Labour’s plan to renationalise the UK energy network is unworkable
27th November 2019 | Commercial Energy
Along with rail, mail, water and broadband, the UK Labour Party has announced plans to bring energy back into public ownership in its election manifesto. Labour has big plans to reduce the UK’s carbon emissions by also investing in more renewable energy and it believes public ownership is the best way to do this. But the evidence suggests the opposite. If we look at the plans in detail and the realities of the energy sector, re-nationalising the UK’s energy networks is a bad idea.
Renationalise
The details in the manifesto are relatively scant. But they nod to the more detailed plans that the party published in May with the document Bringing Energy Home and the vote at the 2019 Labour Party conference to nationalise the big six energy suppliers. The party proposes nationalising the wires that transmit electricity and pipes that feed the country’s gas supplies. Altogether there are ten firms in the UK, including the National Grid, UK Power Networks and Cadent, which would return to public control. Six companies distribute electricity, three distribute gas and one transmits both electricity and gas. As well as nationalising these, Labour proposes significantly reorganising them.
It says it will create new regional energy agencies – combining gas and electricity – to manage distributions to houses and businesses. New municipal energy agencies and local energy community firms would be able to take control of local networks and energy supply and generation. There would be a National Energy Agency to maintain the grid and infrastructure, acting as an independent public body.
This would be a substantial reorganisation. Two large FTSE 100 companies – SSE and National Grid – would lose significant amounts of their existing assets and be vulnerable to takeover. UK grids were 40% or more of both SSE and National Grid operating profit in 2018.
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