UK aims to turn new state-owned firm GB Energy into energy giant

The United Kingdom is working on legislation enabling its newly founded firm Great British Energy – GB Energy to rival other European state-controlled energy giants like France’s EDF and Norway’s Statkraft. In addition, the Labour government has awarded CfD subsidies to 131 onshore and offshore renewable energy projects with 9.65 GW in total capacity.

The City of Munich owns more British offshore wind capacity than the UK government, Secretary of State for Energy Security and Net Zero Ed Miliband told lawmakers. The new Labour government, led by Prime Minister Keir Starmer, promised in the election campaign to make a radical change by establishing state-owned clean energy company GB Energy.

Downing Street has appointed Chair Jürgen (Juergen) Maier, former head of Siemens UK, launched a partnership between the firm and the Crown Estate and proposed legislation for both entities. The two bills are in Parliament.

Through their companies, Denmark, Sweden, Norway and France own much of Britain’s energy assets, Miliband pointed out in a debate on the proposed legal framework for the new firm.

“Following the auction results I announced on Tuesday, the largest two offshore wind projects to win a contract will be built by Ørsted, a Danish state-owned company. I strongly welcome its investment, but the question before the House today – the question at the heart of this bill – is simple: do we think there should be a British equivalent of state-owned energy generation companies such as Ørsted, Vattenfall, Statkraft and EDF investing in our infrastructure?” the energy secretary said at the bill’s second reading.

GB Energy to generate but not supply electricity

The government vowed to capitalize GB Energy – Great British Energy with GBP 8.3 billion within five years. It would raise the funds with a windfall tax imposed on the oil and gas sector.

“We have a simple proposition: if it is right for the Danes, the French, the Norwegians and the Swedes to own British energy assets, it is right for the British people to do so as well,” Miliband stressed.

The vision for GB Energy is to invest in solar and wind power, including floating wind facilities, and in segments such tidal energy, hydrogen, carbon capture, utilization and storage (CCUS) and energy storage. During the election campaign, the Labour Party said the utility would produce electricity but that it wouldn’t be a supplier.

GB Energy said it would work on project development, invest together with the private sector, promote projects with local authorities and communities and build supply chains. Its goal is to create 650,000 jobs in clean technology sectors. Additionally, the plan is to bolster the nuclear energy segment.

The idea is to base the company in Scotland. According to the latest media reports, the headquarters would be in Aberdeen.

Synergy with seabed leasing authority

The partnership with the Crown Estate has the potential to leverage up to GBP 60 billion in private investment into the UK’s drive for energy independence, the government said in July.

The state property and seabed manager has a GBP 16 billion portfolio. The tieup is envisaged to help build offshore wind farms. The Crown Estate owns almost the entire seabed up to 12 nautical miles (22.2 kilometers) from the shore. It estimated that the partnership would enable as much as 30 GW in new offshore wind capacity to reach seabed lease stage by 2030.

The government said the synergy, coupled with legal reforms, can potentially halve the time it takes to get offshore wind projects operating. Currently they take 10 to 15 years.

Labour government revamps renewable energy auctions

After Energy Secretary Ed Miliband unblocked onshore wind power project development and moved the needle on big solar farms, the country’s sixth renewables auction opened the way for state aid for 131 projects. The previous offshore wind auction failed, so the government also boosted the available sum.

Total capacity eligible for support in the form of 15-year contracts for difference (CfDs) is 9.65 GW. Most is for bottom-fixed offshore wind turbines, 4.94 GW, plus the 400 MW floating wind farm project Green Volt.

The Department for Energy Security and Net Zero (DESNZ) has awarded Ørsted the contracts for a 1.08 GW share of Hornsea 3 and 2.4 GW for Hornsea 4. Located off the Yorkshire coast, they are set to become Europe’s largest (2.96 GW) and possibly second-largest facilities of the kind, respectively.

Developers of 93 photovoltaic projects won subsidies. Their total proposed capacity is 3.29 GW. There are 22 onshore wind farm projects on the list, with a combined 990 MW. The remaining 28 MW is in six tidal stream endeavors.