The government risks “disappointing voters” hoping for cheaper energy bills in the next decade if it cuts the £8.3bn budget for GB Energy, a thinktank has warned.
Researchers at the Institute for Public Policy Research (IPPR) found that the publicly owned energy company – set up by Labour to drive renewable energy and cut household bills – will need to be fully funded if it hopes to build enough clean energy projects to meet 5% of the country’s electricity needs by the 2030s.
The left-leaning thinktank added that GB Energy will need to amass a portfolio of clean power more than twice the capacity of the world’s largest offshore windfarm before it begins to have a “systemic impact” on the UK energy system.
It added that creating a portfolio of this size would be “unlikely” before 2030, in a blow to the government’s plan to cut £300 a year from bills by the end of the decade by making the UK a clean energy “superpower”.
But GB Energy could still make a difference to the energy costs faced by specific groups by building projects for local communities or organisations, or by setting up supply contracts directly with energy users, the report said.
The company held its first board meeting at its Aberdeen headquarters this week, chaired by the energy industry veteran Juergen Maier. He said the team was “already engaging with industry on exciting investment opportunities so we can hit the ground running once Great British Energy is fully established” later this month.
The IPPR’s warning was published after reports emerged that the Treasury was considering a cut to the £8.3bn of taxpayer money promised to GB Energy over the five-year parliament in its spending review in June.
Simone Gasperin, one of the authors of the IPPR report, said that for GB Energy to succeed as a publicly owned operating company the government “must take the most ambitious approach possible, including sticking to its original plan to invest £8.3bn”.
“It must ensure that GB Energy can immediately focus on direct investment in fully owned clean energy projects, delivering real benefits to industrial and domestic consumers, and seeking to establish itself as a major player within the entire UK electricity sector,” Gasperin said.
GB Energy emerged as one of Labour’s most high-profile campaign pledges alongside its promise to cut energy bills by £300 a year by creating a virtually zero carbon electricity system by 2030.
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Last month, Starmer reiterated his commitment to the £300 cut and said he wanted “bills to be low for a prolonged period of time”.
But an industry body, Energy UK, has warned that, while the government’s plans could “ensure lower energy bills in the next decade”, the effect will not be felt by 2030, and further plans to help struggling households should be put in place.
A spokesperson for the Department for Energy Security and Net Zero said: “Backed by £8.3bn, Great British Energy will own, manage and operate new projects, to help replace Britain’s dependency on volatile fossil fuel markets with clean, homegrown power.”
