The Centre for Energy Policy welcomes the UK Government’s announcement on Great British Energy and looks forward to understanding more details as they emerge.

Today, the Prime Minister, Sir Keir Starmer, and the Energy Secretary, Ed Miliband, announced the partnership between GB Energy and the Crown Estate, which has the potential to leverage up to £60 billion of private investment in energy independence in the UK. The company, owned by the British people, will be backed with £8.3 billion of government investment over this Parliament to own and invest in clean power projects in regions across the UK. The move shows that the new government is willing to have ‘skin in the game’ to provide certainty for private investment. The government is acting rapidly with the introduction of two new bills into Parliament to give both GB Energy and The Crown Estate the powers they need to deliver.

It was announced that Great British Energy will have five key functions:

• Project development - leading projects through development stages to speed up their delivery
• Project investment – investing in energy projects alongside the private sector, helping get them off the ground
• Local Power Plan – supporting local energy generation projects through working with local authorities, combined authorities and communities
• Supply chains – building supply chains across the UK, boosting energy independence and creating jobs
• Great British Nuclear – exploring how Great British Energy and Great British Nuclear will work together, including considering how Great British Nuclear functions will fit with Great British Energy

At the Centre for Energy Policy, we recognise the need to move rapidly on affordable decarbonisation, and we welcome the Government’s GB Energy initiative and the benefits it can bring to the British public. As the CCC announced last week, we are behind on our targets, highlighting the need for a shift in policy ambition. The announcement today speaks directly to some key action areas that the Centre for Energy Policy has highlighted in the past:

Delivering policy certainty and stability

The UK’s efforts to decarbonise its energy supply and the wider economy have been hampered by uncertainty, short-termism, and a lack of coordination. Today's announcement by the UK government shows a needed long-term commitment to renewables, which can provide industry and investors with much-needed certainty to move forward.

Providing leadership on the timing and sequencing of net zero actions

Net zero requires multiple actions to take place within limited timeframes and act with urgency. Government commitment and leadership through GB Energy will play a crucial role in reducing the risk for private investors and allow the development of the required supply chains, hopefully with sufficient domestic content to play a key role in the transition away from fossil fuel extraction and use. Our work has demonstrated that without effective leadership and planning, the government and investors could face challenges regarding the potential congestion of net zero projects competing for a limited pool of labour and other resources. The timing of projects should also be considered in terms of how freed-up capacity in sectors such as the oil and gas industry could be redeployed in emerging industries such as CCUS, onshore and offshore wind.

Making decisions on how the costs for net zero will be met

Our research has focused on questions of who ultimately pays (one way or another) for net zero, how and when, showing consistently that these decisions can have real implications for competitiveness and fairness. In this area, transparent decision-making and coordination are vital. The Government and the Crown Estate working together could provide the coordination and decision-making powers needed for rapid decarbonisation. However, more detail is needed on how they will work with the private sector to leverage the estimated £60 billion of additional private investment and what the impacts may be on taxpayers, households and businesses.

Do these announcements go far enough?

Given the scale of the challenge we face in decarbonising and making our energy supply more affordable, probably not. If GB Energy can ultimately deliver large quantities of renewable electricity while bringing down electricity prices, we still have a significant challenge helping consumers, transport and industry to transition to electricity where possible.

It is encouraging to see the new Government moving fast on GB Energy, signalling clearly that the new Government is committed to transforming energy supply that businesses and the workforce benefit from and ultimately so that consumers will benefit from lower cost renewables in the system.

What will it do for Scotland and Scots?

Locating the GB Energy HQ in Scotland is positive, and a strong signal to energy interest north of the boarder. But success depends on the UK and devolved Scottish Government working together and pushing renewable energy projects to develop in ways that create jobs in the supply chain and help transition our workforce and communities away from five decades of dependence on fossil fuel industries.

Finally, and crucially, with Scotland the home of such a large share of the UK’s renewable resources, when cost and bill reductions do come, Scottish homes and businesses must benefit proportionately, closing some of the gaps that have opened due to our being so far from centres of thermal power generation in the past.

Professor Karen Turner said:

Leadership is a critical element of this government announcement that will be key to developing the capacity, especially the required supply chains, to successfully deliver GB Energy. We welcome the government’s long-term commitment to renewables that can provide certainty and reduce risk for private.

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