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Labour unveils plan to nationalise energy networks and drive 'Green Industrial Revolution' | Construction Buzz #217

16 May 2019

Party fleshes out plans to take control of electricity and heat networks from 'profiteering' private firms

Labour has unveiled detailed plans to nationalise large parts of the UK's energy sector in a move it claims will vastly boost the pace and scale of the low-carbon transition.

In leaked documents reported on by The Telegraph last night - which Labour then hastily published - the Party reveals plans to seize control of national, regional, and municipal energy networks and agencies at a price to be agreed by Parliament.

It beefs up a promise first made in the Party's 2017 general election manifesto to return the UK's energy networks to public ownership.

Under the plans assets would be nationalised immediately following an election via an act of Parliament, with owners compensated via a bond issuance from the Treasury. 

Once under public control, Labour is proposing to establish a "nested system" of local, regional, and national planning, overseen by a National Energy Agency (NEA) responsible for setting grid-wide decarbonisation targets and strategy. 

Labour argues private energy networks lead to "excess profiteering at the expense of investment in infrastructure". By nationalising the energy system, the government will be able to drive investment in the low-carbon infrastructure needed to run a grid with a high share of renewable power, it argues.

"Ownership matters, because energy networks are infrastructure of national strategic importance that will be central to ushering in Labour's Green Industrial Revolution," Labour says in its plan. "Network costs represent over one quarter of energy bills. As the energy system becomes 'smarter', decarbonised and more decentralised, networks have an increasingly important role to play to balance the system, keep costs down, keep the lights on, and handle data sensitively."

A nationalised network would not only invest more in grid upgrades and other improvements, but would also simplify the current system of subsidies and incentives and improve co-ordination between distribution and transmission networks, Labour argues.

"Under Labour's proposals, distribution operators will have the power and the direct responsibility to deliver electricity and heat with carbon intensity levels consistent with ambitious climate change targets," the document reads. "This will remove the transaction costs involved in devising and monitoring complex incentives for profit-maximising companies, and instead allow the efficiency gains of collaborative planning."

But David Smith, chief executive of the Energy Networks Association, said the proposals will be "extremely costly" to the British public and deliver poorer service.

"Under state ownership the energy networks were more expensive and less reliable," he said. "Since privatisation in 1990 network costs to the bill-payer have fallen by 17 per cent. At the same time that costs have fallen, reliability has improved: the public have experienced 60 per cent fewer power cuts while their length has been reduced by 84 per cent."

"At a time when there are constraints on public spending we need to ask where the money would come from to pay for and provide future investment in these vital assets," he added.

National Grid also hit back at the plans. "These proposals for state-ownership of the energy networks would only serve to delay the huge amount of progress and investment that is already helping to make this country a leader in the move to green energy," it said. "At a time when there is increased urgency to meet the challenges of climate change the last thing that is needed is the enormous distraction, cost and complexity contained in these plans."

Source: Business Green

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