Appreciation for the Energy Sector
Good afternoon. It is a genuine pleasure to be here today, and I would like to extend my heartfelt gratitude to Energy UK for uniting all of us for this important discussion.
Throughout today’s proceedings, you have heard about the critical choices confronting our energy system. I would like to dedicate our time together to exploring what is necessary to forge its future and the essential partnership between government and industry that will facilitate this development.
It begins with recognising the vital contributions of everyone in this room. You are the individuals who ensure that our nation remains powered. You invest in our infrastructure, develop talent, and construct the essential projects on which our future relies. You understand what it takes to transform ambition into tangible investment and to translate that investment into visible results.
Despite enduring years of economic and political uncertainty, you have remained steadfast in your commitment. Thus, I want to express my sincere appreciation to each one of you for your efforts to bring us to this pivotal moment and for the collaborative work I hope we will undertake in the coming months and years.
Ambitious Plans for National Renewal
This collaborative effort begins with our government’s ambition to implement a ten-year plan for national renewal. This plan aims to unlock growth in every postcode, reindustrialise regions that have faced stagnation, and ensure that citizens have access to the essentials for a good quality of life.
We envision a Britain that is confident, forward-thinking, and hopeful, with energy playing a crucial role in that vision. It is an everyday necessity that many of us depend on, yet for far too many families and businesses, it has become increasingly unaffordable. The existing system is evidently not serving consumers effectively.
This is a situation that none of us can accept, and I assure you that we are resolutely committed to reversing this trend. We have initiated steps towards fostering homegrown clean power, which is vital as we find ourselves exposed to the fluctuations of global fossil fuel markets. Events occurring thousands of miles away, such as the conflicts in Ukraine and the Middle East, significantly impact household budgets here.
Progress Towards Clean Energy
Our aspiration for homegrown clean power is not just a lofty goal; it is a necessity that we articulated upon entering government. While I understand the scepticism surrounding this ambition, it is essential to recognise that our intentions extend beyond merely setting targets. Our aim is to foster confidence and momentum within the energy sector.
In just two years, we have achieved remarkable results in collaboration with industry stakeholders. We have unlocked £100 billion in private investment for clean power, secured approvals for enough clean energy to supply over 20 million homes, and delivered 189 terawatt hours of clean energy last year. By 2025, nearly two-thirds of Britain’s electricity generation will originate from clean sources. This is significant progress, and we are committed to maintaining this momentum.
However, we understand that the public assesses the success of our energy system not in terms of gigawatts, but in relation to their bills and their ability to live comfortably. By these standards, the current framework under which you operate is inadequate. This is not a criticism of the businesses that have invested and innovated within this system, but rather an acknowledgment that even the most capable companies cannot overcome a lack of coordination and long-term planning.
Understanding the System’s Flaws
It is essential to be candid about how we arrived at this juncture. If we were to start with a blank slate, would we design the energy system we currently have? Probably not. The privatisation of the energy sector transformed more than just the ownership of assets; it fragmentised generation, transmission, distribution, and retail into distinct components.
These reforms altered the state’s relationship with the energy system, moving away from direct ownership and coordination. Responsibilities were distributed across various companies, regulators, and public entities, leading to a dilution of accountability. Successive governments recognised that markets alone could not address every requirement, resulting in an influx of targets and regulations that ultimately led to micromanagement with often flawed information.
The outcome was a system that failed to deliver a coherent approach for industry delivery, lacking the necessary infrastructure and clarity for decision-making. This is compounded by the reality that the state never truly exited the energy sector, as it remains fundamentally responsible for ensuring energy security, protecting consumers, and preparing for future needs.
Consequences of a Fragmented System
As a result, we are left with an energy system that is overly susceptible to volatile global markets. We have projects poised for investment and businesses ready to expand, yet they struggle to secure timely connections. Renewable energy is available, but the system often requires generators to reduce output due to inefficiencies in the network. Families are seeking lower bills but are restricted from accessing more affordable electricity because their homes require upgrades.
During the recent energy crisis, the failure of energy suppliers impacted four million households, resulting in £2.7 billion in costs borne by customers. These are not isolated issues; they highlight the consequences of a system that lacks coherence and accountability. A system can possess ambitious targets, willing investors, and viable projects, but if the necessary connections are absent, aspirations remain unfulfilled.
A Call for Comprehensive Reform
Simply adding more targets will not suffice. While enhanced consumer protections and a more robust regulatory body are vital, our ambition must transcend mere adjustments to the existing model. Our mission is to create a cohesive system that operates in the best interests of the consumers we serve.
This requires clarity regarding the choices before us. Some decisions warrant state intervention, while others are best served by encouraging competition, private investment, and innovation. Additionally, there are choices that should empower communities to shape their local energy futures.
The dichotomy between state and market is a false choice. Numerous countries with significantly lower electricity prices successfully integrate public ownership with thriving markets. The pertinent question is: who is best positioned to fulfil each role? Where should the government establish strategic direction and firm regulations? Where should businesses be granted the freedom to innovate and compete? And where should communities take the lead and benefit from energy initiatives?
Empowering Communities and Driving Investment
The objective of reform should be to expedite delivery, not hinder it; to provide greater certainty to investors rather than less. We must transform accumulated uncertainty into clear responsibilities, autonomy, and accountability, enabling the system to deliver effectively.
This is precisely the vision behind Great British Energy, which seeks to empower the state to go beyond mere regulation. It aims to facilitate direct investment, develop projects, forge partnerships, and adopt a long-term perspective. This initiative allows the state to enter market segments where strategic value is high, even when immediate commercial incentives are not apparent.
By ensuring that more value derived from Britain’s natural resources benefits the people, we can secure public ownership stakes in the energy assets that will shape our economic future. A prime example of the tangible impact of public investment is the Sizewell C nuclear power station, where my department is the primary public shareholder alongside private partners. This project is anticipated to deliver up to £18 billion in net benefits to consumers and reduce overall electricity system costs by approximately £2 billion annually compared to alternative routes to net zero.
Addressing Infrastructure Challenges
This approach provides lower costs, creates quality jobs, strengthens supply chains, and enhances energy security—all while fostering collaboration between Great British Energy and private investors. We are committed to building capabilities in technologies and supply chains that align with Britain’s strategic interests and actively shaping markets rather than merely reacting to them.
The same principles underpin the recently announced Great British Grid initiative. We cannot achieve cheaper energy if viable projects remain stagnant in lengthy approval processes. We cannot electrify industries if businesses lack the necessary connections. Additionally, we cannot establish a more secure energy system if generation, networks, and demand are treated as separate challenges.
Great British Grid acknowledges industry feedback, recognising that projects cannot be delivered at scale unless network planning, connections, and investment are prioritised on a national level. This initiative will provide essential public investment and dedicated leadership, collaborating with existing network operators and private investors to facilitate crucial grid upgrades after decades of underinvestment. This shift is essential for moving from fragmentation to coordinated efforts.
Ensuring Affordability and Community Involvement
Ultimately, the foremost criterion for reforming our energy system must be its impact on people. This will be the test we apply to all our initiatives as a department—whether families and businesses can afford their energy usage. We recognise that immediate relief measures are essential to provide some breathing room for households, especially in our current context.
That is why one of the first actions taken by the Prime Minister upon assuming office was to reduce VAT on energy bills, building upon the £150 reduction in energy costs introduced in last year’s Budget, alongside the expansion of the £150 Warm Home Discount to over six million families. We acknowledge the necessity of providing support to alleviate immediate pressures.
However, this cannot serve as a substitute for the transformative changes required within the energy system to ensure sustained reductions in energy costs. Our government is unequivocally committed to this responsibility and is poised to take action.
Community-Centric Energy Solutions
While I have provided a broad overview, it is crucial to emphasise that