The Great British Energy Bill – an overview

Posted: 12/09/2024

The Great British Energy Bill (the ‘Bill’) a key element of the UK government’s strategy to expand green energy production, is set to be fast-tracked through the House of Commons. Its second reading occurred on 5 September, and it passed with a majority of 253 votes (348 to 95 in favour).

The Bill is designed to transform the UK energy landscape, promoting locally generated renewable energy and less reliance on fossil fuels. In doing so, it aims to address the energy trilemma of sustainability, security and affordability.

Establishment of Great British Energy

The Bill will establish Great British Energy (‘GBE’, the ‘company’) as a publicly owned company, giving it a statutory footing to operate independently, and to invest in and develop clean energy, while remaining wholly owned by the government.

Overview of the key objectives of the Bill

Sustainability: a key objective of the Bill will be to reduce emissions from energy produced by fossil fuels, and to support the UK’s 2050 net zero target by promoting sustainable energy practices.
Regulatory framework: it will create a regulatory framework for GBE to facilitate, encourage and participate in the production, distribution, supply and storage of clean energy.
Financial assistance and strategic priorities: the Bill will outline provisions for financial assistance, and strategic priorities and plans for GBE that align with national energy goals.
Environmental impact: it will support the government’s commitment to decarbonising the power sector by 2030 (which may lead to amendments in existing environmental laws to accommodate new clean energy projects).
Energy security and efficiency: the Bill aims to enhance energy security and efficiency by investing in renewable energy sources and improving infrastructure, potentially leading to new standards and regulations.
Economic and job growth: it will create new jobs and boost economic growth through investments in the energy sector, developing local community energy projects and investing in emerging technologies like hydrogen and tidal power.
Partnerships and investments: it will enable partnerships with entities like The Crown Estate to expedite offshore wind projects.

Affordability: impact on energy prices

It is hoped that the Bill will provide for long-term price stability and a reduction in costs for consumers. By investing in renewable energy sources like wind, solar and hydro, the government is aiming to reduce the UK’s reliance on imported fossil fuels. This, coupled with the energy efficiencies that the Bill intends to implement, will potentially result in lower energy prices for consumers in the long term. The Bill also includes measures to provide financial assistance to low-income households, to help them manage energy costs.

Challenges

Structure: critics are querying whether GBE is an investment vehicle, a developer, or a mixture of the two. At present, this is unclear.
Planning and environmental regulations: balancing the need for rapid change alongside the existing framework of environmental protections is likely to be challenging.
Competition laws: as a publicly owned entity, GBE must ensure it operates within the framework of existing competition laws, avoiding any practices which may be anti-competitive or unfair to private sector companies. The private sector has queried whether GBE would be a competitor in terms of energy development.
Local opposition: despite national support, specific projects such as onshore wind farms may face push back from local communities and environmental groups (albeit the government is committing to local projects through lending to local authorities and community groups).
Grid connections and infrastructure: careful legal and regulatory planning is required to integrate new infrastructure into the existing grid, which will take time and have a cost implication.
Financial and investment regulation: navigating financial regulation and investment laws may come with complexities.
Spend: whilst the government has indicated funding of £8.3 billion, which is by no means insignificant, commentators are questioning whether this is enough to fulfil the anticipated projects, given that even the cost of a single offshore wind farm could exceed this amount.

Disputes

It is not yet entirely clear what status and functions GBE will have. For instance, despite its intended identity as a company limited by shares (albeit one exempt from the standard requirement to use the word ‘limited’ in its name), it may be regarded as a public authority, based on its nexus with the government and the likely public nature of its anticipated decision making. If so, such ‘public’ decisions would be susceptible to judicial review. Any straightforward ‘commercial’ conduct, eg breach of contract, however, would be actionable in the civil courts, in the ordinary course.

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