Greg Jackson is no stranger to disruption. Fresh from a front row seat in peer to peer financial services, he founded Octopus Energy in 2011 on the belief that “buying energy should be as simple as buying cornflakes”. Since then, he’s not been shy of stirring controversy.
In the lead-up to the publication of the Draft Price Cap Bill, Jackson expressed his support for price regulation. He worked alongside the BBC to gather evidence and expose how “loyal customers” were being overcharged and shared this data to demonstrate the impact of the “broken system” on local economies. He also wrote to MPs to point out where he saw residents overpaying within their constituencies.
With Octopus, Jackson’s plan was to “change the energy market for the better”, by making pricing “as transparent as possible”, building positive customer relationships, not charging exit fees, and pushing forward with the transition to renewables. This agenda led him to sign up to the Big Clean Switch Pool, an initiative that encourages consumers to transfer to a better-value renewable energy deal by working with a branded partner. Jackson has even gained the backing of Arsenal Football Club which has signed up to a renewable energy tariff with Octopus.
The company’s latest innovation is its “agile” electricity tariff, a time of use tariff which it claims is a “world first”. The hope is that this tariff will increase customers’ engagement with their energy supply and change expectations of how energy is sold.
On a quiet street in Soho, Utility Week meets Jackson at Octopus’ head office to discuss whether the new tariff is living up to expectations, and to get his views on the future of renewables.
The agile octopus tariff was launched in February. The idea is that customers are paid to use electricity when demand is low or there is a glut of renewable power. Negative prices are passed on to customers through “plunge pricing” when the grid is oversupplied. The peaks vary but are generally between 4pm and 7pm.
The UK is going to have to spend billions of pounds on new infrastructure to carry new electricity and yet you only need that kind at peak times
Explaining the thinking behind the tariff, Jackson says: “We thought why not use pricing to create an incentive and encourage a shift of the times that people choose to use electricity, then as a result we can reduce the need for all the investment in higher capacity for the grid.
“The UK is going to have to spend billions of pounds on new infrastructure to carry new electricity and yet you only need that kind at peak times. At other times the peaks will be lower, and less investment would be needed.”
Customers on the new tariff will be alerted via text message, email or through their online dashboard when the price of electricity drops. They will also be sent a full breakdown of their half-hourly energy pricing and usage once a month. Octopus claims the tariff could save frequent electric vehicle drivers up to £669 per year.
Jackson hopes Octopus’ pioneering attitude towards time-of-use charging for energy will inspire competitors to follow suit, sparking wider innovation in the market.
While Octopus is enthusiastic about innovation in the energy market, and clearly wants to make its mark, there’s no denying the current environment for small new entrants is difficult. Volatile wholesale prices, increasing competition and the burden of government costs are making it difficult for many to grow. Jackson admits Octopus – whose turnover for 2016/17 was around £35.2 million – has had to fight for every one of the 200,000 customers it has won. One of his biggest concerns is that customers are being overcharged by larger energy suppliers, and he has been vocal in his support of a price cap.
He believes a combination of a relative and absolute price cap is the best solution. “Customers are forced to either continually switch which is a big hassle, or they stay on the same tariff and get ripped off. Therefore, the right kind of price cap will enable all energy companies to start giving customers the deals that are good for them and not ones that are a pathway to long-term over charging.”
Parliament has witnessed an increasing backlash to the government’s move to exclude green tariffs from the energy bill price cap legislation. Jackson branded this exemption as a “loophole” intended to continue to overcharge customers. He warned of suppliers introducing default green tariffs to avoid the cap. He says the exemption should only apply to customers who have “explicitly” chosen a green tariff.
People check their bank account more frequently than they check their energy bills
Prior to his current role, Jackson served as a director of Zopa, the world’s first peer-to-peer finance association. He claims finance and energy are similar. “Traditionally banks will advertise one interest rate for new savers and give their loyal customers a lower rate. It’s similar in energy, Zopa for me was about total transparency and the ability to have much lower operating costs through efficiency to bring long-term good value to people.”
“People check bank account more frequently than they check energy bills and just like in energy, loyal customers pay more for their energy than new customers. Both Zopa and Octopus are big on transparency, we try to make information easy to find,” Jackson says.
As well as supplying customers with energy, Octopus is a big investor in solar, and claims the 154 farms it has funded in the UK generate 40 per cent of the country’s large-scale solar.
Jackson is excited for the future of renewables. Drawing a comparison with data, he insists that in the next 10 or 15 years the cost of renewables will come down to a point where they are cheaper than fossil fuels. “It is going to become like data which used to be really expensive, but now we are generating so much data it just gets cheaper and cheaper. A decade of continued falling energy prices and no carbon, it’s going to be fantastic.”
However, he warns two things need to be in place for it to be a success long-term. “One is storage and the other is agile pricing. In terms of the former we have seen some technologies come to market putting down the cost of storage. Once you get into a carbon-free cycle, it’s a huge step forward for climate change and it enables us to keep cutting the cost of the most important commodity for people to use.”
Octopus’ commitment to environmental stewardship was further cemented last year, when it became official energy partner of Arsenal Football Club, to supply 100 per cent green electricity to all of its facilities including the Emirates Stadium. The club claims one of the reasons it partnered with Octopus was to improve its contribution to environmental sustainability. “Since then we have saved 5.7 million kilograms of carbon from polluting the atmosphere, enough carbon to fill Emirates Stadium three times over,” says a spokesperson. “We are very proud of our partnership and look forward to continuing in our efforts in sustainability.”
Jackson says Arsenal going green is a “real boost”, and a huge sign of confidence in the company’s overall mission. “For Arsenal it’s an important statement as they are a global brand that is supported all over the world.
“Many people are living in countries that are experiencing the ravages of climate change. Arsenal has shown that as an organisation of mass-scale making this move, it’s such an important statement. We hope that the rest of the world will follow, not just the world of sports.”