The UK’s largest opposition party, the Labour party, announced at its annual conference that a Labour government would set up a publicly owned energy company to invest in clean UK power.

Party leader Sir Keir Starmer said that new energy generation company would be created within the first year of a Labour government. It would be “a new company that takes advantage of the opportunities in clean British power … because it’s right for jobs, because it’s right for growth, because it’s right for energy independence from tyrants like Putin.” He added that the “road to net zero is no longer one of stern, austere self-denial – it’s at the heart of modern, 21st century aspiration”.

Pointing out that currently, many British energy generators are wholly or partly owned by foreign governments or companies, Starmer cited “the largest onshore windfarm in Wales”, adding: “Who owns it? Sweden. Energy bills in Swansea are paying for schools and hospitals in Stockholm. The Chinese Communist party has a stake in our nuclear industry. And 5 million people in Britain pay their bills to an energy company owned by France.”

Analysis by the Trades Union Congress (which represents most of the UK’s trade unions) suggests that British households are in effect losing money because the UK does not have a nationalised energy generation company. The TUC argues that if the UK had a state-backed energy generation company like France’s EDF, Germany’s EnBW or Sweden’s Vattenfall, it would receive between £63bn and £122bn in revenues over the next two years.

The aim is for the UK to receive the economic benefit from the boom in renewables. The company would have operational independence, but also a mandate to invest in clean energy, and would be able to invest individually or in partnership with the private sector. The hope is that a state-backed company would be able to make riskier investments, including investing in new technology in industries like tidal or in modular reactors. The Labour party said it would give a boost to industries by “making strategic investment that the companies shy away from”.

Under this scheme the government would provide seed capital from the £8bn announced for the National Wealth Fund, but the long-term ambition is for Great British Energy to be profitable, and generate enough energy to make profits through exports. But it is possible that further government funding would be needed as the company is likely to take time to turn a profit, especially if its investment is in riskier and emerging industries.

Research conducted recently for think tank Common Wealth showed that 72% of voters think it is a good idea to set up a state energy company that is government-owned.

Despite denials, fears persist that the scheme would involve nationalising existing companies, and the announcement had an immediate effect in the Stock Market. Drax, the owner of the 4GW North Yorkshire power station, saw its shares fall 6%, while energy generator SSE dropped nearly 7%. Shares in Centrica, which owns a stake in Britain’s nuclear fleet as well as its British Gas retail arm, also fell by 7%.