The Great British Energy Bill announced in the King’s Speech last week has cemented in legislation Labour’s commitment to establish Great British Energy—a new, publicly owned, green energy company.
Headquartered in Scotland, GB Energy stands as the Government’s flagship energy policy, promising to help the UK transition to 100% clean power by 2030, cut energy bills, and achieve energy independence, all while creating thousands of high-skilled jobs and boosting economic growth.
However, for all the talk of optimism, will GB Energy really be able to deliver everything that Labour says it will? There are already early signs that the new company will face several challenges which will make these promises difficult, if not impossible, to deliver without the Government going further.
Funding
There is a rather large elephant in the room that Labour will need to address before people are sold on GB Energy, and that is related to funding.
Labour’s long-term vision for GB Energy sees it operating as an “EDF-style” outfit, generating power by owning and operating state-owned assets like wind and solar facilities. Yet, the commitments set out in the King’s Speech amount to just £8.3 billion over the next five years, which is far short of the original £28 billion that Labour had committed to the enterprise back when it was announced in 2022, and even further short of the £61 billion to £82 billion which some analysts suggest is required to operate an EDF-style company.
So, will GB Energy have the resources necessary to make a meaningful impact?
Labour has been quick to downplay any concerns related to funding, suggesting that GB Energy will initially have two primary functions: first, to drive investment in new technologies via partnerships with the private sector; and second, through the “local power plan,” to give communities a stake and ownership in renewable energy via partnerships with local authorities and the private sector.
However, ultimately, £8.3 billion over five years is a drop in the ocean compared to the investment needed to deliver 100% clean energy by 2030. Therefore, Labour will still be completely reliant on large-scale private investment to ramp up the delivery of green infrastructure to the scale required to meet government net zero targets.
Public Perception
Another issue that GB Energy faces is the problem of public perception. There are some misconceptions about what exactly the company’s role and operations will be and how it will impact the sector.
Many members of the public mistakenly believe that GB Energy is a new energy provider similar to British Gas, Eon, or Scottish Power, companies that directly supply electricity to homes across the country.
Additionally, there is a common misconception that GB Energy will immediately begin constructing and owning large-scale energy infrastructure. While the ultimate goal is indeed to build, own, and operate significant energy projects, current funding limitations mean that GB Energy will initially function more as an investment company rather than a direct developer.
These misunderstandings lead to unrealistic expectations about the immediate service delivery and customer interactions which GB Energy will be able to deliver. Without addressing the common misconceptions regarding GB Energy, the Government could be inadvertently setting itself up for failure in the public’s eyes.
The Planning System
For GB Energy to be a true success, Labour will also need to address the planning system.
Current planning rules give opponents of proposed renewable energy schemes the power to force delays or even block new energy infrastructure from gaining approval. This issue is further exacerbated by cuts to local government funding, which have left many planning departments under-resourced and overworked, leading to delays that increase costs for developers and deter investment.
Additionally, the largest energy projects face the lengthy and costly process of securing Development Consent Orders (DCOs), a requirement for Nationally Significant Infrastructure Projects. This process currently takes years and imposes immense costs on developers. As a result, it can take years for proposed projects to be built.
Without addressing some of these structural issues, it is difficult to see how GB Energy will be able to deliver widespread energy infrastructure within a workable timeframe to meet government targets. This is why many in the industry suggest that Labour will need to tackle and overcome ‘net-zero nimbys‘ if it has any chance of delivering on its net zero targets.
National Grid Capacity
Finally, an issue which is often overlooked in discussions in Whitehall, but is absolutely fundamental to GB Energy’s success, is solving the problem of grid capacity.
Grid capacity is one of the biggest blockers to renewable energy schemes. Many developers stand ready to build the infrastructure that is needed but are unable to do so as they are given lengthy connection dates which delay plans from coming forward. In some extreme cases, new proposed energy schemes are given grid connection dates in excess of a decade.
Put simply, there is limited space on the network to deliver the proposed energy schemes currently in the pipeline in a realistic timeframe that will meet Government targets. National Grid is trying to alleviate the pressures on the grid through its ‘Great Grid Upgrade’. However, this will be a decades-long endeavour, and there will likely be capacity constraints for the foreseeable future.
If Labour is unable to fully address the lack of capacity on the network, GB Energy will soon be confronted by the same issues faced by other companies in the sector and this will limit its ability to deliver the vital infrastructure needed.
Will GB Energy be a success?
GB Energy is a positive first step and there are signs that the new Government understands some of the challenges it will need to overcome. The new Secretary of State for Energy Security and Net Zero, Ed Miliband, has made some key announcements including the decision to lift the ban on onshore wind and fast-track several nationally significant energy schemes which had been delayed under the previous government.
Labour has also confirmed its commitment to supporting National Grid’s ‘Great Grid Upgrade’ to increase grid capacity, and some of the planning reforms announced in the King’s Speech, including a move to simplify and streamline the consenting process for major infrastructure projects, should also remove some of the backlog in DCO applications.
However, without fully addressing these substantial political challenges in the coming years, Labour’s flagship energy policy seems set to underdeliver on its promises without significant interventions which go much further.
