THE creation of a publicly-owned energy firm in Scotland to provide lower cost power should boost the country’s renewables sector as well as reducing household bills, according to experts.

The industry regulator was among the first to back the announcement made by Nicola Sturgeon in her speech to the SNP conference on Tuesday.

Dermot Nolan, chief executive of Ofgem, said he would “welcome any form of potential new entry” into the energy market. He told the BBC the necessary process of granting a licence to the new company could probably be completed within months.

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When asked how long it would take the firm to get a licence from Ofgem, he said: “I don’t think it should take overly long. We would try to facilitate any licence application.”

Nolan added: “We could see a real change in energy in the next five to 10 years, much more local production, much more peer-to-peer community trading of energy and I think something like is by and large something consumers will like.”

While Nolan stressed any new power firm would “need to satisfy its customers and provide a high-quality level of service”, he said: “My view is that in the future the energy sector will change a lot.

“We will have a lot more commun-ity energy groups, we’ll have a lot more local production of energy so it seems that any company with strong roots locally, with a strong reputation is likely to do well.”

Details of the government’s proposals will be set out when ministers publish their energy strategy later this year. It is likely the process of establishing the new company may take more than a year, and because the energy market has been privatised it is likely the government will have to set up a private company that it owns. It would also have to appoint a board which could include experts on the environment and fuel poverty.

Announcing the plans in her keynote address to delegates at the SNP conference, Sturgeon said: “The idea, at its heart, is simple.

“Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possible. No shareholders to worry about. No corporate bonuses to consider. It would give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers.”

Environmentalists and energy experts responded to the announcement positively yesterday.

Richard Dixon, director of Friends of the Earth Scotland, said the UK’s energy system had been rigged against public and small-scale producers by the big energy companies.

He said the setting up of a publicly-owned company could drive prices down for consumers and boost the green energy sector.

“By generating large quantities of energy through wind, solar and other renewables when they reach commercial scale, the Scottish Government could be able to offer energy to people at cost price,” he explained.

“By enabling and encouraging communities to generate and distribute their own renewable energy’ we can literally and figuratively give power back to people.”

Dixon added: “Renewable energy should be treated as a public resource rather than being controlled by a tiny group of corporations creaming off fat profits from an essential service.”

Dixon highlighted the government’s commitment that the new company would only supply energy created from renewable sources.

“By only supplying green energy the move should stimulate more investment in renewables, protecting us from the demand for new nuclear stations and helping people get away from using fossil fuels,” he said.

Peter Strachan, professor of energy policy at Robert Gordon University in Aberdeen, said it was “a national scandal” that fuel poverty existed in a country such as Scotland which had so many energy resources.

“I am optimistic that this new company will offer Scotland the chance to cement its transition to a lower carbon economy,” he said.

Strachan believes the policy will be more effective in addressing fuel poverty than the price cap plans being put forward by the UK Government. Details on those proposals are due to be published today.

“The UK policy initiative looks ill judged,” he said. “It is unlikely to put money back in the pockets of hard-working people, nor will it support industry investment in lower-carbon technologies. Scotland’s new green company has the potential to do both.”