Great British Energy: From pledge to reality

Great British Energy: From pledge to reality is a Public First report, commissioned by RenewableUK. In it we refine a realistic set of aims for the new Labour government’s flagship energy pledge, set out the actions the government will need to take to establish it, and describe how to build the organisation while maintaining both business and public support.

GB Energy’s mission is deployment and returns

  • GB Energy should be an operationally independent company with a focused mission: to rapidly increase the pace and scale of renewable deployment, whilst ensuring stable revenues.
  • GB Energy will need to be established at pace and, at least initially, it will have limited capital. Therefore, the majority of GBE’s initial investments should be focused on onshore wind, solar, and tidal energy.
  • Initially GBE will take minority equity stakes in clean infrastructure and pursue joint ventures with the private sector but it should have the ambition to grow and diversify its portfolio to accelerate other technologies, so that it can continue making profit and expanding low-carbon generation. As other state-owned companies have done this should also see GBE move from minority stakes, to majority, to potentially developing its own projects.  

GB Energy will work in partnership with existing private developers

The scale of investment required to meet the challenge of clean power by 2030 is vast. There is plenty of space for GB Energy’s £5bn without displacing private investment. Having a degree of state co-investment, as other countries do, is one of the ways the UK can benefit from the transition, alongside private investment and job creation.

GBE can also do things to help crowd in more private investment. It can do this by:

  • Focusing on locations where potential returns aren’t yet high enough for private interest, for example incentivising development where grid constraints or surrounding infrastructure are prohibitive.
  • Taking on the burden of permitting and community consultation.
  • Returning and managing a proportion of ownership to communities, providing them an ongoing dividend.
  • Recycling capital from existing projects, allowing private investors to deploy their investments into new projects and expand the provision of renewable energy. 

The Civil Service will need to build a unique organisation at pace

Building GBE at speed will be a challenge and must be done in a manner that reduces the risk of it being sold off in the future as government priorities change. 

It is also vital that communities see the benefits of new developments by the end of the parliament. To achieve this Labour will need to: 

  • Issue a commitment, from the Prime Minister, to establish GB Energy and begin operating within 12 months. This communication should set out the principles established above, and is vital to incentivise government machinery to move at speed. This would be backed up by a legislative commitment in the King’s Speech.
  • Set GBE up in interim form, with powerful internal advocates (interim CEO and Board). 
  • Consider seeding GBE in the UK Infrastructure Bank (UKIB), whilst legislation is in progress. The UKIB issued its first investment just seven months after the initial policy paper proposing it, though its first equity investment was longer. This will be important to the quick release of Local Power Plan financing. UKIB already has the salary bands to attract talent and has staff with knowledge of onshore energy.
  • Be sponsored by HMT and DESNZ. GBE’s principle relationship with the state will be returning profits to the Exchequer and therefore financial, but will have key insights on the progress of clean infrastructure deployment.

Sam Alvis, a director at Public First and the report’s author said: “GB Energy was front and centre of Labour’s election campaign because it has huge public support, driven by a public that wants to see both the UK tackling its emissions and the country directly benefiting along the way. 

“Labour in government now needs to design GB Energy in a way that maintains that public support, as well as the support of the private sector, in the long term. 

“Public First’s research points to an organisation which is dedicated to accelerating the building of renewable energy generation, particularly onshore wind, solar and tidal. Working in partnership with the private sector but leading on community engagement consultation and ensuring those same communities directly benefit along the way. 

“GB Energy will be an independent company, making its own decisions beyond government. But ensure it has this clear steer, to build faster and to generate profit along the way, will be vital to an organisation that is not only successful now, but for many years to come”

The report Great British Energy: From pledge to reality can be found here, and you can download the full polling tables HERE