Ms Sturgeon told the Glasgow conference her government would set up a not-for-profit company by 2021that will sell renewable energy to consumers “as close to cost price as possible.” Her spokesman said it would initially sell only to Scottish customers but could expand to England.
Two years ago Nottingham City Council launched a similar but smaller initiative, Robin Hood Energy, which used the revenue generated to repay a loan taken out to set up the company.
Its initial tariffs were more than £200 cheaper than the average offered by the Big Six but were still more expensive than the best deals offered by some other smaller suppliers.
The same year the Scottish Government handed £2.5 million to a not-for-profit energy firm called Our Power Energy, which planned to sell power to some of Scotland’s most disadvantages communities.
In its submission to the energy strategy, SSE acknowledged there are “a few examples” of state-owned companies operating in the market “at a very small scale”.
But it asked for more clarity on what was intended by a “government-owned energy company”, before concluding: “This is not appropriate at a larger scale as it risks distorting the market and deterring private investment.”
The submission urged ministers to instead form “strategic partnerships” with the industry to achieve their aims. It also warned against a government-owned firm using financial incentives to encourage locally-owned energy projects as they “risk being more costly overall to tax and bill payers.”
SSE argued that Distribution Network Operators, firms that own and operate the distribution network of towers and cables that carry electricity to homes, are good at investing in expensive energy infrastructure with a “long cost recovery period.”
“We believe that these type of organisations can in many cases replicate what a government owned company would achieve in terms of consumer value, without the same level of risk,” it concluded.