Launching his plans for Great British Energy, a state-owned clean energy company, Sir Keir Starmer promised the new entity would reduce bills, create jobs and provide greater energy security.
Specifically, the Labor Party’s press release for an idea first announced in October 2022 said: “Great British Energy will cut energy bills for good as households face the threat of £900 annual energy price rises under the Tories.”
This assertion is based on analysis of fluctuations in the energy price cap set by Ofgem and the prospect of a rise in energy prices triggered by a repeat of global events – specifically, the Russian invasion of Ukraine.
WorkPrice Cap analysis calculates that in the two years since April 2022, consumers have paid around £1,880 – or around £900 a year – more than they would have paid if prices had remained at pre-war levels. The government also spent £94 billion on energy price guarantees, further capping bills at £2,500 per household.
While the £900 figure is correct and energy bills remain well above the long-term average, the likelihood of further spikes depends on your reading of world events.
Where Work and Conservatives We agree is that the way to increase energy security and reduce bills is to accelerate the transition to low-carbon, renewable energy sources. The difference is how quickly this must happen.
Labor says the Conservatives have “blocked clean, local energy”, and the data certainly shows that new renewable capacity has slowed in recent years.
The UK currently has around 15 GW of installed solar, onshore and offshore wind capacity, enough to supply more than 40% of the UK’s electricity last year.
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Onshore wind effectively stagnated under the Conservatives in England due to planning restrictions – it remains an important part of Scotland’s energy mix – while offshore wind, until now a success story, stalled last year when a government auction failed.
The government has targets to increase renewable capacity, but only in solar, up to 70 GW, and offshore wind, for which the Boris Johnson-era target is 50 GW by 2030. There is no target for onshore wind .
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The Conservatives’ offshore wind targets predate Rishi Sunak becoming prime minister. Photo: Reuters
Workers want to go further and faster, building 35 GW of onshore wind and 55 GW offshore, along with 50 GW of solar capacity. Crucially, they want to fully decarbonise the grid by 2030, five years earlier than the Conservative proposal.
Senior industry figures, and even the Labor Party, agree that this is an extremely challenging target, made more difficult by recent supply chain and inflationary pressures that have seen some UK projects put on hold.
Mr Keir he said delivering Great British Energy it will shave £300 off your bills, but that’s a disputed and tricky number to break down.
Keir Starmer with Scottish Labor leader Anas Sarwar and Shadow Secretary of State for Energy Security and Net Zero Emissions Ed Miliband. Photo: PA
Renewable energy is cheaper than fossil fuel alternatives, but only after the infrastructure, much of which requires subsidies, is built, and the cost of the electrical transition alone is estimated at more than £100 million.
Most of this will come from the private sector, in which the new state entity will seek to compete.
Following the model of French national supplier EDF and Sweden’s Vattenfall, both of which generate significant power in the UK, Labor envisages its entity owning and operating major renewable generation assets in the future, although it will not act as a retailer.
However, initial plans were scaled back at the request of shadow chancellor Rachel Reeves, leaving £8.3 billion to be invested over a five-year term. That’s a lot for a state-owned start-up, but relatively small in the energy sector.
Labor privately acknowledges that it will take time to grow, but maintains that with the access to capital on preferential terms that the government enjoys, and perhaps the freedom to take greater risks than other industry players, there is no reason to that the British state does not make profits from energy in the same way as France and Sweden.
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