The UK government has been warned that any cuts to the £8.3bn funding promised for GB Energy could jeopardise plans to lower household energy bills and boost renewable energy.
Government Urged to Fully Fund GB Energy
The Institute for Public Policy Research (IPPR) has cautioned that GB Energy, the publicly owned company established to expand the UK’s renewable energy sector, must receive its full £8.3bn funding to meet its goals. Without this investment, the company may struggle to generate the clean energy required to cover 5% of the country’s electricity needs by the 2030s.
The thinktank highlighted that GB Energy would need to build a portfolio of clean power projects more than twice the size of the world’s largest offshore wind farm to have a significant impact on the UK’s energy system. However, achieving this level of development before 2030 is considered “unlikely.”
This presents a challenge to the government’s promise to cut household energy bills by £300 a year by the end of the decade by making the UK a leader in renewable energy.
Local Communities Could Benefit
While large-scale benefits may take time to materialise, GB Energy could still make a difference by investing in smaller renewable energy projects for local communities or setting up direct energy supply contracts. These efforts could provide cost savings for specific groups and businesses.
GB Energy recently held its first board meeting in Aberdeen, with industry veteran Juergen Maier as its chair. Maier stated that the company is already exploring investment opportunities and aims to be fully operational later this month.
Concerns Over Potential Budget Cuts
Despite the company’s ambitious plans, there are concerns that the Treasury may reduce GB Energy’s £8.3bn budget as part of a spending review in June. Simone Gasperin, co-author of the IPPR report, stressed that maintaining the original funding is crucial for GB Energy’s success.
“For GB Energy to truly deliver benefits to both households and industries, it must have the full £8.3bn funding to invest directly in clean energy projects and establish itself as a major player in the UK electricity market,” Gasperin said.
Labour introduced GB Energy as a key part of its strategy to reduce household bills by £300 a year and achieve a net-zero carbon electricity system by 2030. Prime Minister Keir Starmer recently reaffirmed his commitment to long-term affordability, stating that he wants energy bills to remain low for years to come.
However, industry body Energy UK has warned that while the government’s plans could lead to lower bills in the next decade, they may not have a noticeable impact by 2030. It has urged ministers to introduce additional measures to support struggling households.
A spokesperson for the Department for Energy Security and Net Zero reassured that GB Energy will “own, manage and operate new projects” to reduce the UK’s dependence on volatile fossil fuel markets and deliver affordable, homegrown energy.
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