Creating an Inclusive Energy System for Everyone

Good afternoon. It is a privilege to be here, and I extend my heartfelt gratitude to Energy UK for convening us all today.

Throughout our discussions, we have explored the choices currently confronting our energy system. I would like to dedicate our time together to examining what is required to shape its future, particularly the collaboration between government and industry that will enable this transformation.

We must begin by acknowledging the invaluable contributions of everyone in this room. You are the ones who keep the nation powered, investing in our infrastructure, nurturing our workforce, and developing the projects upon which our future relies. You possess the expertise to turn ambition into tangible investment and to transform that investment into visible improvements in our daily lives.

Even amidst years of economic and political instability, you have persevered. I want to express my sincere thanks to each of you for your efforts that have brought us to this juncture, and for the collaborative work I hope we will undertake in the months and years to come.

Setting Ambitious Goals for the Future

This collaborative effort commences with our government’s ambition to implement a 10-year plan for national renewal. This plan aims to unlock growth in every postcode across the country, reindustrialise areas that have faced economic stagnation, and ensure that all citizens have access to the basic necessities for a good quality of life. We envision a Britain that is confident, forward-thinking, and hopeful.

Energy plays a crucial role in this vision. It is an everyday necessity that we all depend on, yet it has become increasingly unaffordable for far too many families and businesses. The current energy system is failing consumers, and we are resolute in our commitment to rectify this situation.

One of the key factors driving rising prices is our unique vulnerability to the volatile global fossil fuel markets. Events occurring thousands of miles away, such as the conflict in Ukraine and tensions in the Middle East, have direct implications for our households and businesses. This highlights the importance of our goal to promote homegrown clean energy, a commitment we made upon assuming office.

While some may express scepticism regarding this ambition, it is not merely the target itself that matters; it is the confidence and momentum it instils within the system. The progress we have achieved together in just two years is commendable:

• £100 billion of private investment in clean energy has been unlocked.
• We have consented to enough clean energy to power over 20 million homes.
• Last year, we delivered 189 terawatt hours of clean energy.
• By 2025, nearly two-thirds of Britain’s electricity generation is expected to come from clean sources.

Addressing the Systemic Challenges

Despite this significant progress, we must recognise that the public does not measure the success of our energy system in gigawatts. Rather, they assess it based on their bills and their ability to live comfortably. By these criteria, the framework in which you operate is inadequate.

This observation is not a critique of the companies that have invested, built, and innovated within the system. It is an acknowledgment that even the most capable businesses cannot compensate for a system that lacks adequate coordination and long-term direction. It is failing to provide this essential service to the British public at a reasonable cost.

To understand how we arrived at this point, we must reflect on the history of our energy system. If one were to design an energy framework from scratch today, it is unlikely one would replicate the existing model. The privatisation of the energy sector did more than change asset ownership; it fragmented generation, transmission, distribution, and retail into disparate segments. This separation altered the state’s relationship with the energy system, moving away from direct ownership and coordination.

Responsibilities became dispersed among various companies, regulators, and public bodies. As a result, accountability diminished. Successive governments recognised that markets alone could not fulfil every requirement of the nation, leading to the introduction of targets and new regulations. However, this cumulative approach resulted in a system micromanaged by central government and regulators, often operating with incomplete information.

Recognising the Role of the State

The outcome was a hybrid system that lacked both free-market efficiency and effective public direction. Industry was often expected to deliver without the necessary infrastructure, certainty, or cohesive decision-making. Importantly, the state never fully exited the energy system, as it cannot relinquish its responsibility to ensure the lights stay on, protect consumers, maintain national security, and prepare the system for future demands.

Consequently, government involvement returned through regulation, subsidies, contracts, targets, and interventions, yet the fundamental question of how to create an energy system that serves families and businesses effectively remains unresolved. The repercussions of this oversight are now evident.

We find ourselves with an energy system that is overly reliant on fluctuating global markets. There are projects ready to invest and businesses eager to expand, yet they struggle to secure timely connections. Renewable energy exists, but the system still compensates generators for reducing output due to network inefficiencies. Families striving for lower bills are often prevented from accessing cheaper electricity by the inability to upgrade their homes.

During the recent energy crisis, the failure of suppliers left four million households affected, burdening customers with £2.7 billion in costs. These issues are not isolated; they demonstrate the consequences of a fragmented system lacking coherence and accountability.

Acknowledging the Need for Comprehensive Reform

It is clear that a system can possess ambitious targets, willing investors, and feasible projects, but if the necessary networks cannot connect them, those aspirations will remain unrealised. If the public does not witness the benefits, confidence in the system diminishes.

Thus, the solution cannot be another layer of targets. Piecemeal reforms are insufficient. Enhanced consumer protection is important, and a more robust and effective Ofgem is essential—indeed, we are progressing with these reforms. However, our ambition must extend beyond mere adjustments to the existing model; we must make the entire system work coherently in the interests of the consumers we serve.

This requires clarity regarding the choices before us. Some decisions necessitate state intervention, while others call for competition, private investment, and innovation. Additionally, certain choices should be made at the community level, empowering individuals to shape the energy future of their regions.

It is vital to understand that this is not a binary choice between state and market; such a perspective is misleading. Numerous countries with significantly lower electricity prices successfully combine public ownership with dynamic markets. The real question is: who is best suited to undertake specific responsibilities? Where should government establish strategic direction and firm regulations? Where can businesses operate with the freedom to innovate and compete? And where should communities have the authority to lead and benefit?

Reforming with a Focus on Delivery

The objective of reform should be to expedite delivery, providing investors with greater certainty rather than less. We must replace the accumulated uncertainty with clear responsibilities, freedom, and accountability, enabling the system to perform effectively.

This is the underpinning principle of Great British Energy, which empowers the state to go beyond mere regulation. It creates the capability to invest directly, develop projects, forge partnerships, and adopt a long-term perspective. The initiative allows us to enter sectors of the market where strategic value is high, even if immediate commercial incentives are not evident, ensuring that the value generated by Britain’s natural resources benefits the British populace.

We are already witnessing the tangible impacts of public investment. For instance, the Sizewell C nuclear power station exemplifies this approach, with my department serving as the primary public shareholder alongside private consortium partners. Taxpayers stand to gain up to £18 billion in net consumer benefits, while overall electricity system costs are projected to decrease by approximately £2 billion annually compared to alternative routes to net zero.

This initiative promises lower costs, job creation, thriving supply chains, and enhanced security. Great British Energy will collaborate with private investors to build capabilities in technologies and supply chains where the UK has a strategic interest, helping to shape markets rather than merely react to them.

Enhancing Infrastructure for Future Demands

The same rationale underlies the establishment of Great British Grid, which was announced by the Prime Minister at the recent conference. We cannot achieve lower energy prices if viable projects remain ensnared in waiting lists. We cannot electrify our industries if businesses are unable to obtain the necessary connections. Moreover, we cannot develop a more secure energy system if generation, networks, and demand are treated as separate challenges.

Great British Grid aims to address the concerns voiced by industry: projects cannot be delivered at the required scale unless network planning, connections, and investment are prioritised at the national level. It will provide additional public investment and dedicated leadership while collaborating with existing network operators and private investors to facilitate essential grid upgrades following years of underinvestment. This initiative is crucial for reducing constraint costs and meeting the increasing demand for electricity.

This shift from fragmentation to coordination is vital. However, the foremost criterion for reforming our energy system must be whether it benefits the people. This will remain the ultimate measure we apply to all our endeavours as a department: can families and businesses afford the energy they consume?

Immediate Relief and Long-term Solutions

We must implement short-term relief measures to provide some breathing space