📋 Ministerial Foreword
The United Kingdom stands at a critical juncture in its energy and economic future. Households and businesses continue to face the consequences of global energy volatility, while the transition to clean power demands long term investment and strategic clarity. At the same time, rapid growth in artificial intelligence and datacentre infrastructure is reshaping national energy demand and placing new pressures on the grid.
This proposal sets out a fiscally responsible, forward looking approach to strengthen the UK's energy security by expanding publicly owned renewable generation through GB Energy. By reallocating a portion of existing public spending on AI and datacentre related programmes, the Government can accelerate the deployment of offshore wind, reduce household bills, support British industry, and build long term public wealth.
This is a practical, affordable, and nationally beneficial pathway that aligns with the UK's net‑zero commitments, industrial strategy, and economic resilience objectives. It ensures that the benefits of the clean energy transition are shared fairly and that the UK remains competitive in a rapidly changing global landscape.
1. Executive Summary
This document outlines a fiscally neutral proposal to accelerate the UK’s transition to clean, affordable energy by reallocating a portion of existing government expenditure into publicly owned offshore wind capacity. The proposal sets out the strategic rationale, delivery mechanism, financial case and expected economic, social and environmental impacts. It demonstrates how 2–3 GW of new offshore wind, owned and operated by GB Energy, could be delivered without new taxation or borrowing while strengthening energy security and reducing long term costs for households and businesses.
The proposal reallocates £5–6bn of existing UK Government spending on AI infrastructure, datacentre linked investment, sovereign compute and digital procurement into the construction of 2–3 GW of publicly owned offshore wind capacity under GB Energy.
The proposal is fiscally neutral, requiring no new taxation or borrowing. It repurposes existing public expenditure to deliver:
- Lower household electricity bills
- Long term public revenue
- Reduced exposure to global gas price volatility
- Support for UK manufacturing
- Acceleration of the renewable transition
- Strengthened national energy security
2. Alignment With Existing Government Strategies
This proposal is consistent with, and reinforces, a wide range of existing UK Government strategies across energy security, net‑zero delivery, industrial competitiveness and regional development. By reallocating existing expenditure into publicly owned offshore wind, the proposal strengthens current policy objectives rather than creating new or competing priorities. The key areas of alignment are summarised below.
Net Zero Strategy (2021)
- Expands renewable generation
- Reduces reliance on fossil fuels
- Supports long term decarbonisation
British Energy Security Strategy (2022)
- Increases domestic energy supply
- Reduces exposure to global gas markets
- Strengthens national resilience
Powering Up Britain (2023)
- Accelerates offshore wind deployment
- Enhances consumer protection through stable pricing
Advanced Manufacturing Plan (2023)
- Reduces industrial electricity costs
- Supports competitiveness and reshoring
National Infrastructure Strategy (2020)
- Invests in long term national assets
- Supports regional development
Levelling Up White Paper (2022)
- Creates jobs in coastal and port communities
- Reduces regional inequality
This alignment ensures coherence with wider government priorities.
3. Context and Rationale
The UK’s energy system faces ongoing challenges related to price volatility, security of supply and long term affordability. At the same time, significant public expenditure is being directed towards AI infrastructure, datacentres and sovereign compute capacity. While these investments support digital innovation, they also represent a substantial fiscal commitment. This section outlines the scale of current spending and sets out the opportunity cost of reallocating a portion of this expenditure into publicly owned renewable generation.
3.1 Current Government Spending on AI and Datacentres
This spending profile demonstrates the scale of existing commitments and highlights areas where reallocation could be achieved without new taxation or borrowing.
The UK Government has committed substantial public resources to AI and datacentre related infrastructure, including:
- £2.5bn for AI supercomputing and national compute capacity
- Government enabled £14bn datacentre investment pipeline (government enabled private investment)
- Sovereign compute and national AI research infrastructure
- £3.4bn+ in software, cloud, and AI procurement
- Ongoing energy tax relief for datacentres
3.2 Opportunity Cost
This illustrates the potential for existing expenditure to be repurposed into long‑term national assets that reduce bills, strengthen energy security and generate public value.
Redirecting even a portion of this spending could deliver:
- 1 GW of publicly owned offshore wind for £2–3bn
- 2+ GW for £5–6bn
- Up to 3 GW for £7bn+
This capacity would be owned and operated by GB Energy, generating long term public revenue.
4. Proposal Overview
This proposal sets out a fiscally neutral approach to expanding publicly owned renewable generation by reallocating a portion of existing government expenditure on AI and datacentre‑related programmes. The intervention would enable GB Energy to deliver 2–3 GW of offshore wind capacity, strengthening energy security, reducing household bills, and generating long term public revenue. The following subsections outline the core objective and the mechanism for delivery.
4.1 Objective
To reallocate £5–6bn from existing AI/datacentre related public spending into the construction of 2–3 GW of publicly owned offshore wind, delivering:
- Lower household bills
- Industrial competitiveness
- Energy security
- Public revenue
- Net‑zero progress
4.2 Mechanism
The delivery mechanism for this proposal is designed to ensure fiscal neutrality, minimise disruption to existing programmes, and enable GB Energy to deploy new offshore wind capacity at pace. The steps below outline the proposed sequence of actions required to implement the policy effectively
1. Freeze expansion
of AI/datacentre subsidy programmes pending review.
2. Reallocate £5–6bn
into a GB Energy capital programme.
3. Commission 2–3 GW
of publicly owned offshore wind.
4. Sell electricity at cost
to households and industry.
5. Reinvest profits
into further renewable capacity and industrial support.
5. Financial Case
This section sets out the financial implications of the proposal, including the current profile of government spending on AI and datacentre‑related programmes, the cost structure of offshore wind deployment, and the revenue potential associated with public ownership. The analysis demonstrates that reallocating a portion of existing expenditure can deliver substantial long term financial returns while remaining fiscally neutral
5.1 Current Spending Profile
This spending profile illustrates the scale of existing public expenditure and government‑enabled investment that could be partially reallocated without requiring new taxation or borrowing.
Current Government AI & Datacentre Spending
| Category | Government Spending | Notes / Impact |
|---|---|---|
| AI Infrastructure | £2.5bn | National compute, AI clusters, supercomputing |
| Datacentre Investment Incentives | Government enabled | £14bn pipeline driven by incentives and planning reform |
| Sovereign Compute (Supercomputing) | Included in £2.5bn | National AI research infrastructure |
| Software & AI Procurement (recent yrs) | £3.4bn+ | Cloud, AI, software licensing |
| Energy Subsidies for Datacentres | Ongoing | Tax relief and discounted electricity |
| Total identifiable pot | £7.4bn+ | Enough to build multiple GW of offshore wind |
5.2 Offshore Wind Cost Profile
Offshore wind remains one of the lowest cost forms of large scale electricity generation in the UK, with predictable operating costs and long asset life.
- Levelised cost: £40–60/MWh
- Wholesale price: £100–200/MWh
- Maintenance: Low, predictable
- Asset life: 25–30+ years
5.3 Revenue Potential
Public ownership ensures that surplus revenue flows directly to the Treasury, strengthening long term fiscal resilience
A 2–3 GW publicly owned offshore wind portfolio could generate:
- £1–2bn per year in surplus revenue
- Enough to fund additional wind farms, grid upgrades, or industrial energy support
6. Value for Money Statement
This Value for Money assessment has been undertaken in accordance with HM Treasury’s Green Book guidance. The appraisal considers the economic, fiscal and social returns associated with reallocating existing public expenditure into publicly owned offshore wind capacity. The analysis indicates that the proposal delivers strong long term value, with substantial public revenue generation, reduced exposure to energy price volatility, and the creation of durable national assets.
This assessment follows HM Treasury's Green Book guidance.
Economic Case
- Offshore wind offers low operating costs and long asset life.
- Public ownership ensures revenue returns to the Treasury.
Benefit Cost Considerations
- Capital cost: £5–6bn (reallocated)
- Annual revenue: £1–2bn
- NPV: Strongly positive over 25 years
- BCR: Expected to exceed 2:1
Fiscal Neutrality
- No new borrowing
- No new taxation
- Reduced long term fiscal risk
7. Impact Assessment
This section summarises the expected economic, social, equality and environmental impacts of the proposal. The assessment has been undertaken in line with HM Treasury Green Book guidance and standard departmental methodologies. The analysis indicates that the proposal delivers significant net benefits across households, businesses and regions, with no identified negative impacts on protected groups and only limited, manageable environmental risks.
7.1 Economic Impacts
The economic impacts of the proposal have been assessed by examining both the direct costs associated with reallocating public expenditure and the wider economic benefits generated by publicly owned offshore wind capacity. The analysis considers fiscal effects, market impacts, and long term asset value
Costs
Economic Impact Assessment - Costs
| Category | Estimated Impact |
|---|---|
| Reduction in AI/datacentre subsidy envelope | Moderate |
| Administrative costs for GB Energy | Low |
| Capital expenditure | £5–6bn (reallocated) |
Benefits
Economic Impact Assessment - Benefits
| Category | Estimated Impact |
|---|---|
| Public revenue | £1–2bn per year |
| Reduced household bills | Medium–high |
| Lower industrial electricity prices | High |
| Long term asset value | Very high |
| Reduced exposure to gas volatility | High |
| Job creation | Medium |
7.2 Equality Impact Assessment (EqIA)
An Equality Impact Assessment has been conducted to determine whether the proposal has differential effects on individuals or groups with protected characteristics under the Equality Act 2010. The assessment finds no negative impacts and identifies several positive distributional effects, particularly for low income households and coastal communities.
Positive Impacts
- Lower household bills benefit low income households most.
- Reduced exposure to wholesale volatility protects vulnerable consumers.
- Job creation supports coastal regions with higher deprivation.
Neutral Impacts
- No differential impact on protected groups.
Negative Impacts
- None identified.
7.3 Environmental Impacts
The environmental impacts of the proposal have been assessed with reference to offshore wind deployment, carbon reduction potential and construction‑phase considerations. The proposal is expected to deliver substantial environmental benefits through increased renewable generation and reduced reliance on fossil fuels, with any temporary construction impacts mitigated through established regulatory standards.
Positive
- 2–3 GW of new offshore wind
- Reduced carbon emissions
- Faster renewable transition
Negative
- Temporary construction impacts (mitigated through existing standards)
8. Distributional Analysis
This proposal has been assessed for its distributional impacts across households, businesses and regions. The analysis indicates that the benefits of publicly owned offshore wind are broadly shared, with particularly positive effects for low income households, energy intensive industries and coastal communities. The key distributional impacts are summarised below.
Households
- Lower bills
- Greater resilience to price shocks
Businesses
- Lower industrial electricity costs
- Improved competitiveness
Regions
- Job creation in coastal communities
- Supports levelling up objectives
9. Risks and Mitigations
The delivery of this programme depends on effective management of several operational, financial and strategic risks. These risks have been assessed in line with standard government methodology, considering both likelihood and potential impact. The matrix below summarises the key risks identified at this stage and the mitigation measures required to maintain programme viability, fiscal neutrality and alignment with wider government objectives.
Risk Assessment Matrix
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| Reduced AI/datacentre investment | Medium | Medium | Private sector continues to invest |
| Construction delays | Medium | Medium | Use established procurement frameworks |
| Political resistance | Medium | Medium | Emphasise fiscal neutrality |
| Grid connection delays | Medium | High | Early coordination with National Grid ESO |
10. Monitoring and Evaluation
KPIs
- GW delivered
- Public revenue generated
- Reduction in household bills
- Reduction in industrial electricity prices
- Carbon emissions avoided
- Jobs created
Timeline
11. Conclusion
Reallocating £5–6bn from existing AI and datacentre related public spending into publicly owned offshore wind capacity offers a high value, fiscally neutral pathway to strengthen the UK's energy security, reduce household bills, support UK industry, and build long term public wealth.
GB Energy provides the institutional framework.
Offshore wind provides the economic foundation.
This integrated proposal and impact assessment provides the strategic direction.