New report: the role of the state in the GB Energy market

The UK has achieved a notable 53% reduction in carbon emissions through state-led initiatives such as carbon pricing and investments in renewable energy. However, the journey towards net zero emissions presents complex challenges, including the decarbonisation of transport, heating, and 'hard to abate' industries like large-scale manufacturing and aviation.

A new report by Nesta and Baringa Management Consulting, funded by the European Climate Foundation, outlines how the state can play a pivotal role in addressing these challenges and accelerating the transition to a zero-carbon economy.

The emerging role of GB Energy

The establishment of GB Energy, a new publicly owned energy company, is seen as a significant step towards achieving these goals. The report emphasises the importance of enhanced coordination, a faster pace of change, and ensuring value for money in the decarbonisation process.

Key findings of the report

The report from Nesta and Baringa identifies several critical roles that the state must play to address the current challenges in the energy market:

• The state as a planner: the introduction of a system architect to develop an overarching strategic plan is essential. This plan would guide technology choices and the locational deployment of assets, ensuring these decisions are co-optimised with network development
• The state as a developer: the state should undertake pre-development roles for large-scale assets identified in the strategic plan. This involvement would help streamline the development process, reduce initial risks, and facilitate the timely deployment of necessary infrastructure
• The state as an investor: direct investment in higher-risk emerging technologies is crucial. By providing financial backing, the state can accelerate the development and deployment of innovative solutions required for decarbonisation
• The state as an enabler: actions such as planning system reforms to unlock potential projects and the establishment of a new public energy procurer to coordinate energy procurement for public bodies are vital. These measures would ensure projects align with broader decarbonisation goals and receive the necessary support to proceed

In response to Nesta and Baringa’s report, Yselkla Farmer, CEO of BEAMA, comments: “Accelerating decarbonisation of the UK is one of the biggest economic opportunities of our generation and this report could not have been clearer in stating that we need to pick up the pace. The UK energy system needs unprecedented levels of investment and supply chain growth to meet targets for net zero and clean power, so the £35 billion savings for energy consumers by 2050 is welcomed to ensure we deliver in a way that manages the cost of energy for homes and businesses. Managing this efficiently will be a vital role for GB Energy.

“BEAMA’s research with the Energy Systems Catapult has shown that investment pre-2035 in our power grid will ensure a least cost approach to 2050. What we need is market stability, certainty, and speed, coupled with an ongoing commitment to deliver flexibility market frameworks which will help drive inward investment into the supply chain and transform our energy market into a zero carbon, more affordable opportunity. The UK electrical supply chain alone is a £14 trillion global sector poised to deliver high-skilled, high-paying jobs and sustained economic growth. We look forward to supporting the government's reforms to the UK energy system through GB Energy and bodies such as the industrial strategy council and transmission accelerator.”