In 1882 the British government passed the Electric Lighting Act, allowing anyone to create and maintain their own electricity supply. And they did. Factory owners built their own power stations. Wealthy individuals fitted out their stately homes – Cragside in Northumberland was lit by hydroelectricity and considered a wonder of the age. Brighton had a 24 hour supply from 1887, serving local shopkeepers and running street lights. Hundreds of companies sprang up, and for the first 50 years of electrification in Britain, supply was decentralised and local.
In the 20s and 30s those diverse electricity networks were standardised and incorporated into a national grid, a project that took over a decade. Then in 1948 the electricity industry was nationalised. For the next 40 years the government was responsible for energy generation through the central British Electricity Authority, and supply to customers through its local boards.
After the early free-for-all and then the central nationalised network, a third chapter began in 1989 with the beginning of privatisation. Energy generation was chopped into three companies, supply was sold off at the regional level, and the national grid became a company in its own right. Competition was only introduced gradually, so companies had agreed monopolies and most customers couldn’t choose their energy supplier until 1999. By that time the ‘big six’ energy companies had emerged and consolidated their positions, and those big six still control 95% of the market today.
You could summarise the history of the electricity companies in Britain like this:
- 100 years ago there were 600 energy companies.
- 50 years ago there was one.
- Today there are six.
It is widely recognised that customers are getting a bad deal from the big six, and that there needs to be greater diversity in electricity supply. Fortunately, it’s getting easier to get started all the time. Renewable energy technologies work at small and medium scale, making it possible for smaller companies to compete, and for individuals, communities or local authorities to get involved in energy generation again.
Things are moving fast. Boris Johnson just announced a plan for London to produce a quarter of its own energy, which includes the local authority acting as a licensed energy supplier. Record numbers of people are switching to smaller providers. Energy supplier Ovo has just launched a plan to help people set up their own energy companies, something I’ll come back to. While fracking and onshore wind farms continue to grab all the attention, the government has issued a Community Energy Strategy and a Solar PV Strategy in the last few weeks, with new funding for community energy and plans to support schools and councils in placing solar panels.
So to those bullet points we may be able to predict a fourth: in 2030, perhaps we’ll have 600 energy companies again. It looks like we may be coming full circle.