There is a tension at the heart of GB Energy. When the company is discussed, it is inevitably compared with Nordic companies that have made a go of it in renewables, such as Statkraft, Ørsted, Equinor and Vattenfall.

But GB Energy’s outlook is much more complex than its Nordic peers. It will have independence from the government, but is answerable to the Secretary of State. And, at least in the first instance, it is funded by the Treasury.

The company’s head, Juergen Maier, set out some of his plans at a committee hearing this week on the GB Energy Bill.

Goals, functions

He was asked how he would consider success for the company. There are two goals, he replied.

Maier said it would be a question of participating in renewable projects and accounting for how “much more renewable energy have we managed to get on the grid”. The second goal is around the creation of jobs and prosperity in Scotland and the UK, rather than overseas.

The executive, responding to a question from the SNP’s Stephen Flynn, said Aberdeen would be at the heart of GB Energy’s plans.

It would have outposts in Glasgow and Edinburgh, to support innovation and finance, but Aberdeen would have the “operational and engineering jobs … those are the well paid jobs and the greater quantity of jobs”.

There will be hundreds of jobs, he continued, but the largest impact will be in the supply chain.

“I see the role of GB Energy as the enabler of getting such new technologies [as floating offshore wind] onto the grid, as investor and co-investor. It will take quite a team of people.”

It would create supply chain jobs in the northeast, to support wind plans off the east coast, but also in the Celtic Sea.

When the plans for GB Energy were announced, it had five key functions. These included project development, project investment, local power plans, supply chain support and working with GB Nuclear.

Into the details

Maier received some stick from the opposition voices of the committee hearing. The bill itself sheds very little light on what the company will do.

He did note the company would play a role in “enabling” by working on projects before they had received contracts for difference (CfDs). It will work alongside Crown Estate on this early-stage work.

“But we will also be there past CFDs, as and when the schemes get developed there may be opportunities to come in and be a co-investor,” he said.

Maier defended the bill, saying there would also be a business plan and framework agreement “between ourselves and the Secretary of State. It will be in that where we clarify those questions”.

Counter cyclical

Given the analogies with the Nordic companies, does GB Energy have the capacity to take the big moves of an Equinor, for instance?

The Norwegian company recently bought a 9.8% stake in Ørsted, valued at around $2.5 billion. Although it said it would not seek board representation.

The Norwegian company’s CEO, Anders Opedal, said the company had a “long-term perspective and will be a supportive owner in Ørsted. This is a counter-cyclical investment in a leading developer, and a premium portfolio of operating offshore wind assets.”

He noted the move was a complement to Equinor’s offshore wind portfolio.

Ørsted has around 10.4 GW of net renewable capacity, with plans under way for another 7 GW of offshore wind. It aims to reach 35-38 GW by 2030.

Equinor’s investment may be counter cyclical, but it also provides a fairly cheap way to acquire offshore wind assets. For $2.5bn, it has acquired roughly 1 GW of equity wind, whereas to build such a project new may cost $4bn.

*Anders Opedal, President and CEO, Equinor. Picture: Ole Jørgen Bratland*

Time to build it

It’s a big bet, but one that Equinor can afford given its strategic priorities and state direction.

The company made reported adjusted operating income of $7.48bn for the second quarter of 2024, driven entirely by oil and gas. Renewables, meanwhile, accounted for a net loss of $91mn.

It plans to pay out around $14bn in dividends this year, of which around $9.4bn is due to the Norwegian state’s share.

There is a clarity to Equinor’s counter cyclical investment narrative that GB Energy lacks. The Norwegian company has spelled out its strategy as finding the “right balance” between providing energy and generating cash flow.

The energy transition plays a part in this, informing how the company sees the future.

The TUC’s Mika Minio-Paluello said the bill would give GB Energy scope to grow. “It’s a long-term process”, she allowed. “You wouldn’t build Ørsted in one year or two years or five years. We think we should aim to be there by 2040-45.”

GB Energy could put in place the “mechanisms and a plan so that by 2040 and 2045 we are a more powerful country. We are a richer country because we are finally on par with our peers.”

Mike Clancy, general secretary from Prospect, said that to build such a company “you better start now”.

GB Energy has a limited pot of money – around £1.6bn per year – and some lofty ambitions.

But it also has a limited amount of time, given uncertainty around the changing whims of government. In 2012, the government launched the Green Investment Bank but by 2015, it began work to privatise it.

Where companies such as Equinor can take a long-term counter-cyclical perspective, it is not at all clear that GB Energy will have that luxury.

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