Given that devolved nations have different approaches to net zero and a Welsh owned energy company is already in operation, will Great British Energy benefit Wales?

The creation of a publicly owned energy company

In her role as Wales’ First Minister Eluned Morgan welcomed the UK Prime Minister, Sir Keir Starmer, to Wales. A large part of what was discussed was done behind closed doors, but in public both expressed their commitment to closer collaboration and discussed Wales’ role in helping Britain become an energy superpower.

During the visit, they discussed energy initiatives that underscored their visions, not only in pursuing net zero objectives but also in improving the wellbeing of households and the wider economy, with the possibility of job creation and economic advancement resulting from the transition to low-carbon energy. Central to this vision is the creation of a publicly owned energy company, Great British Energy.

The vision behind this company is to respond strategically to the immediate requirement of transitioning to renewable energy sources, effectively addressing concerns about energy security and climate change.

The UK has already made progress in reducing its reliance on fossil fuels, as evidenced by the rising prominence of renewable energy within the overall energy mix.

In particular, the UK has made significant investments in wind farms, particularly in offshore wind energy, which has become a cornerstone of its renewable energy strategy. The UK’s offshore wind capacity has grown dramatically, with Government targets aiming for an increase from 951 megawatts in 2009 to approximately 14 gigawatts at the beginning of this year.

Moreover, researchers have found that integrating renewable energy sources into the national grid improves the power system’s resilience against weather fluctuations, a quality that is increasingly important in the context of climate change.

A brief history of public ownership in the UK energy sector

The political discussion surrounding Great British Energy reflects a growing recognition of the importance of public ownership in the energy sector. The Labour Government proposal for Great British Energy is seen as a way to democratise energy production and guarantee fair distribution of the benefits of renewable energy among the population. This approach resonates with findings that suggest reframing climate action as an opportunity for technological and economic advancement can significantly increase public engagement and support, particularly among demographics that may be sceptical of climate initiatives. By positioning Great British Energy as a publicly owned energy company, the initiative aims to foster a sense of collective ownership and responsibility for energy production and consumption.

The idea of public ownership in the UK energy sector is not new. The origins of public ownership in the UK energy sector can be found in the then Labour government’s decision to nationalise key industries following World War II, as a means to bolster the economy and ensure essential services for the public. A key turning point in the nationalisation process was the passing of the Electricity Act of 1947, which paved the way for the consolidation of regional companies into the British Electricity Authority, effectively nationalising the electricity supply industry. This action exemplified the widely shared post-war belief that public ownership was essential for equal energy distribution and economic revitalisation.

However, the landscape began to shift dramatically in the late 20th century, particularly during the 1980s under the Conservative government led by Margaret Thatcher. This ideology gained momentum, promoting privatisation and deregulation as ways to improve efficiency and decrease government spending. The Electricity Act of 1989 played a pivotal role in initiating privatisation in the electricity sector by dismantling the nationalised structure and introducing competition. The privatisation process involved the transfer of state-controlled assets to private entities, fundamentally transforming the state’s role in the energy industry.

The wave of privatisation was not solely an economic manoeuvre, but also a political tactic aimed at reducing the state’s involvement in the economy, mirroring a larger ideological swing towards market-oriented solutions.

The consequences of privatisation had a profound effect on the state of public ownership. As private companies focused on maximising profits, the power of public authorities to shape energy policy drastically diminished. The shift in priorities sparked worries about the stability of energy supply, its affordability, and the potential environmental consequences of a market driven solely by profit. Sceptics pointed out that the privatisation initiative resulted in escalated energy prices and a disregard for long-term environmental sustainability in favour of immediate profits.

By the early 2000s, the UK government started to comprehend the drawbacks of relying solely on a privatised energy sector. In addition, the growing concern over climate change forced a reassessment of energy policies. The government embarked on a fresh evaluation of energy policies, focusing on innovative ways to collaborate with the private sector while maintaining public supervision, including exploring new frameworks for public-private partnerships (PPPs). The objective was to find a middle ground between the private sector’s efficiency and the public’s need for oversight, especially in relation to renewable energy projects.

Will Great British Energy benefit Wales?

The creation of Great British Energy by the UK Government shows their dedication to speeding up the progress of low carbon energy projects through collaboration with local authorities and regions. Yet it’s not clear how this will work alongside other efforts and initiatives such as Ynni Cymru (the Welsh Government nationally-owned energy company established in 2023), and against a wider backdrop of UK nations having different approaches to net zero.

The devolution of energy policy in Wales has allowed for greater local control over energy infrastructure and development, which is essential for tailoring energy solutions to the specific needs of Welsh communities.

With a commitment to renewable energy and community participation, Great British Energy can help Wales in its energy transition, taking into account the unique challenges of the country. By prioritising collaboration, equity, and the integration of innovative technologies, Great British Energy can help ensure a sustainable and resilient energy future for Wales.