Miliband’s daft state-owned GB Energy plan is full of holes

I come not to praise Ed Miliband but to bury him. On Sunday I thought, for a brief moment, that the wholly unserious energy policy of the Labour Party had been, if not junked, wisely fine-tuned. Miliband and Rachel Reeves, the shadow Chancellor, issued a press release that talked about the national grid. Readers, I cheered, I whooped, I hollered. At last, one of our political parties had realised that all the clean energy in the world doesn’t matter a fig if you don’t have the grid and the grid connections to transport that energy. This is the unglamorous end of the energy sector – pylons, cables, wires, planning permission and rents to landlords – and yet without it, you’re done for.

As Labour’s press release pointed out, because the grid is constrained the taxpayer is paying up to £62 million per day to renewable power providers to turn off their energy generation. Labour also points out that the queue for grid connections now means that around £200 billion of new privately-funded power projects are stuck with connection dates being offered for the late 2030s. This is absurd and it is, of course, yet another sign of how poorly the Tories have governed over the past 13 years when it comes to national infrastructure. But we now have an energy secretary who was unable to defend her own speech at the Tory party conference – and the made up drivel it contained about Labour intending to impose a meat tax – so our current circumstances cannot be a surprise.

Nevertheless, having – encouragingly – identified the problem, what does Ed Miliband intend to do about it? Alas, this is a lot less encouraging. As his press release says, “Labour’s plan will put GB Energy, Labour’s new publicly-owned energy company, to work in coordinating the transmission operators to launch a super-tender which will procure the grid supply chain that Britain needs.” But what if the transmission operators don’t want to be part of a super-tender? What if they’re happy with their own procurement departments? What if they don’t have the money to take part in a super-tender or it doesn’t fit with their current investment plans or their debt profiles? What if they don’t like working together? What if their shareholders don’t like them working together? What if, by working together under the Department of Energy, the world’s suppliers see them coming a mile off? So it’s rubbish and it’s left-wing rubbish at that.

It gets worse because Miliband thinks his state-owned GB Energy is simply a copy of what others are doing: he mentioned Orsted in Denmark, EDF in France and Vattenfall in Norway in his conference speech. But they’re not the same as GB Energy: while Vattenfall is wholly state-owned, Ortsed is listed on the Copenhagen Stock Exchange with the Danish Government as a 50.1% shareholder while EDF was renationalised by the French Government under severe duress earlier this year. Miliband’s speech was full of similar canards: one of the longer parts of the speech bemoaned the fact that a floating offshore wind platform was “built in Spain, assembled in the Netherlands and then towed into place off the Scottish coast”. So what!? If it was the cheapest option resulting in the lowest tariff for consumers then of course that’s what happened. How many of the Floating Production Storage & Offloading vessels (FPSOs – usually converted tankers) that have served the North Sea for years were built in the UK? Zero! And why? Because it’s cheaper to do build PFSOs in shipyards in Singapore and Brazil where they have the expertise and labour that’s required.

It’s very hard to resist the temptation to fisk Miliband’s speech from start to finish. One section jumps out: there’s an ambition for the UK to be “exporting clean power to the world” which is so inane that I almost cried. Our nearest neighbours, to whom we already export some power some of the time and who are the only people that we would ever export power to, have no need of our power except as a balancing mechanism within their own systems. Norway has its hydro-power; France has its nuclear power stations. Of course, I could go on but I will limit myself to saying simply that Miliband and Labour, by recognising some of the issues, are inching their way towards a credible energy policy but, my goodness, it’s very heavy-going and they really don’t help themselves because alongside the inanities, there’s so much that’s missing. Nothing about planning regulations or working with the devolved administrations; nothing substantive about the ongoing role of oil & gas or the risks associated with rare metals, minerals and global supply chains; no sign they understand anything about how electricity is actually produced and transported and why hydrocarbons remain the leading source of energy globally despite the evidence of climate change all around us. Labour have got a year until they likely take office; as things stand, it needs to be the year of thinking seriously. 

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