Octopus Energy chief executive Greg Jackson has hinted that the company is examining how supply chain efficiencies could deliver its pledge to slash the cost of heat pumps.
Octopus has repeatedly claimed that it will have found a way of halving the cost of heat pump installations by the end of 2022.
The company has so far been tight-lipped about its research into slashing the price of heat pumps, which can cost up to £18,000 to install.
At a breakout session at consultancy Aurora’s Spring Forum conference on Wednesday, Jackson said the cost of heat pumps must come down in order to kickstart increased volumes of installations.
Pointing to how Michael Dell had revolutionised the personal computer industry by spotting that the costs of the components in IBM’s devices were a fraction of the price of the finished product, he said: “Essentially, he cut out the vast majority of the supply chain and went direct. If you look at heat pumps there is the opportunity to do something not far off that.”
Jackson added that incentives are important in order to get the heat pump rollout to a sufficient scale, but that once this happens “the market will take over”.
At the same meeting, he pointed to how other industries optimise their capacity issues by offering lower prices at off-peak times or smaller seats on planes rather than offering a one-size-fits-all standard like energy.
“That’s how we optimise physical systems. It’s bonkers that every single customer is paying for a gold-plated system. If we took this approach to airlines, we would be running 747s empty all the time. We have to give people a choice.”