Investing in Britain’s Electricity Infrastructure
Executive summary
Britain needs very large amounts of long-term investment in electricity networks, resilience, storage and strategic infrastructure.
That investment does not all need to come from taxation.
The UK already has a strong culture of government-backed saving. National Savings & Investments has more than 26 million customers and over £100 billion invested, and all NS&I products are backed by HM Treasury. (GOV.UK)
Premium Bonds alone allow individuals to hold up to £50,000, with savers accepting a variable prize-based return rather than conventional interest. (NS&I)
This demonstrates that there is already substantial public appetite for placing savings into government-backed products.
We propose adding another option:
Public Energy Bonds — 5-year and 10-year investments that allow individuals and institutions to invest directly in Britain’s electricity infrastructure.
Unlike a tax, the investor retains an asset and receives a financial return.
Unlike Premium Bonds, Energy Bonds would provide a defined interest return rather than participation in a prize draw.
The capital raised would be ring-fenced for productive electricity investment, including public stakes in Distribution Network Operators, transmission infrastructure and other qualifying strategic assets.
The principle
Britain faces a choice when funding electricity infrastructure.
Government can:
- increase taxation;
- increase consumer levies;
- borrow conventionally;
- rely entirely on private capital;
- or allow the public to invest directly.
Public Energy Bonds introduce another source of long-term capital.
Someone with £5,000 in savings could choose to invest that money in Britain’s electricity infrastructure.
The government receives capital for investment.
The saver receives a financial return.
The electricity system receives an asset capable of generating future revenues.
This creates a fundamentally different transaction from taxation.
The public is not being asked simply to pay for the electricity transition. It is being offered the opportunity to own an investment in it.
Why this could work
Britain already demonstrates substantial demand for government-backed savings products.
NS&I is a state-owned savings organisation and an Executive Agency of the Chancellor of the Exchequer. It currently manages more than £100 billion of savings for over 26 million customers. (GOV.UK)
Premium Bonds are perhaps the most familiar example.
As of August 2026:
- people aged 16 or over can invest;
- investments can start from £25;
- the maximum holding is £50,000;
- capital is backed by HM Treasury;
- savers do not receive conventional interest;
- instead, returns are distributed through monthly tax-free prizes;
- the Premium Bonds prize fund rate is currently 3.80% variable. (NS&I)
The August 2026 Premium Bonds draw is expected to distribute around £447 million across more than 6.4 million prizes. (NS&I)
Public Energy Bonds would use the same basic insight:
Millions of people are willing to place savings into secure, recognisable government-backed products.
But Energy Bonds would have a different purpose and structure.
Premium Bonds and Energy Bonds are different products
Public Energy Bonds should complement Premium Bonds rather than replace them.
| Premium Bonds | Public Energy Bonds | |
| Capital | Government backed | Government/infrastructure backed |
| Return | Prize draw | Fixed or defined interest |
| Term | Withdrawable | 5 or 10 years |
| Purpose | General government financing | Ring-fenced electricity investment |
| Investor knows return? | No | Yes, subject to bond terms |
| Investment linked to infrastructure? | No | Yes |
| Capital repaid | On withdrawal | At maturity |
Premium Bonds appeal partly because investors retain access to their money while receiving the chance to win tax-free prizes.
Energy Bonds would appeal to savers prepared to commit money for longer in return for a predictable return and a clear understanding of what their capital finances.
Proposed products
Initially there would be two simple retail products.
5-Year Public Energy Bond
Designed for people who want a medium-term investment.
Investors commit their capital for five years.
They receive an agreed annual return.
At maturity, their original capital is repaid.
10-Year Public Energy Bond
Designed for longer-term investment.
The investor commits capital for ten years.
Because government receives longer-term certainty over that funding, the interest rate could normally be set appropriately relative to prevailing long-term government borrowing costs.
The original capital is repaid at maturity.
Interest rates
The policy should not permanently specify a 4%, 5% or any other interest rate.
Market interest rates change.
Energy Bond rates should therefore be set when each bond issue is launched.
They should take account of:
- prevailing gilt yields;
- Bank of England interest rates;
- expected inflation;
- comparable savings products;
- the maturity of the bond;
- government financing requirements.
The UK Debt Management Office already issues conventional government bonds across multiple maturities, including long-dated securities, so the concept of government raising fixed-term capital through bonds is well established. (DMO)
The aim should be to offer a competitive but responsible rate rather than overpaying simply to attract deposits.
Example
Suppose a new 10-year Public Energy Bond were issued at an illustrative rate of 4%.
Someone investing:
£10,000
would receive:
£400 per year
subject to the precise payment and tax rules established for the product.
After ten years:
£10,000 capital is returned.
The government has meanwhile had use of that capital for a decade to finance productive electricity infrastructure.
The 4% figure is only an illustration.
Actual future rates would be determined when bonds are issued.
Where the money goes
Energy Bond capital would be legally ring-fenced.
It could only be used for qualifying electricity-system investment.
Potential uses include:
Public DNO investment
Purchasing or subscribing for equity in Britain’s electricity Distribution Network Operators as the public stake progressively rises towards approximately 60%.
New network infrastructure
Funding new substations, cables, transformers and grid reinforcement in return for public ownership of the resulting assets.
Electricity transmission
Investment in strategic transmission infrastructure where public ownership provides long-term consumer value.
Strategic storage
Long-duration storage required for system resilience where a purely commercial market does not yet provide sufficient investment.
Strategic Dispatchable Reserve
Public ownership of carefully selected reserve assets where this represents better long-term value than purchasing availability from private providers.
The bond programme should not become a mechanism for financing unrelated government spending.
Energy Investment Account
All Public Energy Bond proceeds should enter a dedicated:
Public Energy Investment Account
This should remain legally separate from everyday Treasury spending.
The account would record:
- Energy Bonds issued;
- capital received;
- infrastructure investments made;
- public equity acquired;
- dividends received;
- interest received;
- bond interest paid;
- bonds reaching maturity;
- asset valuations.
The public should therefore be able to see precisely what their investment is financing.
How investors are repaid
The system should not depend upon continually issuing new bonds simply to repay old ones.
Electricity infrastructure itself generates income.
For example, public investment in a DNO provides an ownership interest in a regulated network business.
The network continues collecting revenues.
After operating costs, financing, maintenance and necessary investment, the public shareholder may receive its share of distributable returns.
Those returns can contribute towards:
- Energy Bond interest;
- future bond repayment;
- further infrastructure investment;
- the Electricity Resilience Fund.
The financing cycle therefore becomes:
Energy Bonds
↓
Infrastructure investment
↓
Public ownership
↓
Infrastructure revenues
↓
Investment returns
↓
Bond servicing and reinvestment
This is substantially different from borrowing to meet recurring expenditure.
The snowball effect
Public Energy Bonds work particularly well alongside our proposed gradual acquisition of electricity networks.
In Year 1, Energy Bonds and the Electricity Resilience Fund help acquire a small public stake.
That stake starts producing returns.
Those returns are reinvested.
Additional Energy Bonds finance further investment.
Public ownership grows.
Future public returns grow.
Over time:
Initial capital
→ creates public assets
→ assets generate returns
→ returns fund more assets
→ public ownership grows
→ still more returns accrue to the public.
By Year 10 the objective is approximately 60% public ownership of electricity distribution infrastructure, with 40% remaining privately invested.
Why not simply borrow through normal government bonds?
Conventional government borrowing will remain available and may sometimes be cheaper.
Public Energy Bonds serve a somewhat different purpose.
They create a direct and visible connection between:
people’s savings
and
Britain’s electricity infrastructure.
A saver should be able to see:
£10,000 invested in Public Energy Bonds contributes to Britain’s electricity network and earns me a defined return.
They therefore broaden the sources of investment capital while creating public participation in infrastructure ownership.
The government should still compare Energy Bond financing against conventional gilt borrowing before each issuance.
If conventional borrowing is materially cheaper, policy should not knowingly impose unnecessary costs on electricity consumers simply for branding purposes.
Could pension funds invest?
Yes.
The programme should not necessarily be limited to individual retail savers.
Separate institutional Energy Bond issues could potentially attract:
- pension funds;
- insurance companies;
- local authority pension schemes;
- investment funds;
- other long-term institutional investors.
Electricity networks have very long asset lives.
Long-term investors frequently seek predictable infrastructure-style cash flows.
That creates a potentially useful match between Britain’s infrastructure requirements and institutions seeking long-duration investments.
Retail and institutional bonds should be separated
A household saver and a pension fund do not need identical products.
Retail Public Energy Bonds
Simple.
Easy to understand.
Available directly to individuals.
5-year and 10-year terms.
Relatively low minimum investment.
Institutional Energy Bonds
Potentially much larger issues.
Different maturities.
Market-traded where appropriate.
Designed around institutional investment requirements.
This prevents a retail savings scheme from having to perform every financing function.
Should Energy Bonds be tax-free?
This requires further Treasury modelling.
There are several possibilities.
Interest could:
- be taxed normally;
- receive a limited tax advantage;
- be available through ISA structures;
- or receive another defined treatment.
There is a strong argument against creating an unnecessarily generous tax subsidy simply to attract capital that government could otherwise borrow more cheaply.
Premium Bonds already provide tax-free prizes, but they operate under a very different structure. (NS&I)
The Energy Bond tax treatment should therefore be designed around value for the taxpayer and investor rather than automatically copying Premium Bonds.
Investment limits
Retail Energy Bonds should probably have minimum and maximum holdings.
The exact figures require consultation.
The objective should be broad participation rather than creating a savings product overwhelmingly benefiting a small number of extremely wealthy investors.
Premium Bonds currently allow individuals to hold between £25 and £50,000. (NS&I)
An Energy Bond programme could adopt similar accessible minimum investments while potentially allowing higher limits because the economic purpose is long-term infrastructure finance.
Capital protection
The level of government backing must be completely clear.
Two models are possible.
Treasury-backed Energy Bond
Capital and interest are direct obligations of government.
This provides the strongest investor security.
Infrastructure-backed Energy Bond
The bond is issued by the public electricity infrastructure corporation and ultimately supported by its assets and revenues.
That could create a more direct relationship between investment risk and infrastructure performance.
For a mass-market retail product, the Treasury-backed structure may be simpler and easier for households to understand.
Institutional products could potentially use more varied structures.
Energy Bonds are not shares
Someone purchasing a Public Energy Bond would not personally own a proportion of a DNO.
The public infrastructure organisation owns the equity.
The investor owns a bond issued to finance that investment.
That distinction protects the electricity infrastructure from fragmented ownership while giving savers a clear contractual investment.
Relationship with the Electricity Resilience Fund
Public Energy Bonds and the Electricity Resilience Fund perform different jobs.
Resilience Fund
Accumulated electricity-system reserves.
Protects regulated tariffs.
Pays for strategic resilience.
Invests true long-term surpluses.
Public Energy Bonds
Raise additional investment capital.
Primarily finance productive infrastructure.
Have defined repayment obligations.
The Resilience Fund should not automatically guarantee every investment decision made using Energy Bonds.
Strong financial governance remains essential.
Protecting resilience
The system must never purchase network shares using money required to protect electricity consumers from a wholesale-price crisis.
The priority remains:
- maintain the Tariff Stabilisation Reserve;
- finance Strategic Dispatchable Reserve requirements;
- maintain emergency electricity resilience;
- invest genuine surplus reserves;
- supplement those investments using Energy Bonds.
This ensures infrastructure investment cannot undermine electricity security.
What happens when the system becomes financially mature?
Eventually Britain could reach a position where:
- public DNO ownership is around 60%;
- major network investment is adequately financed;
- Strategic Dispatchable Reserve is secured;
- the Electricity Resilience Fund has reached its target;
- public infrastructure produces substantial annual returns.
At that point Britain should not continue accumulating capital without purpose.
Public investment returns can increasingly contribute towards reducing consumers’ Network Access Charges.
The long-term beneficiary of public electricity infrastructure therefore remains the electricity consumer.
Avoiding political interference
Energy Bond proceeds must not become an easy source of money for whichever government happens to be in office.
Legislation should prevent ministers from transferring the capital into general spending.
An independent public infrastructure investment organisation should publish:
- annual accounts;
- bond liabilities;
- investments;
- infrastructure ownership;
- investment returns;
- management costs;
- projected maturities;
- risk exposure.
Every pound should be traceable.
Why this is not privatisation in reverse
The objective isn’t to eliminate private investment.
The proposed electricity system deliberately retains it.
Private capital continues financing:
- electricity generation;
- renewables;
- batteries;
- technology;
- construction;
- 40% of DNO equity;
- contracted strategic capacity.
Public Energy Bonds simply give citizens another way to participate in financing the essential public part of the system.
Why this is different from taxation
The distinction is straightforward.
Tax
Citizen pays £1,000.
Government spends £1,000.
Citizen no longer owns the £1,000.
Public Energy Bond
Citizen invests £1,000.
Government/public infrastructure body owes the investor £1,000.
Investor receives a return.
£1,000 finances an infrastructure asset.
At maturity the £1,000 is repaid according to the bond terms.
That is investment.
It still creates a financial liability for the public sector and must therefore be managed responsibly.
But describing the entire infrastructure programme as a £X billion taxpayer cost would ignore the productive assets acquired in return.
Potential scale
The UK already demonstrates that extremely large pools of household savings are available.
NS&I has more than £100 billion invested by over 26 million customers. (GOV.UK)
In 2024–25 alone, NS&I paid more than 70 million Premium Bond prizes worth over £5 billion. (GOV.UK)
We do not need anything approaching all existing NS&I savings to move into Energy Bonds.
Even comparatively modest participation could produce significant infrastructure capital.
For illustration:
1 million people investing an average £2,500
would raise:
£2.5 billion.
2 million people investing £5,000
would raise:
£10 billion.
These are illustrations rather than forecasts.
But they demonstrate the potential scale of household investment capital.
Example of the wider transformation
Imagine the electricity transformation requires £2.5 billion of public infrastructure investment in a particular year.
It could theoretically be financed through:
£1.0bn Resilience Fund infrastructure surplus
£1.0bn Public Energy Bonds
£0.5bn retained returns/dividends from public electricity investments.
Government has invested £2.5bn.
But it has also acquired approximately £2.5bn of productive infrastructure assets.
Those assets start contributing revenue towards future years.
The following year’s financing requirement can therefore increasingly be met from the returns generated by previous investment.
This is the snowball effect at the centre of the electricity transition.
Benefits
More investment without equivalent taxation
Long-term infrastructure can be financed partly through voluntary savings.
Public participation
People can invest directly in Britain’s electricity future.
Productive assets
Borrowed money is linked to assets capable of producing long-term revenue.
Reduced reliance on foreign infrastructure capital
Domestic household and institutional savings can finance a greater proportion of British electricity infrastructure.
Long-term thinking
Five- and ten-year products better match infrastructure investment horizons than short-term political budgets.
Transparency
Ring-fencing gives investors a clear understanding of where their money is being used.
Compounding public returns
Infrastructure purchased today helps finance the infrastructure purchased tomorrow.
Risks and safeguards
Interest-rate risk
Government must not lock itself into unnecessarily expensive financing.
Bond pricing should be compared with gilt markets before issuance.
Refinancing risk
Maturities should be spread over time so huge volumes of bonds do not all require repayment simultaneously.
Political misuse
Bond capital must be legally ring-fenced.
Investment risk
Infrastructure acquisitions must undergo independent value-for-money assessment.
Overpaying for assets
The 10-year public acquisition programme allows government to wait rather than purchasing assets at excessive valuations.
Excess borrowing
Energy Bond issuance should be limited by genuine infrastructure requirements rather than used simply because investors are willing to provide money.
Implementation
Phase 1 — establish the framework
Create the Public Energy Investment Account.
Define eligible infrastructure investments.
Establish governance and reporting requirements.
Phase 2 — initial retail offering
Launch straightforward 5-year and 10-year Public Energy Bonds.
Start with conservative issuance volumes.
Phase 3 — infrastructure investment
Deploy bond proceeds alongside Resilience Fund surpluses into approved electricity infrastructure.
Phase 4 — institutional programme
Introduce appropriate products for pension funds and other institutional investors.
Phase 5 — reinvestment
Retain public infrastructure returns within the electricity system.
Use increasing investment income to reduce reliance on new financing.
Phase 6 — mature system
Once public infrastructure targets and resilience reserves are adequately funded, direct growing public returns towards reducing consumers’ Network Access Charges.
FAQ
Is this just another government bond?
It is government or public-infrastructure borrowing, but with a specific purpose.
Capital is ring-fenced for qualifying electricity investment rather than general expenditure.
Is it like Premium Bonds?
Only in the sense that both allow people to place savings into a public financial product.
Premium Bonds provide variable prize-based returns and allow withdrawals.
Public Energy Bonds would have defined maturities and pay an agreed investment return.
Would my money be safe?
That depends on the final legal structure.
A Treasury-backed retail Energy Bond could provide the same sovereign backing associated with other government obligations.
The exact guarantee must be explicit before launch.
Can I withdraw early?
The default proposal is that the bonds are designed as fixed-term investments.
Whether limited early withdrawal should be permitted is a product-design question that should be examined before launch.
Why five and ten years?
Electricity infrastructure is long-lived.
Longer investment periods provide greater funding certainty while still giving retail investors understandable time horizons.
Would I know what my investment financed?
The programme would publish detailed annual reporting showing how much capital was raised and the infrastructure portfolio financed by the scheme.
Could the bonds pay more than Premium Bonds?
Possibly, but that should never be guaranteed in advance.
Rates would depend on prevailing market conditions.
As of August 2026 the Premium Bonds prize fund rate is 3.80%, but this is variable and is not the same as an individual investor earning 3.80% interest. (NS&I)
Why would government do this instead of simply taxing people?
Because long-lived productive infrastructure is appropriately financed over time.
A person purchasing an Energy Bond retains a financial asset and receives a return.
A tax payment does not provide the taxpayer with an equivalent individual financial claim.
Conclusion
Britain has enormous infrastructure requirements.
It also has enormous pools of private savings.
The two can complement each other.
Public Energy Bonds would allow people to make a simple choice:
Invest some of my savings in Britain’s electricity infrastructure, earn a defined return, and receive my capital back at maturity.
The government gains long-term capital.
Electricity consumers gain productive public infrastructure.
Investors gain an additional savings option.
And because the infrastructure itself produces revenues, each generation of investment can help finance the next.
Combined with the Electricity Resilience Fund and progressive public ownership of network infrastructure, Public Energy Bonds provide another route towards an electricity system that increasingly finances itself rather than continually returning to taxpayers for subsidies.
The principle is straightforward:
Instead of asking the public only to pay for Britain’s electricity infrastructure, give them the opportunity to invest in it.