A new power for business?
In recent years, the macroeconomic and geopolitical landscape has significantly affected the energy sector in the UK. This can be witnessed through the apprehension in deploying capital to build critical infrastructure and rising bills.
The sector will have been reassured by the emphasis and immediate action that Sir Keir Starmer’s government has signalled towards its ambitious plans of public investment through the National Wealth Fund (NWF), and a nationalised energy company, Great British Energy (GBE).
As the new government gears up for action, Freshminds looks at who’s who in the refreshed Department for Energy Security and Net Zero (DESNZ), who will be pulling the strings, and what the new Government’s energy plans might mean for UK business.
Who’s who in DESNZ?
The Department for Energy Security and Net Zero (DESNZ) has been set a large mandate that is keenly focused on delivery. Key to its success is the ministerial team, civil service leaders, and the experts they are levying from the private sector. In addition to this, DESNZ has the ability to collaborate and partner with the private sector to develop and operate clean energy projects.
Ed Miliband, Secretary of State for Energy Security and Net Zero
Ed Miliband has been appointed as the Energy Secretary, having held the equivalent role in Gordon Brown’s 2008 Cabinet. Over fifteen years further on, Miliband finds himself back with a similar set of issues to solve, again needing to quell increased energy bills and to set a path for renewable energy uptake.
As a champion of clean energy, his leadership will reassure renewable energy leaders. His support of the Green New Deal in 2019 and approval of the construction of three major solar farms in the East of England in his first weeks in office, has already demonstrated his appetite to act.
Sarah Jones, Minister of State for Industry and Decarbonisation
Sarah Jones sits at the intersection of the government’s energy transition goals and relationship with industry. She will act as both the Minister for DESNZ and for the Department for Business and Trade (DBT), further highlighting the government's commitment to work ever closer with the private sector. Jones is familiar with the apparatus of Whitehall and the delivery of large mandates. As a former civil servant, she worked on the London 2012 Olympic and Paralympic Games. This year, she has spoken in the Commons on hard-to-abate sectors such as steel, as well as the National Infrastructure Commission’s advice for the government to act with greater urgency on net-zero investment.
Ministerial team
The Ministerial team further consists of experienced parliamentarians and recently elected MPs:
Lord Hunt of Kings Heath – a member of the House of Lords since 1997 with ministerial experience in Health, Work and Pensions, Justice, Environment, and Energy and Climate Change.
Kerry McCarthy – Minister for Climate, MP for Bristol East since 2005.
Dr. Miatta Fahnbulleh – Parliamentary Under-Secretary of State at DESNZ, responsible for fuel poverty and domestic energy efficiency. Former Chief Executive of New Economics Foundation and Director of Policy & Research at the Institute for Public Policy Research, where she focused on devolution, energy, and climate change.
Michael Shanks - Parliamentary Under-Secretary of State at DESNZ, responsible for Great British Energy and North Sea Transition.
The delivery of this mandate will be led by Permanent Secretary Jeremy Pocklington, a career civil servant. Pocklington started at the Treasury in 1997 and is responsible for leading the department in its day-to-day activities. Delivery will be deputised by Clive Maxwell, who, similarly, is a long-serving civil servant, having joined in 2000.
Four workstreams covered by DESNZ
The Director Generals cover four workstreams:
Energy Markets & Supply: Jonathan Mills is responsible for energy affordability.
Energy Infrastructure: Ashley Ibbett will cover new and existing technologies including CCUS (Carbon Capture, Usage and Storage), offshore oil and gas regulations, renewable electricity, energy systems and networks.
Net Zero, Nuclear and International: Lee McDonough is responsible for the delivery of the net-zero strategy, nuclear protection, and decommissioning.
Net Zero Buildings and Industry: Ben Rimmington will have oversight of heat and business energy, home and local energy, as well as smart metering implementation.
The Mission Control for Clean Power
Their collective ability to deliver the Government’s energy transition policies will be “turbo-charged” by The Mission Control for Clean Power, which focuses on setting and tracking the approach to achieve 100% clean energy by 2030, and real-time monitoring of critical infrastructure projects to this aim.
Miliband has looked to external figures to deliver. He has appointed Carbon Trust CEO Chris Stark as its lead and has encouraged discussion with external experts to convene between the private and public sectors. Stark has over a decade's experience in energy and low carbon posts, having worked for The Scottish Government, Climate Change Committee, and most recently, The Carbon Trust - a global climate consultancy that partners with businesses, governments, and financial institutions to accelerate their route to Net Zero.
This appointment shows that the Government understands the need to work with the private sector to achieve its 2030 goal. This can be seen not only through the addition of Stark, with his experience of supporting businesses to set and achieve net-zero targets but also through the Chancellor’s meeting with Greg Jackson, CEO of Octopus Energy. These steps mark the beginning of a rejuvenated relationship between the private and public sectors.
Expected investment into industry and infrastructure
This is further compounded by the inclusion of the National Wealth Fund (NWF) and Great British Energy (GBE) in the King’s Speech.
The NWF will look to invest an initial £7.3bn to support industry and the energy transition, specifically £1.8bn into Ports, £1.5bn into Gigafactories, £2.5bn into Clean Steel, and £500mn into Green Hydrogen. The details of how this will be allocated are yet to be announced.
What is known is that the NWF will be led by a task force consisting of green business experts:
Dr. Rhian-Mari Thomas: Chair of the Taskforce, CEO of the Green Finance Institute, former Global Head of Green Banking at Barclays.
Mark Carney: Former Governor of the Bank of England, Chair and Head of Transition Investing at Brookfield Asset Management.
There are further large institutional investors that will sit on the taskforce including C.S. Venkatakrishnan, Dame Amanda Blanc, and Paul Thwaite. The NWF will look to encourage private investment alongside public capital commitments. Oliver Wyman’s Lisa Quest has commented on this plan, stating that the decision “will help the UK keep pace internationally … using innovative public funding tools to attract significant private capital.”
Oliver Wyman has further provided recommendations to establish the NWF, which focuses on emboldening the deployment of catalytic capital into a portfolio that is diversified through financial instruments of varying risk. They have also recommended that the NWF acts as an arm’s length body from the government to best attract private investment.
Great British Energy
Arguably, the most high-profile energy policy that the Labour Government has announced is the establishment of a nationalised energy company, Great British Energy. It has been announced that GBE will be capitalised with £8.3bn of public money to co-invest in new technology, scale mature technology as well as municipal and community energy.
The aim of the policy is to secure UK energy from imports and control drastic price increases that have occurred since the outbreak of Russia’s war with Ukraine.
GBE is to be chaired by Juergen Maier, former CEO of Siemens UK, who will work with the CEO to lead the wholly independent company to invest, own, and develop renewable energy projects from floating offshore wind to nuclear. Critical to this aim is their partnership with The Crown Estate to lease suitable seabed sites for the development of marine energy projects.
The Government has compared the scheme to that of the Danish Orsted, Swedish Vattenfall, and Norwegian Equinor, all successful fully or partly publicly owned companies that provide renewable energy. This, however, does still come with its risks to the public purse, as all three Nordic companies felt the effects of rising interest rates on their ability to operate offshore wind farms effectively.
Looking ahead
Whilst the Government has set an ambitious mandate to deliver 100% clean energy by 2030, there are concerns over how GBE and NWF’s operations will complement established investment operations such as the UK Infrastructure Bank and British Business Bank. It has been said that they will want to avoid a scenario where multiple public bodies are competing for the same assets and, most crucially, talented staff with the right experience and skills.
A flexible recruiting model, such as that operated by Freshminds’ Consultants on Demand, could provide a useful solution. A more dynamic and flexible model would allow professionals to take their experiences from the private sector and apply them to each public body’s projects to utilise their expertise in each institution.
Having a contingent workforce that has experience in similar investment and development programmes would ameliorate the competition for resources and help to ensure that each project had the required skills to deliver.
Find out more
For more detailed information about the DESNZ’s plans, please visit https://www.gov.uk/government/organisations/department-for-energy-security-and-net-zero
Freshminds will revisit this topic at the end of 2024, but in the meantime, if you would like more information please contact author Jack Boyce at jack.boyce@freshminds.co.uk.
