GB Energy's offshore wind role and impact questioned

A plan to have Great British Energy and The Crown Estate team up to drive new investment in UK offshore wind has been praised for its innovative thinking, although questions remain over whether the new state clean power company will be a “competitor or ally” to the private sector and how effectively it will help hit immediate national goals.

GB Energy was formally launched on Thursday to major fanfare from the UK renewables sector, which is riding a new wave of optimism following the election of a Labour government promising to turn the country into a clean energy superpower.

Launching a new national clean power company in GB Energy was one of Labour’s flagship manifesto pledges. It has however been unclear exactly what role the company will play in the UK’s renewables sector.

The government has now announced that GB Energy will team up with The Crown Estate, the UK’s seabed landlord, to try and catalyse up to 30GW of new offshore wind reaching the seabed lease stage by 2030.

GB Energy will get £8.3bn ($10.7bn) in funding over the next five years, while the government has also lifted the handbrake on the Crown Estate by allowing it to start borrowing money, leveraging the seabed lease fees it charges developers to raise capital.

Juergen Maier, former chief of Siemens UK, has meanwhile been announced as chair of GB Energy, which is yet to announce who will act as its CEO.

RenewableUK chief Dan McGrail said the news that The Crown Estate plans to “bring forward up to 30GW of new seabed leases will drive confidence among investors.”

Allowing it to borrow money will meanwhile “enable it to invest in our supply chain, including much-needed port infrastructure to accommodate vital new manufacturing for offshore wind.”

McGrail also welcomed further details on how GB Energy will operate, including the announcement that it will lead wind projects through development stages to speed up their delivery, including carrying out land assessments and environmental surveys and securing grid connection.

McGrail cautioned that it is however “vital” that GB Energy “doesn’t disrupt the billions of pounds of private investment the government will need to deliver their clean power ambitions.”

Nicholas Skeen, lead value engineer at ScottishPower Renewables, questioned on LinkedIn whether GB Energy will be a “competitor or ally” to the private sector in the UK energy market.

If it focuses on areas that “struggle to attract investment” – including grid infrastructure and new technologies like floating wind – then he said it “will complement the private sector’s appetite to invest in established technology like fixed offshore wind.”

But if GB Energy starts to “undercut” the private sector by investing in offshore wind projects that are already attracting capital – “especially if buddied up with the Crown Estate who are meant to be impartial” – then it could “potentially cause more harm than good,” he said, “displacing direct investment with taxpayers' money.”

Can partnership really attract £60bn in private capital?

Starmer said that the new partnership between Great British Energy and The Crown Estate has the potential to “drive up to £60bn in investment” from the private sector, “turbocharging” the UK’s decarbonisation and lowering bills.

“However, the plan to raise £60bn of private-sector finance from £8.3bn of public funding appears optimistic.”

“That would mean a ratio of 7:1 – or potentially 18:1, if Labour implements its plan to allocate £5bn of the GB Energy budget to community energy.”

Luísa Amorim, wind energy analyst at BNEF, added that “offshore wind development timelines could be cut if funding is used for more analysis of seabed areas for future offshore wind auctions.

“But that won't help Labour achieve its goal to quadruple offshore wind by 2030,” she warned.

Peter Lloyd-Williams, senior wind energy analyst at Westwood Global Energy Group, noted that The Crown Estate “already carries out some scoping work on offshore wind leases as part of its auction preparations, so how much extra heft will the addition of GB Energy provide?”

“Centralised site pre-investigation is already extensively used in many countries, such as the Netherlands, Germany and Denmark, so are we moving closer to that sort of system?”

If so, he asked “how much control” developers will have over site selection and other parameters – adding that less "freedom of choice” does not however have much effect on auction demand in those countries.

Eyes turn to auction budget as deadline looms

But GB Energy’s “ambition and mandate are clear,” he said, “from catalytic investment in key projects, to building a domestic supply chain.”

“This clarity provides a strong foundation and opportunity for public/private sector collaboration and partnership which are fundamental to accelerating progress at pace and scale.”

Susanna Elks, senior policy advisor at climate change think tank E3G, said that GB Energy’s central purpose “should be to take a stake in the sector for the British people, so that if companies profit, so do households.”

“It’s really exciting to see Labour setting it up rapidly and looking at creative ways for it to speed up delivery.”

Eyes will now turn to new energy secretary Ed Miliband, who must decide by a 1 August deadline whether to boost the budget for the upcoming UK renewables auction, which would facilitate more offshore wind projects being awarded contracts.

The current budget of £800m for offshore wind is enough to underpin 3-5GW of new capacity, energy think-tank Ember has estimated.

But Sam Hollister, head of policy, economics and investment at consultancy LCP Delta, said that their analysis has shown that to meet the government's offshore wind target the UK will need to procure a further 15GW of wind in each of the next two auction rounds.

Pressure on the upcoming auction rounds has ratcheted in the wake of last year’s failed edition, which offshore wind developers sat out of due to the poor price on offer for electricity amid spiralling inflation and supply chain pressures.