Britain began privatizing its energy markets in 1989 under Margaret Thatcher. Competition was slowly phased in, and from the consumer perspective there has been a choice of energy suppliers since 1999. There’s a growing number to choose from, but the ‘big six’ still dominate the energy landscape, controlling over 90% of the market between them.
It is widely recognized that power is too concentrated and the market doesn’t function as well as it should, but little agreement on how to reform it. Labour have called for price freezes and some argue that the whole system should be re-nationalized. Others focus on trying to streamline the market, making it easier for people to change supplier and lowering the barriers to entry.
While this debate is going on, a new class of hybrid energy supplier is emerging that may make the whole nationalization vs privatization argument obsolete. Councils are setting up their own companies, offering a better rate to local people than the big six can deliver, and demonstrating Donnie MacLurcan’s argument that not for profit businesses can often out-compete traditional businesses. Here are some of them:
The first to this particular party were Nottingham council with their not-for-profit Robin Hood Energy. The service is aimed at tackling fuel poverty in the city. Generation from the council’s incinerator and solar installations is included, but most of the energy is bought in. As the priority is to keep costs down, the energy mix is still pretty heavy on fossil fuels, but they’ve blazed a trail for others to follow and are proving useful at sharing what they’ve learned.
Named after Angel, a part of North London that I used to call home, Angelic Energy is a partnership between Nottingham and Islington councils. They’re providing cheaper energy for London residents on a not for profit basis. The Leccy – or Liverpool Energy Community Company, to give it its full name, is another Robin Hood partnership. Set up by the Mayor of Liverpool, it will aim to make a difference to the one in seven households in the city that live in fuel poverty.
What Robin Hood are doing in these partnerships is providing ‘white label’ services – acting as the supplier and allowing other councils to operate the brand. Ovo Energy also supply white label power, and some councils have partnered with them to create cheaper energy retailers for their local citizens. Southend Energy is one, and Peterborough Energy is another. These council projects deliver cheaper energy by cutting out the retail mark-up, and since Ovo is two thirds renewable, it’s lower carbon than the industry standard as well.
Woking council is another pioneer, working with a very different model. It set up its first energy services company in 2000 to provide heat and power to the town centre and its own buildings. Thameswey Energy was a unique and visionary project that was years ahead of its time, and it’s often used as a case study. The council installed its own private grid to provide district heating and electricity from its gas CHP plant. At one point Woking had 10% of the country’s solar panels too. Since it uses a private network, Thameswey only supplies buildings with a direct connection. Among its customers are the WWF’s Living Planet Centre that I wrote about here.
Gateshead council is attempting something similar to Woking with its Gateshead Energy Company. At the heart of its scheme is the Gateshead Energy Centre, a highly efficient gas-powered heat and power plant (below). It delivers electricity and heat through its own network of pipes and cables under the city centre, providing for the council’s buildings, nearby colleges and homes, with plenty of capacity for commercial contracts too.
I expect it’s only a matter of time before we see a project that brings these approaches together, with a council generating its own power and handling the retail side of things too. I expect to see council not for profits with elements of community energy ownership in the mix, with regional as well as municipal companies. There are plans afoot in London at an unprecedented scale (though not quite as ambitious as we first thought). The Scottish government plan to create their own supplier too, operating at a national level. We’re at the beginning of this change in the market, and there’s more I could mention, such as Bristol Energy or White Rose in Leeds. As I wrote a few years ago, there used to be 600 energy companies in Britain. After nationalization there was one, then six. We’re now on our way back to 600.