State-owned energy companies across Europe are lowering household bills and delivering good jobs while UK workers and their families are missing out
Union body says, “It’s common sense – those who invest in the future end up better off”
A publicly-owned energy company could see a £3 return for every £1 of investment – generating “a mammoth £140bn” for the economy by 2040, according to TUC analysis published today (Thursday).
The TUC says a national energy company could lower household bills, make the country richer, create good jobs and cut carbon emissions.
The new analysis reveals the UK could be £140bn better off by 2040 – the equivalent of £5,000 per household for the public purse – if the next government invests £40bn by 2030 in a publicly-owned clean power company.
The TUC says a public energy champion will create a fairer energy system, which can support good jobs and help speed up the path to net zero.
Labour has committed to launching Great British Energy, a publicly-owned national energy champion which it says will end energy dependence on international energy companies like EDF and Norway’s Statkraft.
Making Britain richer
The TUC says UK households are feeding the profits of foreign firms and subsidising cheaper bills abroad.
A publicly-owned clean power company could see the UK reap the rewards – not only making Britain richer but keeping bills down, according to the union body.
The Norwegian government earned $392bn from North Sea oil in the last 40 years by investing in publicly owned Statoil and having a public stake in other oil projects.
The TUC says the UK could have done the same but instead privatised its oil fields, putting corporate profits over the public purse.
The government spent £69bn on energy support schemes, helping drive up inflation when fuel costs spiralled in 2022. TUC analysis shows this could have been avoided, if the UK already had a public energy champion.
The TUC says the government could invest a significantly smaller amount over five years to reap the rewards and lower bills for the long term.
While energy bills for British households rose by 54% last year, in France household energy bills rose by just 4%.
That is because publicly-owned EDF – which also operates in the UK – was instructed by the French government to cut profits and keep prices down.
The TUC says that with a public energy company the UK would be able to take a similar approach.
Good jobs and clean power
A publicly-owned energy company could help dramatically expand the UK’s supply of clean power – such as offshore wind, tidal, and nuclear – accelerating the path to net zero.
The TUC says it should follow examples from other countries such as Norway, Sweden, France and Denmark, where strong recognised unions and worker representatives on company boards help to ensure good, fairly-paid union jobs.
The union body says that a public clean power champion could boost domestic investment, make the UK a global leader in zero carbon technology, and make the country energy independent.
And that the company should be democratically accountable to the public like those in Europe.
TUC General Secretary Paul Nowak said:
“Publicly-owned energy companies work. Across Europe they are lowering household bills and delivering good jobs.
“But the UK is feeding foreign firms’ profits and subsidising cheaper bills abroad, while British households struggle to heat their homes and pay their bills.
“It’s common sense – those who invest in the future end up better off. A British public energy champion – at the right scale – could create good jobs, speed up the path to net zero and make everyone better-off by a mammoth £140bn.
“The UK is at a crossroads – we can continue to allow foreign firms to rip off British households or we can invest in publicly-owned clean power. That's the best way to decarbonise the UK economy and safeguard people's jobs and livelihoods.”
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TUC report: Public Power: Turning it into a reality https://www.tuc.org.uk/research-analysis/reports/public-power-turning-it-reality
The report shows a government investment of £40bn in clean technologies would return £140bn by the end of the decade, or £5,000 extra in the economy per household.
Methodology for return on investment calculation
The public energy company's returns to 2040 are modelled based on the same investment model described in the report (see Appendix: Investment modelling methodology, p.20), using the following assumptions:
The clean power deployment scenario based on the CCC’s Balanced Pathway with Labour's 2030 clean power target
Average capex per GW of new capacity for each year is calculated from BEIS capex £/kw annual numbers for different technologies, combined with the estimated annual technology mix from the CCC’s Balanced Pathway and Tailwinds scenarios.
The average capex per GW of new capacity for each year from 3) is multiplied with new GW of publicly-owned clean power capacity deployed in that year from 2) to assess the annual capex investment into new generation capacity estimated for the public energy champion.
The debt to equity ratio used is 35%, i.e. a conservative assumption for the company's ability to leverage capital (based on comparisons in European power sector, we expect it could rise to 65% for some projects)
Assessments assume no returns are made in the first five years as the company establishes itself.
After that, returns ramp up to Orsted's annual return on capital employed (15%)
The cost of debt capital is 6%
Examples of direct use of public power companies' profits to lower bills
Sweden's publicly owned grid operator Svenska Kraftnat made SEK 60 billion in bottleneck income during the price spikes of 2022. The Swedish state directed these funds towards bills support
This helped Sweden keep the change in household electricity prices to under 10% and well below European average. (Eurostat data)
Norway spent an estimated NOK 40 billion on energy bill relief packages in 2022 but earned over a third of it (NOK 14 billion) back in the same period through the Norwegian state's ownership of various renewable energy assets (according to industry association Energi Norge, now Fornybar Norge). (https://www.nrk.no/norge/nytt-anslag_-staten-haver-vel-70-milliarder-ekstra-pa-strom-i-ar-1.16112738).
Norway has also kept electricity bill rises to well under 10%. (Eurostat data)
VIDEO CONTENT: A TUC video (55 seconds), comparing high energy bill increases under private ownership in the UK to much lower increases under public ownership in France, is available for digital reporting. Use of the video is free.
DOWNLOAD LINK: https://vimeo.com/732395879/d0c079844e
EMBED CODE: <iframe src="https://player.vimeo.com/video/732395879?h=d0c079844e" width="640" height="564" frameborder="0" allow="autoplay; fullscreen" allowfullscreen></iframe>
Making Britain richer: The $392bn the Norwegian government earnt from North Sea oil in the last 40 years comes from estimates by the Natural Resource Governance Institute based on UK and Norwegian government data. https://resourcegovernance.org/articles/did-uk-miss-out-ps400-billion-worth-oil-revenue
Cutting bills: The government spent £69bn on energy support schemes in 2022 according to the National Audit Office (NAO). https://www.nao.org.uk/press-releases/energy-bills-support-schemes/
- About the TUC: The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together the 5.5 million working people who make up our 48 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living.
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