Bringing energy home- replacing complexity with complexity?

Labour’s plans to re-nationalise the energy transmission and distribution networks will involve the complete reengineering of the ownership and management of networks in parallel with de-carbonisation. Is it deliverable and is the risk of unpicking a stable system worthwhile?

Nationalisation is in vogue.  The Labour Party know that bashing the private networks will provide a short-term electoral gain, even at the potential cost of the UK’s status as an attractive location for investment.  The need for an accelerated response to climate change has also rapidly climbed the agenda, and in its proposals, Bringing Energy Home, Labour have been able to neatly bring together a critique of the network owners focused on high profits, short-term investment priorities and their ability to enable a future energy transition.

The UK does need a significant increase in investment in networks, which will deliver a radical change in the way that energy is generated, distributed and consumed.  We will need access to the best skills, capabilities and resources that the sector can offer.  However, the most radical changes to the way in which services are delivered to consumers – in digital services, on-line retail and mobility for example have been delivered by private innovation and private capital.  The loss of access to these skills and resources and the risk of litigation could become barriers to change that are greater even than those identified in Labour’s report.

There can be little doubt that a much more robust plan needs to be in place to accelerate energy transition.  The slow pace of the Smart Meter roll-out is a good illustration of the need.  This plan will need to be a hugely complex undertaking to deliver the capabilities outlined in Labour’s report.  Can it be realistic to expect such a plan to be developed and implemented whilst the national network is being reconfigured as a four-tier system, and can the Public Loans Board and as-yet non-existent Regional Development Banks be relied upon deliver the finance needed?

A number of the criticisms made by Labour are justified and in some areas such as skills, it is essential that the Energy Industry takes steps now to manage the impacts of a crisis that is already in the making.  However, no matter how good Labour’s analysis is, there is a significant risk that the costs and disruption associated with their proposed 4-tier re-nationalisation will exceed the benefits that can possibly be delivered.  The priority must be to plan for the optimum delivery of network transformation to deliver a green transition – delivering the jobs and prosperity that investment at scale will deliver.  Labour’s plans for a complex, publicly owned and accountable system may put the achievement of good outcomes at risk in the pursuit of ideological perfection.

Simon Bimpson

Managing Director - Water, Energy and Utilities Ask me a question
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