A dose of truth on Labour’s GB Power plan | Letter
Dr Matthew Lockwood says the party will have to choose between cutting household bills and investing in renewables
Nils Pratley is right to question whether Labour’s Great British Energy plan can bring down bills (7 June). There is a fundamental tension between aiming to win investment for renewables at the same time as cutting bills, and it will be difficult to do both at the same time in any significant way. An £8.3bn capitalisation from taxing oil and gas firms will give GB Energy a good basis for leveraging private investment into new areas such as floating offshore wind, but novel technologies will not produce large returns in the short term. This will mean fewer profits to feed back to consumers.
In the meantime, electricity prices could realistically continue to be linked to the price of gas – which will remain higher than it was pre-crisis – for at least another decade. Only more radical changes to wholesale markets would change that sooner. It’s no surprise that GB Energy is a vote-winner, but which of its competing goals would a Labour government prioritise when it inevitably has to choose?
Dr Matthew Lockwood
Senior lecturer in energy policy, University of Sussex Business School
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