Electricity shortage could halt Thames Gateway

There is not enough electricity capacity to supply the 200,000 homes the government is planning for the Thames Gateway.

The 43-mile strip of land east of London – the most important of the government's four growth areas because it has the greatest capacity for new housing – is likely to see a 20% growth in the number of households by 2016.

Developers are struggling to strike affordable deals with electricity suppliers to meet planned demand. They say the problem will become unmanageable if the expansion envisaged by deputy prime minister John Prescott takes place.

There are plans to build 140,000 homes in the 124 km2 stretch of the gateway within the boundaries of Greater London over the next 13 years, and create 220,000 jobs. At least another 60,000 homes are to be built in the rest of the region.

The Olympic stadium proposed for the 2012 games would be built in Stratford, within the growth area. If London's bid to stage the games is successful, the strain on the electricity grid will be severe.

Stephen Joseph, deputy chief executive of the Thames Gateway London Partnership, said: "This is a seriously high rate of growth in a relatively small brownfield area. To bump this up will cause a massive problem as the existing framework is only set up for existing demand.

"The issue is whether or not suppliers can be persuaded to make the necessary investment – without this they can't meet the need. We are working to try to solve this potential market failure just now. We need to be able to reassure suppliers that they won't just be left holding the baby after making a large capital investment.

Unless the supply of power and the other utilities are addressed, the Communities Plan will be nothing but a pipe-dream

Barrie Dyde, Tilfen Land

"There will need to be some beefing-up of the supply – we are working on just how much will be required. There is a need for someone to sit down with the big utilities and do some serious negotiating. Sewage, water and gas will all encounter similar problems in certain areas. We will flag these issues up at the new Thames Gateway Board as a matter of urgency."

Developer Tilfen Land, which wants to build 2000 homes and 1.6 million ft² of industrial property in Thamesmead, was told by supplier 24/7 that it would need to part-fund a new substation that could cost up to £5m.

Tilfen baulked at the cost and wrote to the Office of the Deputy Prime Minister, the Department of Trade and Industry and the local development agency to express its concerns. Barry Dyde, engineering director at Tilfen Land, said: "There is a major concern that if the issue of power is not resolved, the development will not go ahead.

"It is as big a strategic concern as transport. It's all very well to have plans to build 200,000 homes, but the issues of power and the supply of other utilities such as water simply aren't addressed in the Communities Plan. Unless they are, the plan will be nothing but a pipe-dream. At the very least, there will be major delays to what the government wants to do. There has to be a comprehensive review of utility needs in the Thames Gateway so we can work out how serious the problem is."

A spokeswoman for London Electricity – of which 24/7 is part – said: "We are aware of the level of development activity that is likely to occur in the Thames Gateway area and the energy demands that will create. The capacity to meet these demands is, or will shortly be, in place."