Great British Energy: the industry responds

Labour has announced that a new publicly owned energy company is one of its six ‘first steps’ if it takes office.
It is not clear at this stage exactly what role Great British Energy will have. Politico website suggests it will have a ‘two-speed approach’.
It will have £8.3 billion capitalisation. Initially £3.3 billion will be funding for a ‘Local Power Plan’ which can be used by local authorities, metro mayors and community groups for grants and loans towards small-scale clean energy projects, such as solar panels on council houses, schools or hospitals.
The rest would start to build an energy company owned by the government but operating independently in the free, global market.
like Sweden’s Vattenfall or France’s EDF

Dan McGrail, chief executive, RenewableUK CEO:

“With the right set-up and direction, Great British Energy has the potential to play a key role in supporting the development of innovative emerging technologies like tidal power and floating wind, as well as the development of new onshore wind and solar sites through Labour’s Local Power Plan.”

Alasdair Johnstone, Energy and Climate Intelligence Unit said: “The UK has spent £100bn on gas during the energy crisis of the last couple of years placing a burden not only on bill payers but also tax payers as bills were subsidised. With prices are set to go up again in October, there will be a need to insulate from more gas price volatility.

“This means using less gas and more British renewables along with insulating homes so they leak less heat. Recent polling showed that the public think that the best long-term solution to the energy crisis is to decrease dependence on gas and transition to renewable energy.”

Amit Gudka, CEO, Field:

“Great British Energy recognises the potential of the energy transition to bring down bills, bolster energy security and help the nation achieve its net zero targets. However, it’s only part of how we achieve this. A stable roadmap for policy and regulation and discarding proposals such as zonal pricing are equally important steps forward – minimising uncertainty for investors and an industry ready to deploy billions in capital.

“To go further and faster, we would urge any new government to prioritise available, established low carbon technologies, such as battery storage.”

Hugo Lidbetter, head of sustainable infrastructure, Osborne Clarke:

“The sleight for publicly owned companies is they become a metaphor for delivering a target or policy, without having to explain how they will do so. We saw this last year with Great British Nuclear – and it is not immediately obvious that the Great British Energy plan has taken on board the pitfalls of marrying a laudable mechanism with an undefined objective.

For example – is GBE about delivering decarbonisation targets; establishing a state-owned energy company; delivering “independence from foreign dictators”; accelerating the move from gas (and, conversely, accelerating the deployment of domestic renewables) faster than the counterfactual; being successful commercially (returning a profit to the state); investing in FOAK or nascent technology; investing in mature green power; or transforming public opinion through national branding? All have been flagged as objectives in the fanfare surrounding GBE’s launch.

The last of that wish list is perhaps the only one more obviously suited to a standalone company; the others all have existing and more obvious delivery mechanisms in place (e.g. reforming the CfD auction; introducing the hydrogen and CCS business models; and the government taking a direct stake in Sizewell C and offering an investor protection arrangement to new investors in nuclear and CCS). Being successful commercially also looks at odds with a focus on investing in tidal and floating power – as well as starting to look very similar to the UK Infrastructure Bank.

None of this is fatal if it is all pulling towards a common goal of a decarbonised grid, and a secure, affordable power system. But establishing a new, high profile delivery body on top of existing policies runs the risk of diverting attention from the real time-critical issues: grid constraints; planning reform; market reform uncertainty; and supply chain capability. There are established teams within DESNZ, BEIS and National Grid looking very closely at those issues – and the distraction potential of GBE should be carefully considered.”

David Whitehouse, CEO OEUK:
“It was good to hear again from Labour that if they win this General Election, they won’t turn off the taps and revoke oil and gas licences and they recognise the need for oil and gas in the UK for many decades to come.
“We now need to understand how they plan to work with the sector they say they need, to safeguard oil and gas jobs and build a sustainable and secure energy future that leaves no one behind.
“We share the ambition to make the UK a green energy superpower. A successful path can only be one that recognises that in the journey to net zero we need both renewables and our homegrown oil and gas sector.”

Dr Andrew Jenkins, founder, Kinewell Energy:
“The development of a sovereign, green energy investment vehicle would be a welcome boost to the industry, providing the security, support and more importantly, the funding, required to help rapidly grow the UK’s green energy sector.

“In September last year, we witnessed the first time a government auction for offshore wind received no bids from the major energy producers, resulting from spiralling construction costs and an inability to guarantee a competitive price for the clean electricity produced by the farms. We must never let that happen again.

“The introduction of an investment vehicle investing directly into projects will help give the supply chain confidence to invest given a more stable and wider pipeline of projects, and investing directly in the supply chain will bring forward increased capacity and new innovations to deliver the ambition at a lower cost. “

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