Following the UK Government’s announcement of a partnership between Great British Energy and the Crown Estate, the innovation charity, Nesta and consultancy Baringa today published a report, The role of the state in the GB energy market.

Ravi Gurumurthy, CEO of Nesta, led an independent policy team to set out options for the design of Great British Energy. The report includes these findings, which helped to inform Government policy regarding the role of the state and the formation of Great British Energy.

Ravi Gurumurthy, chief executive of Nesta and report co-author, said:

“Over the next decade, we will need 350 to 500 billion pounds of investment to expand the UK’s electricity capacity.

“But renewables investment today is held back by red tape. From buying sea-bed leases and conducting environmental surveys, to waiting for planning and consenting decisions and for grid connections, developers have been made to take on big risks outside their control.

“By taking on these tasks, Great British Energy will speed up delivery and reduce the risks faced by the private sector. We estimate this could reduce the time to build an offshore wind farm by 2 to 4 years, and reduce costs to consumers by up to 35 billion pounds by 2050.”

The report outlines that the reforms brought about by Great British Energy’s formation could deliver:

• Faster delivery of low carbon infrastructure allowing for acceleration of whole energy system decarbonisation by approximately two to four years due to enhanced coordination and efficiencies in project development and deployment.
• A reduction in the £350-500bn of capital investment in the power sector that needs to be deployed to deliver decarbonisation.
• A transfer of up to £35bn from producers to consumers out to 2050 for offshore wind alone, with the potential for additional transfers of surplus for other low carbon technologies.
• Savings of up to c. £1bn in regret development expenditure for offshore wind projects that ultimately fail, with similar benefits possible for onshore projects.
• More efficient deployment of network infrastructure and system assets, reducing the total volume of infrastructure needed to deliver decarbonisation.
• Greater certainty for the supply chain, leading to more investment, growth in green jobs, and more domestic capacity.
• A reduction in constraint costs which are projected to reach £3bn per year in the late 2020s.
• Acceleration of innovation and commercialisation of new technologies.
• Additional resilience in the energy system as a result of a more coordinated transition.

On the report’s findings, Ravi Gurumurthy added:

“The state can accelerate the net zero transition and lower costs in three ways. As a planner, it should be responsible for identifying where best to locate power stations and grid infrastructure, so we build in the right places and give clarity to the supply chain. As a pre-developer, it should prepare sites and fast track planning and consenting decisions, and grid connections. As an investor, it should co-invest in less established technologies that the private sector will not do alone.”

Duncan Sinclair, Partner at Baringa, said:

"Developed and tested with senior stakeholders from across the industry, we believe that these proposals could accelerate the country’s decarbonisation by two to four years and save costs while returning a greater proportion of energy transition benefits to citizens. By facilitating better alignment between energy and industrial strategies, they would also enable economic growth."

Notes to editors

1. Ravi Gurumurthy joined Nesta as Chief Executive in December 2019. Ravi was previously responsible for the International Rescue Committee’s work in designing, testing and scaling products and services for people affected by crisis in over 40 countries. Prior to joining the International Rescue Committee in 2013, Ravi held a number of roles in the UK Government, including Director of Strategy at the UK’s Department of Energy and Climate Change and as a strategic advisor to the Foreign Secretary. Ravi led a number of major social and environmental reforms including the development of the world’s first legally-binding carbon emissions targets.
2. For more information on the analysis or to speak to one of the experts involved, please contact Kieran Lowe, Media Lead, on 020 7438 2576 or [email protected]. Spokespeople are available for broadcast interviews.

About Nesta

We are Nesta, the UK's innovation agency for social good. We design, test and scale solutions to society's biggest problems. Our three missions are to give every child a fair start, help people live healthy lives, and create a sustainable future where the economy works for both people and the planet.

For over 20 years, we have worked to support, encourage and inspire innovation. We work in three roles: as an innovation partner working with frontline organisations to design and test new solutions, as a venture builder supporting new and early stage businesses, and as a system shaper creating the conditions for innovation.

Harnessing the rigour of science and the creativity of design, we work relentlessly to change millions of lives for the better. Find out more at nesta.org.uk