It’s not renewables putting up your energy bills, it’s billionaires

Do you remember Great British Energy? Labour’s 2024 manifesto had six pledges. No. 4 was ‘Set up Great British Energy’, a publicly owned clean power company, to cut bills for good and boost energy security.

If you’ve seen the news or paid a bill recently, you’ll be forgiven for wondering where those lower bills are. Then again, it was always smoke and mirrors. When it was set up in 2024, CEO Jürgen Maier appeared in front of a Select Committee. ‘When can we expect to see bills come down?’ SNP MP Stephen Flynn asked him. That is ‘not the scope of Great British Energy’, answered Maier.

Crunching the numbers

So far as state-owned electricity generation goes, GB Energy has helped solar panels get installed on school and hospital roofs. That’s a good policy. But in total, that’s between 70MW and 100MW of energy generation – it barely makes a dent.

Total UK electricity demand was 127 Terawatt hours last year. If we replace fossil fuel vehicles with electric vehicles, and gas boilers with electric heat pumps, demand will rise to between 500 and 800TWh. The lower figure requires us to insulate homes and expand public transport.

That’s a lot of numbers. But to save you the arithmetic, GB Energy’s solar on public buildings will generate between 0.013% and 0.027% of the extra capacity we need. So only another 3,730 years to reach net zero.

Contracts for Difference

The UK government has awarded contracts for more offshore wind, though. 4GW was agreed in January – a benchmark of 4 gigawatts for all renewable energy-generating projects. That will deliver around 7.9% of what we need, which is a start. Except it’s all privately owned, with contracts agreed by auction. It uses a system called ‘Contract for Difference‘ (CfD). This means the government agrees the ‘strike price’ for the next 15 years, which rises with inflation. So whatever happens to the wholesale price, the company gets paid the same in real terms. That money comes from our electricity bills.

January’s CfD set the strike price at £91.20 per MWh. The actual cost to produce the electricity is £46.40 per MWh, according to the International Renewable Energy Association. That’s technically known as the Levelized Cost of Electricity, and takes into account all the planning, manufacture, installation, operation and maintenance. So privatisation results in a 97% price premium. Who owns the companies that won the contracts? Qatar, Abu Dhabi, and Blackrock are the biggest shareholders. The money is leaving the UK economy.

Financial jargon calls this ‘derisking’. No one will invest £4billion in a wind farm unless they are guaranteed a return, or so goes the argument. Another term would be ‘corporate welfare’. We’re told that capitalists should get profits because they’ve taken a risk. But they’re removing the risk. I never hear these people say that an engineer, teacher or chef should be guaranteed 197% of their living costs for the next fifteen years for taking the risk to become qualified.

Private profits, nationalised losses

The UK electricity system was privatised in 1990. Not for any common-sense reason, but from pure ideology. It was explicitly structured to create ‘competition’. Except it’s a monopoly. Or at least an oligopoly – where a few large firms dominate. In the North East, our transmission grid was sold to an American billionaire, under the company name of Northern Powergrid. Their 2024 accounts show a turnover of £536 million. They paid dividends of £300 million. In other words, 56% of everything we pay goes straight to the owners.

They’re not developing the grid, either. As Mayor I worked with a firm who wanted to expand. The electricity supply to their factory was inadequate. I had to step in with investment to get the supply upgraded. They could then install a new production line, creating good jobs. In fact, every £1 I invested in this way returned over £3 to the public purse in payroll taxes alone. Investment in electrical infrastructure is one of the best things that could happen to British industry. But not when every kWh is milked for profit for overseas investors.

The final piece of the puzzle is the energy retailers. They buy from the grid, and sell to us as consumers. In 2022, loads of them went bust. The system is set up so a generator is not allowed to be a retailer. This meant that, when energy prices spiked and a cap was put on bills, loads of retailers could not meet their costs. Many community energy schemes and cooperatives were wiped out.

The system is regulated so OFGEM becomes the ‘supplier of last resort’. That is, we, the taxpayer, foot the bill for transferring the contracts so people don’t get cut off. It’s the old story of privatise the profits, nationalise the losses.

A new approach to nationalisation

This brings me to the Green Party’s recent conference motion on nationalising energy companies. First, a caveat – I wasn’t there and didn’t hear the arguments. I have spoken to someone who was. It was a bit chaotic, apparently. The Green Party’s membership has quadrupled since last year’s conference, and the systems are creaking. Everyone I speak to in the leadership team knows this. But as a strategic choice, focusing on winning elections has been extremely successful. The Greens are polling above Labour.

The previous Green Party policy was to nationalise the five largest energy supply companies. That clearly needed revisiting. Transmission and generation is where the money is creamed off, not retail. The new motion now explicitly calls for ‘public ownership’ of transmission, but diverse ownership of retail and generation.

‘Nationalisation’ is usually used as shorthand. It is thought of as ending wealth extraction where very, very rich people bribe governments so they can rip us off. But you can’t govern by shorthand. Sooner or later, you need detailed policies and specific legislation. Unless you’re Donald Trump, but that’s not a good example to follow. Co-ops, community ownership, municipal, and public-commons partnerships can all be in the mix.

Co-operatives are private profit-making ventures. As a socialist, I’m all for co-ops in a diverse ownership model. They’re a cornerstone of community wealth-building. And technically, I’m a private electricity generator, as is anyone else who has solar panels on their roof that can feed back into the grid. I don’t want my roof nationalised.

Nationalisation is not a magic bullet, either. RBS, NatWest, Lloyds and others were nationalised in 2008. It didn’t change their operation. The National Coal Board was a nationalised industry throughout the 1984-5 miners strike. The Labour 2017 manifesto did not talk of nationalisation, but the alteration of licenses and a transition to a decentralised energy system.

We need whole-system reform

The whole system needs restructuring. Surplus-making community co-ops and local authority generation are a good thing. OFGEM should require private retailers to have commercial insurance to underwrite their liabilities so that, if they go bust, we don’t pay for it. That would stop the ‘privatise the profits, nationalise the losses’ business model. Still, it’s fair criticism to say the Green Party’s new motion leaves the words ‘effectively regulated’ to cover a lot of gaps.

What is really needed is massive public investment. We have to stop worrying about ‘levering in’ private finance. As a sovereign nation with a central bank, Britain can effectively borrow from itself. Using that to create abundant clean energy would repay the investment many times over. It does for private finance, so it would if we owned it. Manufacturing and hospitality would see costs fall. Householders would have lower bills and more money in our pockets. Poverty would fall, along with pressure on public services. The economy would benefit.

It’s not net-zero putting up your bills, it’s billionaires. And neither Farage nor Starmer is willing to do a thing about it.