GB Energy gets just £100mn over 2 years in Budget despite £8bn pledge

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Britain’s new state-owned energy company will receive just £100mn in funding for renewables projects in the first two years of this parliament, despite the government’s pledge to invest £8bn of cash by mid-2029.

The sum allocated to Great British Energy in the Budget prompted concerns over the Labour government’s progress towards its goal of decarbonising the entire electricity system by 2030. 

The government has said that GB Energy, which Labour has made one of its first legislative priorities, will receive £8.3bn of taxpayer money over the five-year parliament.

Leader of the Liberal Democrats Sir Ed Davey said: “I worry that the government isn’t acting with the urgency needed to sufficiently increase renewables, bring down emissions and cut household energy bills.”

Trevor Hutchings, chief executive of The Association for Renewable Energy and Clean Technology, an industry lobby group, said: “I think it’s disappointing that there isn’t a bigger start to the funding.”

The Treasury said on Wednesday that GB Energy would initially work closely with the National Wealth Fund — until recently the UK Infrastructure Bank — to draw on its “resources, experience and pipeline of projects”.

Adam Bell, director of policy at consultancy Stonehaven, and former head of energy strategy in the energy department, said the allocation reflected the fact that GB Energy was at an early stage in its foundation. 

“It’s what you need to get officers, start hiring and start making commitments. If it was £2bn this year, I would question their ability to spend it in time,” he said. “If it’s still £125mn in the second year of operation, that’s when we would start to raise questions.”

In her Budget, the chancellor, Rachel Reeves, allocated £125mn for GB Energy in the 2025-26 financial year, going up to the second year of the current parliament.

The figure includes £25mn of seed capital to establish the company, which will have its headquarters in Aberdeen, Scotland. The other £100mn is capital funding for clean energy project development, which is typically carried out through partnerships with private sector operators. 

By contrast, the government set aside a large funding boost of £3.9bn in 2025-26 for the development of the UK’s first carbon capture and storage clusters. 

GB Energy, which was set up to drive investment into renewable energy projects, is expected to accelerate its activities after 2026, with billions of lending expected later in the decade, leaving a relatively small window to initiate projects ahead of the 2030 target. 

The Department for Energy Security and Net Zero said: “This initial investment will help Great British Energy start its pivotal work in speeding up the deployment of clean technologies”.

“Further funding will follow in the multiyear spending review when GB Energy will have built the capacity and capability to ramp up its activities, and we will meet our £8.3bn commitment over the parliament,” it added.

Ministers have indicated that they expect much of the initial funding from GB Energy to be given to solar energy projects, which tend to be quicker to launch than other renewable infrastructure.