ofgem will be putting forward proposals in the New Year based on today’s consultation to ensure that Britain’s energy industry can meet the challenges ahead.”

Engineering and manufacturing trade body EEF, welcomed the report. Energy advisor Roger Salomone said: “This independent report confirms that our energy supplies and markets are likely to be severely tested over the next decade. It’s a real wake-up call for anyone who still underestimates the challenge of maintaining secure and competitive supplies whilst we rebuild our infrastructure and cut carbon emissions.

“The real the elephant in the room is the 2020 renewable energy targets and the dogmatic approach of specifying exactly how much renewable energy must be generated and by when. Our response to climate change must be robust but flexible, otherwise we risk exposing consumers and businesses to higher costs during what will be very challenging time.”