What would be the energy policy of a UK Labour government under Jeremy Corbyn, its newly elected leader? Citing Corbyn’s recently published manifesto, Protecting Our Planet, Stephen Hall, Research Fellow at the University of Leeds, argues that it would be anything but a throwback to the past. On the contrary, it meets the issues of today in innovative and practical ways.
Have you heard the one about Jeremy Corbyn’s plans to renationalise the energy system? In an interview with Greenpeace, the Labour MP and leadership candidate said: “I would personally wish that the Big Six were under public ownership, or public control in some form.”
It would be easy to take this quote out of context, add up the market value of the Big Six and suggest the Corbyn campaign wants to spend £124 billion renationalising the utilities. Yet, in the next breath however Corbyn added: “But I don’t want to take into public ownership every last local facility because it’s just not efficient and it wouldn’t be a very good way of running things.”
So what does the Corbyn camp suggest instead? The only clear evidence is in his Protecting Our Planet manifesto, which sets out ten energy pledges and details some key policies.
It’s no aggressive nationalisation plan. What it is, is a manifesto for a more decentralised and democratically accountable system, inspired more by present-day Germany than 1980s Britain.
So does Corbyn’s energy policy look like a throwback or a revolution? There are four reasons to suspect the latter.
Introducing genuine competition
“Competition” in the UK energy market has left consumers bamboozled and overcharged. Our choices are like a shopping mall food court: you can have anything you like, as long as it’s fast food. The energy market is similar, most suppliers are operating the same big utility model with the same options; you can have anything you like, so long as it’s a national tariff from a large private utility.
Corbyn’s manifesto cites Germany, which allows consumers the option to buy energy from municipal utilities or co-operatives. Some new consumer options are being seen in the UK. Smarter ways of buying green energy are appearing, and Nottingham City Council has set up its own energy company with a name that sends a clear message: Robin Hood Energy.
But while it’s easy enough to build a wind turbine these days – or even a whole wind farm – it’s significantly harder for innovative new businesses to actually join the market. Corbyn’s manifesto commitment to growing municipal and co-operative models would mean consumers face more meaningful choices.
Help for smaller energy startups
The manifesto pledges to create a “route-map into tomorrow’s ‘smart energy’ systems” to “use smart technologies to run localised storage, balancing and distribution mechanisms” and allow customers the “right to have first use of the energy they generate themselves”. But why isn’t this happening already?
It’s useful to think of our electricity system as being like a big swimming pool. Everyone’s electricity has to go into this big pool and a vast amount of market regulation is needed to make sure the pool stays “balanced” at the right level, with all the buying and trading and using of power going on underneath the surface. This means small-scale solutions to generating and using power locally are extremely difficult to set up, as they all incur the costs of trading in the big pool. To stretch the metaphor, this means little fish have to swim in a big pond.
Such a setup creates barriers to innovation and is holding back new technologies. There is no technical reason why you shouldn’t be able to choose to buy energy from local sources these days – what stands in the way is the requirement that everyone has to swim in the big pool first. By creating local energy markets, smaller but still viable businesses can flourish.
Cheap access to green investment
The manifesto commits to pursue energy investment through a National Investment Bank. While this model has seen success in Germany, what is less well understood is how important citizen banks have been in deploying this investment.
The UK doesn’t have a citizen banking sector like Germany. This means you can only invest in renewables by either buying shares in a green energy company or investing in a co-operative. However, new models are emerging. Abundance Generation, an online crowdsourcing platform, allows investors to participate in renewable energy schemes for as little as £5, and a German-style local bank is being developed in Hampshire.
While Corbyn’s manifesto sees the benefit of establishing a state investment bank to invest in the energy transition, it will be important to deliver this investment through the right institutions at the right level so citizen investment can complement state finance.
Democratising the energy sector
Throughout, the manifesto argues for more citizen influence over the energy system – and not just through supposed consumer “choice”.
It is not only the German system that can be drawn on to change this. Energy decision-making can be brought closer to citizens by, for instance, looking at public value energy governance which draws on Danish and North American examples, direct action to take back ownership of key infrastructure, or reframing energy as a public good.
It is clear from the manifesto that the energy policies of the Corbyn camp are anything but a throwback to monolithic state utilities. There is potential for more competition through more diverse energy business models, a clear willingness to make space for smart energy innovation, a call for different approaches to energy system finance, and a platform for more plural approaches to energy governance.
Whether or not people agree with these proposals, it should be clear that they are not “old solutions to old problems”, but provocative responses to increasingly urgent challenges.
Editor’s Note
Stephen Hall is Research Fellow in Energy Economics and Policy at the University of Leeds. This article was first published on The Conversation and is republished here with permission.
Mike Parr says
The reality is – the Tories are in the process of ramming through a fleet of (high cost) nuclear stations. Once this is done, the UK will be locked into high priced power and there will be no space in the market for renewables such as wind (on or off-shore) or indeed, appetite to support local RES such as roof-mounted PV (which is the only practical RES tech for household deployment).
With respect to wind turbines – new ones are now banned by order of Camoron. PV will soon follow suit. At the same time, DECC polls show 65 – 70% support by the UK pop for…. wind turbines and PV.
Democracy, tory style.
Giacomo Valentini says
To complain of high UK electricity prices and than promise to follow the example of Germany, where consumer prices are 50% higher than in the UK, appears a bit contradictory.
Mike Parr says
As a proportion of household bills, the Germans spend the same as the Brits – overall German household consume less elec’ per year than UK ones – due to higher levels of energy efficiency in German households.
Camoron (true to his word “we are going to cut this green crap”) has cut most UK energy efficiency progs’ that are residential facing.
However, I note that Union fenosa, a Spanish power company has just installed in Galicia a 14MW wind farm – which will get no subsidy – but will be – nevertheless profitable. UF has a pipeline of nearly 300MW more wind farms – all with no subsidy.
This raises the question – if the Spanish can do it – why cann’t Germany or indeed the UK/Scotland, the latter having the best wind resource in Europe (Scotland has more than 60% of its land with a ave wind speed greater than 9metres/second. Questions I will be pursuing.
Paul Hunt says
It is possible that the author of this piece had a hand in drafting Jeremy Corbyn’s energy policy proposals, which, though forward-looking and innovative, fail to address the current political economy of the energy sector in GB. It appears that the current Government got most of the legislation it believes is required on to the books in the last parliament with the Energy Act 2013. The Chancellor of the Exchequer and the Secretary of State for E&CC should have enough powers to twist and tweak things as they desire in response to various political pressures.
Meanwhile the Competition and Markets Authority (CMA) is less than four months from the end of its scheduled 18-month investigation of electricity and gas supply in GB and is getting close to setting out its findings and recommended remedies. Its principal provisional finding, which is strongly contested by the suppliers, is that the energy supply companies (in particular, the Big 6) are ripping off “inactive” and “disengaged” consumers who comprise the overwhelming majority of consumers. Its proposed remedies include various efforts to encourage more consumer participation and a transitional “regulated safeguard tariff” (RST) to protect these consumers. The RST, not surprisingly, is being opposed strongly by the energy companies – and the army of consultants, advisers, tame academics, media operatives and other lackeys they retain. Other statutory bodies, such as Ofgem and the Citizens Advice Service, have pledged cooperation to the CMA, but the RST proposal is manifestly unworkable and it is likely it will be abandoned by the CMA as a quid pro quo for some additional, but worthless, “commitments” from the suppliers. The majority of ordinary consumers will continue to be gouged.
I have proposed a statutory collective buyer to protect these consumers:
https://assets.digital.cabinet-office.gov.uk/media/55e6bdcbe5274a558000001c/Paul_Hunt_resp_to_PFs.pdf
I doubt it will gain much traction. However, this issue will have to be resolved before public consent will be secured to pursue more ambitious GHG emission abatement.
Paul Hunt says
Following on from my previous comment, the CMA has decided to extend its investigation by 6 months until 25 June 2016:
https://www.gov.uk/government/news/cma-extends-energy-investigation-timetable
It does, however, expect to publish its final report in Aril 2016.
It appears that it will take quite a bit of time to overcome and finesse the opposition to its principal finding about the gouging of connsumers and to the nonsensical proposed remedy of a RST.