Andy Burnham\u2019s first address to the Labour party conference as prime minister addressed Britain\u2019s rising energy costs and sluggish economic growth with plans for a new government-backed body to invest in the electricity grid.<\/p>\n
The proposals to set up Great British Grid, first revealed by the Guardian<\/a>, build on the party\u2019s manifesto pledge to create Great British Energy, a state-owned company to invest in renewables.<\/p>\n However, GB Grid faces a tougher challenge: lowering bills and supercharging the economy through public investment in the electricity network.<\/p>\n \u201cWe have a cost crisis. We all know it,\u201d Burnham argues. \u201cThe price of energy is crippling for businesses, and British bill payers pay some of the highest energy costs in Europe.<\/p>\n \u201cWe have an energy system where prices are dictated in markets miles away, while families and businesses here shoulder the costs. Once again, the British public has lost control.\u201d<\/p>\n Few would disagree with the diagnosis \u2013 but is direct government investment in grids the remedy Britain needs?<\/p>\n What is the grid plan?<\/p>\n Burnham says the government-owned GB Grid will work with the private sector and network companies to increase competition in the sector, drive down costs and speed up delivery.<\/p>\n This should help companies and businesses connect to the power grid sooner, and make energy costs cheaper for all consumers.<\/p>\n Andy Burnham has plans for a new government-backed body to invest in the electricity grid. Photograph: Peter Byrne\/PA<\/p>\n The creation of GB Grid is timely. In the coming years Great Britain plans to invest more in upgrading its power lines and electricity infrastructure than it has in the past three decades combined<\/a>.<\/p>\n It also fits in with Burnham\u2019s philosophy of increasing public control over utilities<\/a>. \u201cThe essentials in life will be controlled by the people. They are ours: we rely on them, we pay for them, and we will have power over them. That is what public control can do,\u201d the PM argues.<\/p>\n How will it work?<\/p>\n GB Grid has limited funds \u2013 at most about \u00a34bn, or a fraction of the \u00a370bn investment expected over the next five years \u2013 so its level of \u201ccontrol\u201d is likely to be limited, too.<\/p>\n However, alongside the new quango, Burnham plans to expand the rights of developers and businesses to build their own infrastructure to connect projects to the grid<\/a>.<\/p>\n GB Grid will be available to support and co-invest alongside companies, so they can vie for competitively tendered transmission projects with the established network companies to get work done cheaper and faster.<\/p>\n The idea was inspired by the approach taken in Ireland, where allowing fresh companies to compete with the incumbent networks has sped up connections by 11 months.\u00a0<\/p>\n What has been the reaction?<\/p>\n Given the long history of delays linking projects to the electricity network<\/a>, it remains to be seen whether Burnham\u2019s plan can make a meaningful difference to the cost and pace of the grid overhaul, but the PM\u2019s approach already has its supporters.<\/p>\n \u201cThe UK is one of the only countries to have fully privatised its grid,\u201d said Mathew Lawrence, a director at Common Wealth, which campaigns for public ownership. \u201cOur vision is a fully public grid, but today\u2019s announcement can help rebuild state capacity in energy, learning by doing.\u201d<\/p>\n Grid upgrades map<\/a><\/p>\n Doug Parr, a policy director at Greenpeace, said the plan was \u201ca welcome step to grapple with a problem that has plagued the green energy sector for years\u201d.<\/p>\n Greg Jackson, the founder of Octopus and a member of the Cabinet Office board which advises the government, has been a vocal critic of the network industry, which is built around a series of regional monopoly network companies that undertake the grid upgrades in their local area.<\/p>\n In recent years other companies have been allowed to tender for work in competition with the regional monopolies \u2013 but Octopus has argued that more competition could speed up connections, improve innovation and reduce costs.<\/p>\n Not everyone is convinced by the proposals, however. One network industry source told the Guardian: \u201cIf they want to have more competition, that\u2019s fine. But at the end of the day, we are all chasing the same supply chains and skilled contractors, and then we\u2019re all using the same planning system. The pressures won\u2019t be different if you use a different name.\u201d<\/p>\n What has been holding up grid upgrades?<\/p>\n In recent years, Great Britain\u2019s power networks have become inundated with applications for grid connections. These have come from prospective energy developers hoping to plug in new renewable energy projects and batteries to the grid, as well as those hoping to build new housing, factories and datacentres.<\/p>\n Queue times for a connection hit more than 15 years at one point, due in large part to a deluge of speculative project applications that were unlikely to move ahead. Despite a two-year programme by the government\u2019s National Energy System Operator (Neso) and the industry regulator to remove these \u201czombie\u201d projects from the queue <\/a>in favour of \u201cshovel-ready\u201d schemes, there are still complaints over the speed of connection work.<\/p>\n This has raised concerns over whether the government\u2019s target to double onshore wind, triple solar power and quadruple offshore wind might be derailed. It has prompted warnings that the UK economy might miss out on investment in new infrastructure if developers cannot be sure of a swift connection to the grid.<\/p>\n So are electricity networks driving up the cost of energy?<\/p>\n In short: yes. After years of underinvestment, Great Britain\u2019s ageing power grids are in need of a multibillion-pound overhaul to build new pylons and substations while rolling out thousands of miles of new power lines across the country.<\/p>\n The amount spent by network companies is controlled by the industry regulator for Great Britain, Ofgem, before the costs are recovered through our energy bills \u2013 and the sums are rising fast. Network companies are expected to spend between \u00a370bn and \u00a380bn between 2026 and 2030, and network investments of \u00a389bn could be needed in the 2030s, according to Neso.<\/p>\n This means bill levies will rise, too. Power grid costs currently make up almost a quarter of household electricity bills \u2013 almost \u00a3210 on the average annual dual-fuel bill last year. Some analysts believe that could rise to \u00a3341 a year by 2030.<\/p>\n Power grid costs make up almost a quarter of household electricity bills. Photograph: Jacob King\/PA<\/p>\n These costs should allow the UK to access more low-cost renewable energy and reduce the system\u2019s reliance on gas, which should eventually lead to lower costs and falling bills.<\/p>\n Over the longer term this investment makes sense \u2013 not least because much of the upgrade work that would need to happen whether the UK government pursued ambitious green targets or not. However, in the near term, rising energy costs are piling pressure on households and slowing the economy.<\/p>\n Are private network companies to blame for rising costs and delays?<\/p>\n