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Ed Miliband’s clean energy company is being split apart
LONDON — Labour swept to power with a big, expensive promise: to create a government-owned energy company, hand it billions to invest in British renewables, and watch it grow, eventually, to rival other state-owned energy giants.
Two years on from the foundation of Great British Energy, that isn’t what has happened.
Analysis from POLITICO shows billions of pounds from its budget have been redirected to schemes not included in GBE’s initial remit, stripping away some of the cash earmarked for costly, large-scale renewable energy projects like wind and solar. Those funds are being used instead for very different purposes, like planning new nuclear schemes and reviving Britain’s creaking electricity grid.
Set up by then Energy Secretary Ed Miliband, the government backed GBE with £8.3 billion of fresh funding. Its purpose at the time seemed clear. “Great British Energy will own, manage and operate clean power projects,” Miliband pledged, “and generate energy in its own right.”
Labour officials familiar with GBE plans told POLITICO in 2024 local projects would get around £3 billion of its total budget, while the rest would go on helping the company establish itself in the market, including by taking stakes in wind and solar projects.
Yet now experts can’t agree on what, exactly, GBE is for.
How to spend it
Miliband’s GBE pitch to the public was ambitious.
The company would allow Britain to become a bigger player in its own clean energy market in Labour’s dash to hit green goals, he said. Referencing huge state-owned companies in Denmark and France, he told Channel 4 News weeks after the election that GBE was “not going to become Ørsted or the generation arm of EDF overnight. But that is the long-term vision.”
Soon after GBE passed into law, though, former Chancellor Rachel Reeves reassigned £2.5 billion of its budget to help developers design small-scale nuclear power plants and prep sites where those mini-nukes will eventually go.
The government also scaled back its funding for those local, smaller-scale projects, which include getting solar panels onto school and hospital roofs. The mooted £3 billion for GBE’s Local Power Plan became just £1 billion when more details were announced this February.
GBE has set aside another £1 billion to build up clean energy supply chains.
And that’s all before Prime Minister Andy Burnham used Labour’s annual conference to pledge another whack of GBE’s budget to a totally new venture: Great British Grid.
Enter GB Grid
In a bid to put his own stamp on Miliband’s pet project, Burnham announced that the new unit would sit within GBE, using some of its budget to speed the build out of Britain’s creaking grid network.
GB Grid will invest alongside existing grid operators in a bid to cut costs, Energy Secretary Miatta Fahnbulleh said last week, at a time when the grid regularly struggles to handle the levels of power being generated by developers.
Energy experts are torn over whether GB Grid, in particular, is a smart pivot for the government — but acknowledge it is not the same thing Miliband promised to deliver.
“I think the focus has shifted, but I don’t think that should be seen as a problem,” said Joshua Emden, a senior research fellow at the Institute for Public Policy Research think tank.
GB Grid would have access to £4 billion of GBE funding, according to media reports published at the time of Burnham’s announcement, although officials from the Department of Energy Security and Net Zero insist they “don’t recognize” that figure.
It is still enough for Kemi Badenoch’s Conservatives to pile the pressure on ministers to explain why their plans have changed.
“Taking half the GB Energy budget and putting it into a venture that was only announced a few weeks ago leads to the obvious question of: What actually is GB Energy for? And does the GB Energy of today bear any resemblance to what the government envisaged in July 2024?” asked Shadow Energy Minister Harriet Cross.
Doubters and defenders
Some energy industry officials are doubtful that setting money aside for grid investment is the best use of public cash.
“If it does that last mile [of grid] to a data center, if it helps where there isn’t actually any program or plan, [then] fine. We’re not going to say: ‘No, don’t spend it on making the grid better,’” Dhara Vyas, chief executive of the industry group Energy UK, told a panel at Conservative Party Conference earlier this month.
But transmission operators — who run the network — are already spending tens of billions on the grid, she said. “The energy transition will be paid for by the private sector.”
GBE “made a slow start and has focused on low-impact activities, important though they are,” said Bill Esterson, a Labour MP and chair of parliament’s Energy Security and Net Zero Committee. Creating GB Grid, he argued, “suggests a shift in emphasis to build what the country needs where the network companies are not delivering.”
The pivot “makes sense as an efficient use of government money,” argued IPPR’s Emden, if there’s a choice between investing in power generation — where there’s competition between providers — and in the grid where private networks have a “total monopoly.”
GB Energy has “the foundations now to create something genuinely useful,” argued one government figure. “Politicians of all stripes should give it the space to get on with the job.”
A spokesperson for DESNZ said “securing new homegrown energy and building a grid fit for the 21st century work hand in hand. Great British Grid will bring public and private investment together, helping to build the infrastructure Britain needs.”
Additional reporting by Nicholas Earl.
