Utility Week

8 | NOVEMBER 2022 | UTILITY WEEK Policy & regulation Analysis Should utilities be worried about resurgent Labour? The party conference season saw utilities taking fl ak from bothsides of the political divide, so should utilities be worried orindiff erent about Labour's 30-point lead in the polls? The opposition has been criticised since Sir Keir Starmer took over the party's leader- ship in early 2020 for failing to put forward a positive vision. That changed in Liverpool as Labour opened its annual gathering with an ambitious pledge to decarbonise the electric- ity grid by 2030. While Sir Keir Starmer likes to portray himself as a safer pair of hands than Jeremy Corbyn, this pledge is in line with his prede- cessor's 2019 man ifesto promise to source 90% of electricity generation from renewable sources by the same date. The Labour leader also molli‚ ed his leƒ - wing activists with a pledge to turn the UK into a "clean energy superpower" by setting up a publicly owned low-carbon generation company, which would be known as Great British Energy. The Labour leadership's goal is that GB Energy will have a remit to develop low-car- bon generation, like renewable and nuclear power. The idea, Sir Keir Starmer said, is to create a UK-owned energy champion along the lines of Danish state-owned energy company Orsted, which has played such an important role in developing the North Sea's oŽ shore wind resources. The proposal also responds to post- Ukraine invasion concerns about national security by addressing the UK's dependence on companies controlled by potentially hos- tile overseas governments. Josh Buckland, Theresa May's former energy and environment special adviser, says the commitment to the 2030 decarbon- ised grid target is "pretty stretching". And there isn't much clarity about GB Energy, he says: "It's not completely clear in terms of technology choices and what it really means in terms of delivery." Jonathan Reynolds, the party's shadow secretary of state for business, told Utility Week at a fringe event that the new company wouldn't be a supplier. However, the picture isn't "necessar- ily binary", Buckland says, pointing out as an example that the kind of local commu- nity energy projects GB Energy might invest in could easily end up supplying cut-price power to local residents, such as Octopus is proposing. Even if Labour seeks to steer GB Energy clear of becoming a supplier, a bigger con- cern is that a new state-owned company could crowd out investment in sectors such as oŽ shore wind, which currently have little trouble attracting capital. "I don't think it makes any sense for it to be operating in relatively mature mar- kets," says Phil McNally, senior researcher on Net Zero at the Tony Blair Institute for Global Change, the former prime minister's thinktank. He notes that the likes of Drax and SSE may be concerned about a state-owned entity encroaching on their turf. Labour's proposal could have a bigger role to play in getting more capital-hungry and less mature technologies, like hydro and tidal power projects, oŽ the ground, says McNally: "It really makes most sense in less mature technologies with a higher risk factor where the government is uniquely well posi- tioned to manage those risks and take bets." Nuclear power, which currently relies on elaborate mechanisms like the Regulated Asset Base model to attract private ‚ nance, could also bene‚ t from GB Energy. Com- mentators say there are similarities between Labour's proposal and the current govern- ment's plan to set up a state-backed GB Nuclear company to kickstart development in the sector. Tom Davis, head of corporate aŽ airs at Hinkley Point and Sizewell developer EDF Energy, told Utility Week at a Labour confer- ence fringe event that GB Energy is exactly the kind of idea that should be looked at if Labour wants to deliver its pledge to decar- bonise the electricity system by 2030 by stim- ulating investment in low-carbon projects. A week is a long time in politics, for- mer minister Harold Wilson famously quipped. And if that's the case, then the last month in British politics has felt like an aeon. This period, during which both Labour and the Conservatives have held their annual conferences, has seen a dramatic reversal in their fortunes since the last such gatherings in 2021. A Tory party that dominated the political landscape under Boris Johnson is now con- templating how big its defeat will be at the next general election, while Labour has gone from the political wilderness to eyeing the kind of triple ‚ gure majorities last achieved under Tony Blair. So, which of the UK's two potential gov- erning parties should utilities fear most? Labour Labour opened its annual party conference, which was held in Liverpool, by putting the net-zero transition at the heart of its prospec- tus for government. OUT: Ex-prime minister Liz Truss

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