Assessing the Case for Public Ownership in the Energy Sector

Last year was the hottest on record, causing extreme weather all over the world, and global emissions are still rising. It has never been clearer that we need to radically accelerate the shift to cheaper clean energy. The question is how?

One idea gaining traction in the UK is a return to public ownership. The Energy Research Accelerator (ERA) has drawn on a wide set of stakeholders to think through in detail the potential roles of a publicly owned company in areas such as offshore wind, grid development, energy storage and critical infrastructure through to local energy.

Download the Policy Commission report here

Watch our video about the Policy Commission report

The Energy Research Accelerator’s Policy Commission was undertaken in response to Labour’s idea of establishing GB Energy, and ERA has conducted a number of detailed consultations over the last few months with senior figures from energy, finance, academia, trade unions and other sectors.

There are a number of recommendations from the report which include the following:

Establish a Net-Zero Delivery Unit at the top of government

The main conclusion of the report is that the government needs to introduce a Net-Zero Delivery Unit. The report concludes that this is a vital reform because responsibility for net-zero policies cuts across many different ministries, devolved administrations, local authorities, regulators and companies. There is currently no single ministry or minister responsible for the targets with powers to hold others to account and there is no single point of contact for companies and civil groups trying to overcome barriers to net-zero.

ERA recommends that the Net-Zero Delivery Unit needs to sit at the very top of government with equal status to the Treasury. The report argues that the Net-Zero Delivery Unit should have the power to direct all relevant government ministries and organisations.

The report advises that the Net-Zero Delivery Unit’s job is not to devise policy but to make sure existing targets and deadlines are met, and to overcome barriers. It should be explicitly focused on net-zero and have powers over Whitehall departments, regional and local authorities, Ofgem, National Grid, Distribution Network Operators, Gas Distributions Networks, and indeed GB Energy, UK Infrastructure Bank and the National Wealth Fund.

Give GB Energy a specific focus

On the subject of Labour’s GB Energy, ERA believes that it should be established but that its focus should be on Local Power Planning, Local Area Energy Planning and the collective procurement of transmission assets. The policy commission also recommends that GB Energy should not interfere with the UK Infrastructure Bank and GB Nuclear, which are well underway to being established.

Reform planning, grid access and market reform

The ERA report suggests that the government needs to pursue planning, grid access and market reform as quickly as possible in order to encourage renewable development and reduce the effect of marginal gas pricing on retail prices.

Invest in new technologies

On new technologies, ERA is calling for investment in early-stage clean energy technologies and strategic infrastructure through the UK Infrastructure Bank where possible and otherwise by DESNZ.

Raise the net-zero objective to the highest priority

Speaking about the Policy Commission report, Professor Martin Freer, Director of the Energy Research Accelerator (ERA), said: “The events of the last two years have made it clear that the energy transition is going far too slowly. 2023 was the hottest year on record, causing extreme weather all over the world and emissions are still rising. At the same time, soaring fossil fuel prices following Russia’s invasion of Ukraine are creating energy poverty for millions of people.

“It is clear that Britain needs to radically improve the way it implements policy and delivers infrastructure projects. Whoever forms the next government will need to introduce a clear industrial strategy for clean energy, and raise the net-zero objective to its highest priority. I hope that the findings of our Policy Commission report will help with their thinking and ensure that time and money is directed into the areas that will make the biggest impact.”