The government has launched its publicly-owned clean power company, Great British Energy, announcing its first major project today.
The government plans to lease land owned by the royal family to build new wind farms on the sea bed. It hopes the project will help power 20 million homes.
The wind farms will be built through partnerships between Great British Energy and private companies. The Crown Estate, which owns the land where the wind farms will be built, owns a large portion of the UK’s seabed stretching up to 12 nautical miles from the land.
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Starmer says the plans will drive up to £60 billion of investment into the sector, as well as “bringing down energy bills for good”.
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Stefan Boscia, who writes for the political news outlet Politico, points out that this initiative isn’t necessarily a new one, as the Crown Estate already leases out land extensively for wind farms. “The Crown Estate made £1.1 billion last year, with a very large proportion of that coming from offshore wind leasing,” he says.
The key difference, as Boscia points out, is that these projects will be delivered by a publicly-owned company under the government’s new initiative.
Ed Miliband, secretary of state for energy security and net zero, told BBC Breakfast it would take time for households to start to see the impact on their bills, but that the project would help deliver long-term energy security. “We are going as fast as we can,” he added.
The government will present its Great British Energy Bill to the House of Commons today, after introducing it in the King’s Speech last week. As well as delivering energy security, the government hopes investing in clean power will help boost national growth.
What is GB Energy?
GB Energy is a publicly-owned clean power company, launched by the government to fulfil a key manifesto promise. Labour has said it wants to transform the UK into a “clean energy superpower” and deliver energy security.
This comes after households suffered soaring energy bills in the aftermath of the pandemic and Russia’s invasion of Ukraine. The government has said clean energy is part of the solution to preventing something like this from happening again.
GB Energy will “drive down bills and provide the energy security that will kick oil tyrants like Putin to the curb”, the Prime Minister’s Office said.
GB Energy will not supply power to households and businesses – it’s more about accelerating investment and creating public ownership.
The government is going to invest £8.3 billion of public money over the course of this parliament. It hopes this will be matched by £60 billion of private company investment – although there are no guarantees this will happen.
Will GB Energy cut bills?
In theory, GB Energy will make the UK less reliant on fossil fuels and energy imported from other countries. The idea is that this would make the country less susceptible to price shocks.
However, it is currently unclear whether the government will be able to secure the private investment it needs to help bring its plans to life. We also don’t know exactly how long it will take before households start seeing an impact on their bills.
Tom Edwards, a senior modelling consultant at Cornwall Insight, suggested securing investment could be challenging. He told the BBC that the company would “need to have the certainty of revenues for investors to say, ‘Yes, I will put my money down’”.
He added that most of the capital injection in a project like this is up front, which means spending a lot of money at the beginning.
Speaking on BBC Breakfast, Miliband claimed GB Energy would start making a profit within the next five years.
When pressed on when bills would start to come down, he said: “Within a couple of years, as we build new onshore wind, new solar, we’ll start to see the effect on bills, but there are lots of things going on here. So our exposure to gas prices, which are set internationally, is something I don’t control.”
Will investing in clean power supercharge the economy?
In addition to cutting bills, the government hopes investing in clean energy will boost the economy. It has said its plans will “create jobs and build supply chains in every corner of the UK”.
The multiplier effect from this could be felt more broadly. People will need specialist training to work in these roles – and more people in skilled jobs means more people with decent incomes who are spending money and boosting the economy. At least, that’s the theory.
The UK also has a problem with underinvestment – something the government is trying to rectify through a range of policies, from pension reforms to an overhaul of the planning system. Investing in clean energy infrastructure could help with this.
In its 2021 net zero review, the Treasury found that GDP multipliers for green investments in renewables can be between 2.2 and 2.5 times larger than fossil fuel energy investment.
However, it added that “the overall productivity impact crucially depends on the degree to which the new technologies require lower operating costs and increase output compared to existing technologies”.
Chancellor Rachel Reeves has declared economic growth to be the “national mission”, and will be hoping that launching GB Energy takes the government one step closer to achieving this.
However, for now, there are still a large number of uncertainties – not least whether the government will be able to secure the £60 billion private investment it needs to bring its plans to life.
