Labour Win in the UK: WeConnect Energy’s Thoughts on the GB Energy Initiative

North Sea Operators in Limbo

Depending on who you ask, it’s not all positive news though for the energy industry. Keir Starmer and co. have their sights firmly set on halting any granting of additional Upstream exploration licenses, having firmly pledged that no new licenses for oil and gas exploration in the North Sea will be issued. In addition, fracking will be banned permanently. This could have serious repercussions for operators in the North Sea area and the communities depending on the work, capital, and subsequent benefits.

To provide a clearer and rounded overview of policies that were in the mix during the elections, we should also mention two of the smaller parties, Reform and the Green Party, who had completely opposing views but managed to take a larger amount of votes than usual. Reform wished to scrap the goal of Net Zero and renewable energy subsidies, while the Greens wanted to cancel recent fossil fuel licenses and remove all oil and gas subsidies.

GB Energy Initiative

Something which seems to have caught the public’s interest and been positively received was the announcement of a new publicly owned energy company, Great British Energy. The plan is to establish this company to co-invest in clean power technologies and promote local energy production.

Richard mentions, “A massive statement of intent really, this initiative proved popular with voters in the run-up to the election, with the power to have an impact on everyone long-term. The commitment to create a publicly-owned energy company funded somewhat ironically via a windfall tax on the profits of Oil & Gas companies landed well with the public because it was a long-term and strategic commitment at a massive scale, of which we don’t always get.” Jonnie draws a parallel with the French energy giant EDF, who actually operate eight nuclear power stations in the UK, and had just last year moved back into state hands in 2023.

The Conservative manifesto had mentioned cutting the cost of the pursuit of net zero for consumers by taking a more pragmatic approach, also guaranteeing no new green levies or charges, but nothing as far-reaching as a new public energy company.

Should this master plan of a state-run energy company come to fruition and Labour deliver on their promises, it has the potential, to deliver energy security within the UK. Both Richard and Jonathan refer to the cost-of-living crisis that has negatively impacted Great Britain since 2021. Having weathered what seems like a constant rising of household costs since this period, consumers and industry alike are demanding some stability in the energy arena.  

This route of national-ownership may offer a path to lower bills. This news should offer relief for most, the crippling impacts of rising electricity prices both in the UK and further afield such as Ireland have had serious repercussions on businesses and households alike. With many businesses and households seeing these bills skyrocket, thousands of businesses have shut down since lockdown, with this bill often cited as a primary factor for business closures.

Keeping prices both stable and low is a priority for everyday people and for economic stability as a whole. Knowing the Oil & Gas market, Labour is also hoping to ease the anxiety felt by those impacted by the licensing halts for new oil and gas. Whether this is enough to appease those who will eventually be impacted remains to be seen.

Balancing Private Sector Concerns and National Ambitions

Jonathan quotes from a Financial Times article stating that from a private sector point of view, "Energy executives are generally unconcerned about the idea of a state-owned company” though this comes with an important caveat, “providing GB Energy does not receive special treatment in state auctions for subsidy contracts or seabed leases." Some industry insiders suggest that, based on discussions with Labour, GB Energy is envisioned as a platform for fostering investment and mitigating risks associated with new technologies and financial ventures, rather than functioning as a direct energy producer competing for projects with other renewable energy developers.  

As a business owner himself, Richard appreciates the concerns, stressing the importance the private sector had in developing and in some ways, fostering the workforce, skillsets, degrees and other peripheral elements that may eventually contribute to GB Energy’s success. Both believe there will be a large amount of synergies between what GB Energy is trying to achieve and current operators and existing supply chains – but appreciate the degree of trepidation from the private sector. Jonnie raises the question of who else will benefit if this national project is pushed ahead. Given the scale and value of investment, GB Energy will be expected to hire nationally and build supply chains throughout the UK.  

Scottish Central Belt for GB Energy Headquarters

Some particularly positive news for those in Scotland, Labour has proposed that Scotland serve as the headquarters for this clean energy mission, dubbing it ‘Britain’s Energy Capital’, with 69,000 proposed roles in Scotland. How accurate these lofty targets are remains to be seen. Nonetheless, Richard also adds that it is encouraging to hear that a figure of almost 20,000 new energy roles has been cited in relation to his home country – Northern Ireland, which are undoubtedly ambitious too. On the point of Northern Ireland, for anyone interested in some further reading, Richard wrote about the energy synergies and closer collaboration potential between NI and Scotland in his last blog post.

Given our Scottish roots, we advocate for the headquarters of GB Energy to be located in Edinburgh or Glasgow. The central belt of Scotland is rich in skills and has strong links to both the North West (Aberdeen) and England, making it an ideal location to capitalise on regional expertise and foster collaboration across the UK. Richard adds, “By positioning GB Energy’s headquarters in Edinburgh or Glasgow, we can leverage the extensive skills base in the central belt and strengthen ties with key regions, ensuring the success of this national project.

Similarly, a really interesting piece from The House featured Ed Miliband and introduced the idea of “local power plan,” a way of giving communities a stake and ownership in renewable energy via partnerships with local authorities and the private sector. The announcement acknowledges that local and community energy initiatives can alleviate the strain on the grid. Generating energy locally can also help avoid the potentially significant expenses associated with upgrading the national grid.

Potential Pitfalls in Labour’s GB Energy Strategy

Richard and Jonnie both agreed that the GB Energy initiative is an interesting endeavour, but playing devil’s advocate, they did raise the tumultuous situation that Labour has the potential to create. This mix of public vs private elements could result in a situation where "the worst of both worlds" is realised. You could easily argue that the state is burdened with the risks associated with costly and new technologies, plus has to either train or find all this new and, as WeConnect Energy fully knows, hard-to-get talent. All the while the private sector will continue to capitalise on established methodology and workforce, and critically, profitable tech.

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While the premise of this state owned energy company is to utilise clean energy sources, be self-sufficient, offset the volatility associated with oil prices and reduce consumer costs sounds great in principal, are the time frames associated with this just too ambitious? The government has stated that this will all be in place by 2030, reducing the previous governments pledge towards decarbonisation by 5 years.

To put this into context the UK is currently reliant on over three quarters of its energy consumed from coal, oil and gas sources. In order to significantly change this by 2030 the government would need to invest heavily into developing both solar and wind sources to remove our reliance on fossil fuels. A study from Aurora Energy Research recently stated that they thought in order to achieve this by 2030 there would need to be a huge increase in output from our current renewable sources. They estimated that Offshore Wind sources would have to triple their output, while Onshore wind and Solar sources would need to double their output for the 2030 targets to be achieved.

Jonathan suggests that if we also consider the infrastructure that will need to be implemented to deliver this energy to UK households, not to mention the bureaucracy and timeframes associated with planning permission for new solar and wind farms, it would be a seriously impressive feat if the government are able achieve this.  

In Conclusion

New developments are emerging daily, even as we finalise this blog. For instance, Chancellor Rachel Reeves recently announced the lifting of the de-facto ban on onshore wind farms in England, a move surely welcomed by many energy companies. Reeves cited this policy change as part of a broader overhaul of the planning system, aimed at facilitating the construction of large-scale onshore wind projects that have been stalled for nearly a decade. Additionally, Ed Miliband circumvents his party processes and suddenly orders a surprise immediate ban on new drilling in the North Sea – watch this space.

Hopefully, you found this piece interesting and the coming weeks and months will be of interest to everyone here at WeConnect Energy and the wider energy industry as more updates continue to roll out from 10 Downing street. From a candidate or sourcing side, if you think our Consultancy, Permanent Recruitment, or Executive Search services can assist, please reach out and get in touch.