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.’