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Introducing Octopus Energy – the UK's largest investor in solar generation
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Published: 7 April 2017
This Article was Written by: Katie Hill - My Green Pod
This article appeared in the spring issue of MyGreenPod.com Magazine, distributed with the Guardian on 07 April 2017. Click here to read the full digital issue online.
With rising bills and uncertainty over our future energy security, something’s got to give. Enter Octopus: a ‘new breed of energy supplier’. It’s a bold statement, but the five-star ratings from its customers immediately set this supplier apart from the Big Six. We spoke to the team to find out more.
THE NEED FOR CHANGE
Octopus Energy launched to customers in April 2016. ‘It’s a market I’ve been interested in for some time, as it’s in such obvious need of change’, says founder Greg Jackson. ‘In fact, I wrote the business plan over five years ago, but getting the right financial backing is fundamental to building a sustainable business – especially in energy.’
Greg and other members of the founding team – Stuart Jackson, Jenny Ashmore, James Eddison and Peter Miller – found that backing in Octopus Group, a UK-based investment firm with over £6 billion in funds under management and a strong history of getting behind successful UK businesses, including Graze.com, Secret Escapes, SwiftKey and Zoopla.
Octopus Group is also the UK’s largest investor in solar generation, and has over £2 billion invested in renewable energy generation in general. ‘There are only two companies that can claim more investment in renewable generation in Britain’, Greg says, ‘both of which are Big Six energy suppliers whose renewable investments are dwarfed by their investment in – and commitment to – fossil fuels.’
As Britain’s largest investor in large-scale solar generation, it’s no surprise that’s where a lot of Octopus Energy’s electricity comes from.
Matt Bunney is responsible for making sure that Octopus Energy has enough renewables to meet its commitment; he complements solar generation with electricity from anaerobic digestion, the process by which organic waste such as manure and vegetable rejects (Octopus doesn’t use by-products from the meat industry) is turned into electricity. While solar generation’s at its peak when it’s bright and sunny, anaerobic digesters can run 24/7, diverting waste from landfill and helping Octopus source renewable energy 24 hours a day.
‘Our green tariffs provide 100% renewable electricity all year round’, Matt tells us. ‘For our Super Green customers, we also offset the carbon dioxide released for the gas they use. This is important because while an increasing number of suppliers off er 100% renewable electricity, gas is often the poor overlooked sibling.’
For an average customer, 100% renewable electricity and full carbon off setting from Octopus Energy only cost about £5 more per month than the supplier’s cheapest tariffs, which aim for 50% renewable electricity. That’s about twice as much clean energy as you’d get on the average Big Six tariff.
With energy from solar and wind generation getting cheaper every year, the plan is to increase the share of renewable electricity in Octopus Energy’s cheapest tariffs over time. It’s a delicate balancing act, as affordability and good value are both fundamental to Octopus Energy’s mission.
CHEAPER FOR MOST
The good news is that Octopus is already cheaper for many families; the Super Green Octopus tariff is cheaper for most homes currently on a Big Six variable tariff – which is the majority of homes in the UK.
‘Amazingly, the cost of solar generation has fallen something like 200-fold since the 1980s’, Matt says. ‘The cost is still falling, which – alongside the simple fact we’re a modern and lean business – is one of the reasons we’re able to off er such competitive tariffs.’
To use Ofgem’s definition, a ‘medium customer’ on the average Big Six standard variable tariff will save £222 on their annual energy costs if they switch to Octopus Energy – and that number is set to increase following recently announced price hikes by fi ve of the Big Six.
Planet and wallet friendliness aside, CEO Greg Jackson feels the fundamental thing that distinguishes Octopus from the Big Six is that ‘there are no dodgy deals’. ‘We don’t offer a cheap one-year deal to lure you in before switching you to a painfully expensive tariff’, he says. ‘We did a lot of work with the BBC’s Money Box to expose this practice to the public; the Big Six use their existing customers to finance new ones and it just isn’t fair. We think it’s ridiculous to expect customers to switch their supplier every year just to get decent value. People’s lives are busy enough without having to add yet another chore just to avoid being screwed on their energy bills.’
While you might expect a premium price to go hand in hand with better customer service, survey after survey reveals this is far from true in the energy market. ‘Big Six call centres are slow, stiff and riddled with ine fficiencies caused by legacy systems and hierarchical management’, Greg says. ‘In short, they’re not fit for the 21st century, and they’re not fit for UK customers.’
Lack of consumer trust in energy suppliers has been the biggest challenge for Peter Miller, Octopus Energy’s customer experience director. ‘Millions of Britons are paying hundreds more than they should be, and yet they won’t switch because they think all energy suppliers are the same and it’s better the devil you know’, he tells us. ‘We know we have to work twice as hard to prove ourselves and to earn our customers’ trust.’
Every customer gets Greg’s email address, and any negative experiences are reported straight to the management team. At the time of going to press, Octopus Energy ranked first on Trustpilot for Electric Power, Natural Gas and Utilities.
‘We don’t see renewable energy as a luxury for those who can afford it. Instead, we’re building a business that means every household in the UK can be part of Britain’s shift to a more sustainable future – and, for the vast majority, actually save money in the process.’
Founder of Octopus Energy
‘Instead of asking you to wait on hold to get to the right department, we suggest using email or social media to describe your problem, leaving you to get on with your day while we work on an answer for you’, Peter explains. ‘If you do prefer to call, no problem, you’ll get through to an energy specialist who can do 99% of what you need first time, without having to transfer you to the right department. We have a wonderful team, who joined because they have a real passion for fairness and the environment. Instead of passing you from pillar to post, they can solve most issues immediately – and instead of trying to wring every last penny out of you they want to make sure you’re happy. In the end, it’s cheaper to have happy customers than to spend hours on the phone arguing with them.’
Ease and fairness are central to Octopus Energy’s service; its fastest switch took just 31 seconds, which says a lot about how straightforward the process is, and there are no exit fees if you decide the supplier isn’t right for you. Customers receive monthly meter reading and direct debit reminders, and the Octopus Energy iPhone app will even take meter readings using your phone’s camera.
DISRUPTING THE MARKET
Disruption in the form of smart meters, renewable energy, in-home energy storage, electric vehicles and big data will test the UK energy market’s capacity for change – and Stuart Jackson, chief financial o fficer, is unconvinced it’ll be capable of moving at the speed of the most nimble and innovative suppliers. ‘As a heavily regulated industry, it’s too used to moving at the speed of the slowest’, he explains. ‘For years the energy market’s been abused by big firms who were literally gifted their customers through deregulation. They haven’t won customers by being more e fficient, providing better service or being more innovative. They’ve prioritised profits over customers, and fossil fuels over our planet.’
The government has been clear that the energy industry must change, and Octopus Energy has worked with Iain Wright MP and John Penrose MP in its campaign for fairer energy prices. ‘We’re starting to see traction in the fight against the exploitative pricing of the Big Six’, Stuart tells us. ‘The proposed relative price cap is being debated in the House of Commons, with Iain Wright MP quoting our support, and Theresa May is emphatically saying the market needs fixing for customers.’
The real challenge is that change needs to happen now; no one wants to head into next winter before fundamental changes have kicked in to create a market that rewards e fficiency and great service.
‘It’s time UK consumers had an energy supplier they can actually trust’, Greg says. ‘We can be that energy supplier by simply staying true to our commitments to transparency and fairness. In the end, all people want is energy at a fair price that does the right thing by the planet. Combine that with good old-fashioned customer service, and you’ve got a winning combination.’
Click here for more about Octopus Energy and its tariffs.