THE boss of one of Britain's big six energy suppliers has entered a game of brinkmanship with the UK Government by warning "there is a very real risk of the lights going out".

Ian Marchant, chief executive of Perth-based SSE, issued the ultimatum as he said the Coalition was significantly underestimating the scale of the capacity crunch facing the country.

SSE, which together with other firms has been criticised for its large profits while continuing to put up gas and electricity prices, announced it is scaling back power generation at five sites.

Energy regulator Ofgem had predicted a one-in-12 chance of the lights going out before SSE announced its capacity cut.

Mr Marchant said: "It appears the Government is significantly under-estimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result. The Government can reduce this risk very easily by taking swift action to provide much greater clarity on its electricity market reforms and bringing forward capacity payments for existing plant from 2018 to 2014."

SSE said it was cutting 2000 megawatts of its thermal generating capacity – more than 20% of its total – with the loss of more than 160 jobs across the next 12 months as a number of its facilities are no longer economically viable. It is delaying investment decisions on new-build power facilities until 2015 due to uncertainty in the electricity market as the Energy Bill makes its way through Parliament.

There are also warnings the capacity margin, the difference between energy supply and demand, is expected to reduce from 14% at the moment to between 3% and 5% in 2015/16.

Trisha McAuley, senior director at Consumer Focus Scotland, said: "We need to invest to keep the lights on but we also need to think about how we protect the most vulnerable consumers who can least afford higher prices."

SSE cited new European directives on emissions as among the reasons for the shutdowns at the sites.

A plant in Lincolnshire is to be mothballed, and at Peterhead, Aberdeenshire, high transmission access charges are being blamed for capacity being cut from 1180MW to 400MW from March next year.

An Ofgem spokesman said: "The situation on likely available capacity has deteriorated since this report with more plants closing sooner than expected."

Energy Minister John Hayes said: "The amount of spare power available today is currently comfortable. As old infrastructure closes, we expect this margin to reduce but we will make sure it stays manageable."

l The Scottish Government has been urged by four parliamentary committees to improve its approach to climate change targets. MSPs welcomed ministers' ambition but urged them to look again at key areas. The Government should promote a "step-change" in public attitude to climate change, the reports says.