Great British Energy: What would Labor’s plan mean for your bills?

Households could see lower energy bills thanks to Labour’s plans to establish a public company Great British Energy if they come to power, the party has claimed.

The average British household currently pays annual energy bills of £1,690, which will fall to £1,568 from 1 July.

Labor leader Keir Starmer has these high energy costs in his sights and today revealed plans to tackle them if he becomes Prime Minister.

Starmer wants to launch Great British Energy, which would invest in wind and solar energy projects, as well as other green technologies.

It hopes this will increase the amount of renewable electricity created in the UK and also reduce energy bills.

So how will Great British Energy work and what will it mean for household bills?

What is Great British Energy?

Great British Energy would be a state-funded organization investing in electricity from wind energy, including offshore wind, solar and hydrogen.

It would also finance ways to capture and store carbon.

Labor plans to have 100 per cent renewable electricity by 2030, and Great British Energy is part of that promise. Both depend on the party winning the general election, although Labor is currently well ahead in the polls.

The party promised that Great British Energy would create 8 gigawatts of energy a day within five years, enough to power 8 million homes for an hour.

The company will be based in Scotland, he said.

What is the goal of Great British Energy?

Starmer said Great British Energy was urgently needed to give the country more energy security, as well as for environmental reasons.

In a speech to launch Great British Energy, Starmer said: ‘This is a taxpayer-owned company, making money for the taxpayer and investing in green British energy.

‘And I will tell you why we need it, because we have been left too exposed by the terrible decisions of this Government. About ten years ago they said “stop the green nonsense.”

‘Remember that? Leave the trash green. And they stopped investing in renewable energy. “They stopped the isolation we need in our homes and left us exposed to the kind of challenges we have faced internationally.”

He added that “when Ukraine was invaded and Putin invaded, we were more exposed than other countries.”

What will it mean for energy bills?

Labor hopes Great British Energy will mean lower energy bills, but has not committed to giving a fixed amount that households can save.

Starmer said: “We were more exposed than other countries (to the Ukraine war) and you are paying more on your bill because of the approach they took.” The bills have gone up. We have to turn that around.

‘It’s a challenge, we will accept it. We have lost ten years because of the conservatives’ approach. But it’s also probably the biggest opportunity we have, not just for lower bills, but for the next generation of jobs.’

How will it be financed?

The Labor Party said Great British Energy will receive £8.3 billion in its first parliament, which will come from extending the windfall tax to oil and gas companies.

Where are all the cheap energy deals?

Historically, most households have stuck to fixed energy agreements. Variable rate deals have been what customers turned to once these cheaper fixed rate deals expired.

But that all changed at the end of 2021, when energy companies stopped offering cheap fixed-rate deals.

They did this because of the energy price crisis, when wholesale gas prices began to skyrocket.

Since most consumers were on fixed rates, energy companies were forced to buy energy for much less than they could sell it.

As a result, dozens of energy companies collapsed and the rest waited for customers to end up with more expensive variable rate agreements.

Most of the country is now on a variable rate energy tariff, with prices set by Ofgem’s price cap.

Almost all energy company rates charge customers the maximum allowed under this limit.