Moves to shift taxation and policy costs from electricity to gas would leave the fuel poor households on dual fuel tariffs better off financially, Greg Jackson has claimed.
Speaking at an event on heat and buildings held by the Energy and Climate Intelligence Unit this morning (2 February), the Octopus Energy chief executive said it is “bonkers” that customers are currently paying more to heat their homes with low-carbon electricity than natural gas due to a combination of policy costs and taxes borne by the former.
He said: “On a windy day, Britain has too much electricity: it is being put into the grid for free.
“You have carbon-free, guilt-free electricity that is being taxed at more than the unit cost of gas, which is bonkers.”
Jackson said analysis carried out by Octopus shows that shifting this balance would not affect the energy bills of the estimated 80 per cent of customers on dual fuel tariffs.
And fuel poor households on such deals would be “slightly better off”, he said.
“If we had a sensible approach to off-peak electricity and if we ended the bonkers world where gas is tax free to the household and electricity is massively taxed, we could start to see cost equivalence in running costs.”
Jackson said this harmonisation of running costs would spur demand for heat pumps. The installation rate currently lags behind those of gas boilers.
He said this kind of market incentive would in turn drive down the costs of heat pumps, which he added Octopus “can’t wait to get going on”.
But mobilising market solutions would be a more effective way to decarbonise heating than government schemes, Jackson said, pointing out that the renewable heat incentive had funded 82,000 domestic installations over five years, roughly equivalent to the number of gas boilers installed in two and half weeks.
But he said that schemes like the Green Homes Grant had to be run on a long-term basis in order to incentivise installation companies to train staff and discourage “cowboy behaviour”.