GB Energy: what did the King’s Speech reveal about the government’s plan?

GB Energy headlined in Labour’s election campaign. Leaflets distributed to households across the country included the pledge to set up a publicly-owned clean power company headquartered in Scotland. The commitment was massively popular. Unsurprisingly, as public ownership of clean power is common sense. Those who own the future end up better off.

Wednesday’s King’s Speech described GB Energy as accelerating investment in renewable energy such as offshore wind. The detailed notes lay out that GB Energy will be a “publicly-owned energy production company which will own, manage and operate clean power projects up and down the country".

The TUC has long called for the UK to catch up with our peer countries in Europe, where public ownership of energy generation is the norm. France has EDF, Denmark has Orsted, Sweden has Vattenfall.

As Labour pointed out repeatedly in opposition – much of the UK’s offshore wind is publicly-owned – but by foreign governments. The city of Munich owns a large part of a wind farm off the North coast of Wales. Meanwhile, energy privatisation in the UK has boosted profits and subsidised cheaper bills abroad, while domestic households struggled to heat their homes and pay their bills.

What has the Labour government promised in the GB Energy Bill?

The briefing notes for the King’s Speech give important details on the Labour Government’s plans.

GB Energy will be a “publicly-owned energy production company which will own, manage and operate clean power projects up and down the country".

That suggests that GB Energy will be an energy generation company focused on clean power, and have a more active role than a back-seat investor. Similar to other public energy companies like French EDF or Danish Orsted, the government’s intentions seem to be for it to develop new clean power projects, and then manage and operate them. 

GB Energy will “develop, own and operate assets, investing in partnership with the private sector”.

This provides further confirmation that GB Energy will develop and operate clean power projects. Similar to publicly-owned companies from other countries, it will co-invest and enter joint ventures with other energy generating companies. For example, Norwegian public renewables company Statkraft is collaborating with Danish private investor Copenhagen Infrastructure Partners on a 500 MW offshore wind farm in Ireland.

“It will have a capitalisation of £8.3 billion of new money over the Parliament.”

As committed to in Labour’s election manifesto, GB Energy will be initially capitalised with £8.3 billion in new money. This was previously broken down into £3.3 billion for the Local Power Plan (delivering £600 million a year for energy projects with local authorities and £400 million a year in cheap loans for projects with community energy groups), and £5bn for the rest of GB Energy.

“Great British Energy will take a stake for the British people in projects and supply chains which accelerate technologies of the future, reaping benefits at home in cheap clean power and securing Britain at the front of the global race for technology which has major global export potential.”

This positive commitments reinforces government ambitions to ensure we manufacture more of our clean power infrastructure ourselves, rather than importing most of it – as has been the case so far.

“Facilitate, encourage and participate in the production, distribution, storage and supply of clean energy, the reduction of greenhouse gas emissions from energy produced from fossil fuels as well as measures for furthering the transition to clean energy and improving energy efficiency.”

This seems to open the door to GB Energy participating in other parts of the energy system as well as generation, including distribution, storage, and supply, potentially, CCUS and hydrogen and energy efficiency.

“It is highly unlikely that this scale and pace of investment could be delivered by the private sector alone within the current institutional and policy landscape. […]Leveraging the capabilities that only the public sector has, a public energy company, in combination with additional electricity market reforms, could help mitigate existing market failures, and therefore increase the speed and reduce the cost of deploying renewable generation capacity.”

The government has recognised the limits of the private sector in delivering the scale and pace needed to meet the climate challenge. And the ability of the public sector to accelerate deployment of renewables and reduce costs is helpfully acknowledged.

What happens next?

Detailed work will now begin on the Bill to establish GB Energy. This will include the structure, powers, priorities and responsibilities, resourcing and accountability of the new public energy company.

We’re ambitious for the potential that GB Energy has over time to match existing players like Vattenfall or Orsted, with comparable powers to borrow to invest to its peers. We’re also keen to see governance structures that reflect workplace voice, and structures that enable GB Energy to support domestic supply chains.

The TUC has an existing set of recommendations for establishing a successful GB Energy, and look forward to working closely with the new government to support its delivery.