UK government partners with Crown Estate to drive £60bn clean energy investments via GB Energy

• Government will also launch the Great British Energy Bill
• The Crown Estate belongs to King Charles III and he recieves 12% of its profits  
• Could enable up to 30 GW of new offshore wind projects and boost carbon capture and hydrogen tech

The UK government will partner with The Crown Estate to leverage GBP 60 billion (USD 77.4 billion) of private investment in clean energy projects, Prime Minister Keir Starmer will announce today.

Starmer’s newly-elected Labour government will also introduce The Great British Energy Bill into parliament today. Set to be a publicly-owned company and headquartered in Scotland, GB Energy will raise GBP 8.3 billion in “new money” over the next five years, to own and invest in clean power projects across the UK.

The "unprecedented" partnership between GB Energy and The Crown Estate — which has a GBP 16 billion portfolio of land and seabed and 12% of its net profits go to King Charles III — has the potential to leverage GBP 60 billion of private investment in clean energy projects in the country, according to a government statement. 

Up to 30 GW of new offshore wind developments could reach seabed lease stage by 2030 because of the partnership, enough to power almost 20 million homes, estimates The Crown Estate. The partnership will also boost investment in new technologies in "carbon capture and storage, hydrogen, wave and tidal energy", the government said.

“This agreement will drive up to GBP 60 billion in investment into the sector, turbocharging our country toward energy security, the next generation of skilled jobs, and lowering bills for families and business,” Starmer said.

He added that the partnership will help Labour, which won by a landslide on 5 July, to deliver on its pledge to boost clean energy by 2030. This includes a vow to double onshore wind capacity, triple solar power, and quadruple offshore wind by the end of the decade.

"The government is already legislating to give both Great British Energy and The Crown Estate the powers they need to rapidly deliver, with two Bills being introduced in Parliament today," said the Department of Energy Security and Net Zero (DESNZ). 

The Crown Estate Bill will expand its investment powers and grant borrowing capabilities to unlock significant investment in public infrastructure, DESNZ added.

Britain’s King Charles III has inherited The Crown Estate's assets, which belong to him during his reign but cannot be sold by him, according to its website.

The Crown Estate is one of the UK's largest rural holdings and manages the seabed and much of the coastline around England, Wales and Northern Ireland. It is an independent commercial business and returns all its profits to the treasury, according to the DESNZ statement.

Hurdles

With around 30GW of installed wind capacity, the UK is the world's second-largest offshore wind market, after China.

However, challenges to scaling renewables remain. The previous Conservative government’s auctioning of new offshore development sites failed to attract a single bidder last year amid complaints from developers that the price set by the government was too low. 

The auction awards long-term contracts to the renewable energy projects that bid the lowest price for the clean electricity they will go on to generate. 

In November 2023, the Conservative leadership increased the maximum strike price by 66% for offshore wind projects, from £44/MWh to £73/MWh. It was a bid to entice investors and the results of the auction will be released this summer.

Problems with connecting renewable energy projects to the UK’s aging National Grid infrastructure has also hindered progress.

Mohamed Jameel Al Ramahi, the CEO of Masdar, which is the UAE’s main renewable energy company, told the Financial Times in May last year; “We have the right solutions and technologies . . . The real issue we face is the ability to execute as fast as we want to, in the UK and elsewhere.”

Masdar is developing the 3GW Dogger Bank South wind farm offshore England with German partners RWE.

The UK’s energy secretary, Ed  Miliband, said today’s introduction of the two bills into parliament – one to launch GB Energy and another to partner it with The Crown Estate – will attract more investment into renewables.

The partnership will enable the public sector to take on “a new role undertaking additional early development work for offshore wind projects,” DESNZ said.

“This will ensure that future offshore wind development has lower risk for developers, enabling projects to build out faster after leasing and crowding in private sector investment. It will also help boost new technologies such as carbon capture and storage, hydrogen, wave and tidal energy,” it added.   

Industry reaction

Since gaining power, the Labour government has scrapped a de-facto ban on onshore wind farms in England and pledged to release a stalled ‘solar roadmap’, which is expected to include plans to make installing rooftop solar panels easier.

GB Energy’s five main functions will include – renewable energy project development, project investment, supporting local power plans, building supply chains and exploring the role of nuclear power – the government statement said.

Energy UK’s chief executive, Emma Pinchbeck, welcomed the government’s clean energy targets but said that the best way to make sure the public benefits from GB Energy is by ensuring that its function complements, rather than duplicates, the “investment, expertise and experience of the private sector”.

“Success depends on private investment being crowded in rather than crowded out - and industry is looking forward to working in partnership with government to make sure this happens,” she said.

Similarly, Offshore Energy UK (OEUK) said that reaching Net Zero is likely to cost GBP 1.4 trillion, according to the Office for Budgetary Responsibility, and the majority of that funding will come from businesses.

“We continue to need a fiscal climate that promotes investment in the offshore energy sector to assure a managed transition to clean energy which does not depend on increased imports,” said David Whitehouse, chief executive of OEUK, which has 400 member organisations. - HQ

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