Labour’s proposals challenge more than just network companies

The Labour Party attracted a lot of attention last week with its renationalisation plans for GB’s energy networks. Titled Bringing Energy Home, the policy document focuses the nationalisation debate squarely on National Grid and the Distribution Network Operators (DNOs), while also bringing focus on local energy and decarbonisation at all levels. Labour’s vision would see National Grid and the DNOs being replaced with publicly owned national, regional and municipal agencies, as well as the state taking ownership of the GB side of all interconnectors.

National Grid is to be replaced with a National Energy Agency (NEA) which would provide the overall strategy for the energy transition, guide “public, collective and private forms of energy ownership” and would build capacity. Below it would sit a new structure of regional, municipal and local state-backed bodies.

Labour argued that renationalisation is necessary because of the “the daunting challenges facing the energy system in the coming decades, and the central role of energy networks within it, society can no longer afford a model that puts the public at such a structural disadvantage”. That disadvantage is due to “excess profiteering at the expense of investment”, with regulators unable to keep in check “the profit maximising that is a structural consequence of granting private ownership over natural monopolies”.

The party also highlighted network costs representing one-quarter of energy bills and large “unjustified” network company profits. Labour said that these profits would be reinvested back into the networks. A system with “such limited democratic oversight, control and public participation is no longer tenable”, Labour argued, with its plan advancing a rationale for change based on value for money, equity, direction of investment and democratic accountability.

While the political focus has shifted to energy networks, other market participants will also be looking at these plans carefully. For example, the retail sector would need to think about a world where regional authorities “hold statutory responsibility for ensuring every household can access affordable energy”, and municipal authorities “will be able to engage in supply”. Regional and municipal authorities and local energy communities are all potential rivals to existing market participants, with state backing. Implicit in this, for example, is that there would be a continuing role for suppliers, with businesses and households still able to engage in a market of some kind. Businesses may notice little difference due to the continuation of disaggregated cost chains for networks and wholesale energy, albeit with the former under different ownership. Additionally, the need for decarbonisation ups the pressure to control energy usage, meaning that energy management and optimisation skills will remain in demand.

Even if they are never implemented, Labour’s plans challenge those who believe in the market to deliver decarbonisation, particularly with regards to equity, vulnerability and cost to the consumer.

Related thinking

Low carbon generation

Our Renewables Pipeline Tracker: In with the new – scoping projects and progression through planning stages

Our latest Renewables Pipeline Tracker was published on 11 June, and this blog provides a summary of some of the recent developments in our coverage of the pipeline for new build and repowering renewables assets in GB. What’s new? Seabed leasing rounds, scoping projects and CfD announcements Since our previous...

Commercial and market outlook

A look back at 2020 part 4

As we take our first steps into 2021, we take our final look back at the biggest developments in the UK energy markets in 2020, setting us up for the significant year ahead. Ofgem issued its decarbonisation Action Plan on 3 February as Jonathan Brearley became Ofgem CEO, setting out...

Energy storage and flexibility

DNO to DSO: A work in progress

Last month the Electricity Network Association (ENA) published updated figures regarding the procurement of Distribution Network Operator (DNO) flexibility services. This is the latest update from the ENA since April this year, with the document highlighting the historical uptake of services across the DNO regions. The publication also provides projections...

Regulation and policy

Targeted Charging Review residual network charges – some remainders

While Ofgem has ruled on the arrangements that will apply to distribution use of system (DUoS) charges from 1 April 2022 following the regulator’s Targeted Charging Review (TCR) Significant Code Review (SCR) decision last November, it has still to determine a series of CUSC modifications that aim to put in...

Regulation and policy

Finding best practice in Ofgem’s compliance engagement outcomes

The past few months have involved a shake-up of the status quo for all of us, with the ramifications of COVID-19 having a disproportionate impact across society. Being an essential service, energy has been at the forefront of policy-makers minds as suppliers have sought to ensure that those most severely...

E-mobility and low carbon

New service shows Electric Vehicles role in net zero

As the ban of petrol and diesel vehicles looks set to be brought forward from 2040, electric vehicles (EVs) are increasingly the focus of the UK’s net zero journey. Last week the Labour party joined calls to bring the sale ban of new internal combustion engine (ICE) and hybrid vehicles...

Low carbon generation

Podcast key takeaways | James Brabben discusses the role of gas in the UK power market

James Brabben, our Wholesale Manager, spoke to William Powell, Editor in Chief, in the inaugural podcast for Natural Gas World. The podcast discusses the latest issues of the day in the gas market and includes a deep dive into the GB gas market by James. In this blog, we take...

Energy storage and flexibility

FiT costs to reach all-time high amid COVID outbreak

Energy Third Party Charges (TPCs) have certainly been in the limelight recently, and rightly so as less consumption from non-domestic sectors is resulting in a greater recovery of money from domestic households amid the COVID-19 outbreak. Several measures have been taken to date to protect domestic suppliers and consumers from...

This site is registered on wpml.org as a development site.