The Carbon Temporary Interview: Octopus Power’s Greg Jackson 

Greg Jackson is the founder and CEO of Octopus Power, a world power and know-how firm headquartered in London. 

Arrange in 2016, it now has 7.7 million prospects throughout 18 nations, in addition to a portfolio of £7bn value of renewable power property. The group’s proprietary know-how platform, Kraken, is now used to run greater than 54m buyer accounts throughout the globe. 

The corporate’s power provider arm not too long ago grew to become the largest in Nice Britain, surpassing legacy big British Gasoline when it added 1.3 million prospects after shopping for Shell Power in late 2023. 

Jackson is a “serial tech entrepreneur”, having constructed and offered plenty of start-ups earlier than Octopus Power. 

Carbon Temporary sat down with him for an hour, to debate the UK’s power transition, the upcoming common election, misinformation within the media and rather more.

Carbon Temporary: What do you assume needs to be the important thing priorities on the subject of power and local weather coverage for the following [UK] authorities over its first six months or so?

Greg Jackson: I believe the power transition used to sound like fairly an advanced course of. The truth is that it simply boils right down to electrification. We have to electrify every thing we will after which be producing as a lot electrical energy as we will from renewable assets. 

Now, beneath that, there could also be a complete lot of coverage priorities. However electrification has obtained to be the one phrase.

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CB: So, when the following authorities is available in, each time the election is, are there particular issues you really want to see, or that you just’d wish to see, to actually ramp up this decarbonisation course of?

GJ: So, once more, I’m going to speak about, for me [its] electrification. As a result of even once we discuss decarbonisation you’re type of weighing up a great deal of various things. If we discuss electrification, primarily, then we will say, OK, what does that take?

And I believe the very first thing we have to do is recognise that, even at present, the electrical energy markets we’ve obtained are usually not match for objective. We spend billions a yr balancing and curbing renewables – that’s turning windfarms off when it’s windy. And we’d like a market that signifies that, on the occasions once we’re producing a variety of electrical energy, it’s tremendous low-cost for individuals. And we have to try this on a regional foundation, or much more domestically than that. 

In order that, for instance, if at present we had regional pricing, each area can be cheaper than it’s as a result of we’ve been lowering waste. However, greater than that, Scotland can be the most cost effective electrical energy in Europe. These are essential as a result of as quickly as individuals can see that renewables can result in cheaper power, we get public assist for renewables – as we must always – and it turns into a way more environment friendly system. We’re not placing a value on everybody’s payments to pay for waste, which is what occurs at present. 

I believe, alongside market reform, you then get the appropriate funding indicators. So we’re going to be investing within the locations that want the infrastructure. And that’s not simply technology, it may be issues like batteries. 

It’s type of mad in the intervening time that lots of people assume we must always put batteries subsequent to windfarms. However, for those who try this, then earlier than anyone’s had an opportunity to benefit from low-cost electrical energy, you’ve already eradicated the worth sign. So the very best locations for batteries, for instance, is likely to be near inhabitants centres. 

Take someplace just like the southeast [of England], the place, clearly, it’s onerous to construct new technology. However we will construct infrastructure that may make electrical energy cheaper by, for instance, deploying batteries in locations that have gotten peak time constraints [to] allow us to scale back peak points and profit extra from the occasions it’s off peak and we will retailer that electrical energy. 

So I believe market reform is totally primary. And meaning essentially the most dynamic pricing doable. 

By the way in which, it doesn’t imply that customers will essentially face dynamic costs, simply to be actually clear. Firms will be capable of wrap-up that dynamic pricing in any variety of tariffs. So, for individuals who need it, you’ll nonetheless have flat tariffs – and so they’ll most likely be cheaper than they’re at present, as a result of the system is extra environment friendly. However, for individuals who can shift demand, or need extra dynamic stuff, it should allow them to profit by utilizing electrical energy extra effectively and that makes for a extra environment friendly system for everybody. 

Clearly, we’d like reform of two units of laws. We critically want grid reform, as a way to really join stuff to the grid. We’ve spent years speaking about this publicly due to the frustration that we’ve obtained huge quantities of capital to construct new technology. However you may’t. You actually don’t have any approach of connecting to the grid. I imply, there’s a challenge we’ve obtained to construct a photo voltaic farm in County Durham, the place I believe there’s a 14-year wait to attach it.

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CB: So is that simply planning reform?

GJ: That’s grid reform. So, mainly within the UK – and, by the way in which, this is applicable in lots of different nations as effectively – you’ve obtained a nationwide monopoly grid and you may solely construct new technology for those who can join it to the grid. You haven’t obtained any various. So, if the grid tells you you’re going have to attend 14 years, you’re going to attend 14 years. 

And I distinction this with what has occurred in gasoline. In the course of the power disaster, Germany alone constructed 5 liquified pure gasoline terminals in a single yr. In the meantime, due to these grid connection points, we will’t construct new renewables. And I believe that the reform for that’s largely bureaucratic; the federal government and grid have to agree on a course of to allow stuff to be linked sooner. 

The second factor, after all, is planning. And I believe, in the intervening time, I imply, famously, England constructed two onshore wind generators within the time that Ukraine throughout a conflict constructed a whole bunch, as a result of you may’t get planning permission. And that doesn’t simply apply for wind generators, there’s an actual problem constructing the infrastructure to transmit electrical energy across the nation. 

And I believe the truth with that is we have to discover methods to allow communities to profit once we construct new infrastructure. Wherever you construct it, you get NIMBYs [“not in my back yard”]. However we have to have IMBYs as effectively, individuals who will straight profit and might see the direct advantage of constructing infrastructure. And so we’d like reform that permits us to deploy new electrical energy infrastructure, however in a approach which embraces, to the utmost extent doable, native communities. 

Between these two priorities – i.e. market reform, planning and grid reform – we will unleash the forces that really will imply that all through a lot of the nation – in every single place, in reality – shoppers shall be benefiting from clear power. And the second persons are benefiting – it’s like when the brand new iPhone launched. The sudden demand for knowledge meant that the cell networks simply needed to construct masts, as a result of it needed to meet shopper demand. And we will try this with power, with clear power, which is the extra we allow individuals to profit, the extra demand there shall be for speedy transition. And that’s what we’d like.

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CB: So, transferring on to Labour’s now type of fairly high-profile pledge to get net-zero energy by 2030…is that broadly achievable? Is that doable if what you laid on the market will get carried out? Or are there further issues that, to hit that 2030 goal, would wish to occur?

GJ: It’s completely achievable. And, by the way in which, I imply, the federal government’s pledge [for 2035] is just not that completely different, proper? Everybody’s pledging net-zero carbon electrical energy by roughly then, I can’t keep in mind all the small print, however they’re all fairly related. 

However the actuality is, what it does want is dedication. I used to be not too long ago at a gathering of governments. A lot of industries have been lobbying governments to say: we must be know-how impartial, everybody’s obtained to be given an opportunity to be a part of this future. Which is all pretty, however this isn’t major college, there are going to be winners and losers. And we’d like the commitments from governments that allow buyers to spend money on the stuff that’s going to be a part of the longer term. 

So a very good instance can be, there’s nonetheless this type of loopy suggestion that hydrogen is likely to be used to warmth houses. I imply, it’d simply be bodily doable, however it’s like flushing our bogs with champagne. It’d work, however it’s inordinately costly and impractical. It’s only a delaying tactic from the businesses who personal the gasoline infrastructure. 

Now, after all, a transition that signifies that the gasoline infrastructure, over time, gained’t be so helpful, or could even change into completely redundant, is just not the longer term that they [the gas industry] need. But it surely’s not like we’re nonetheless working stuff down the canals. The know-how adjustments already made [mean] that renewable electrical energy is the most cost effective type of energy we’ve ever had and is getting cheaper yearly. After all, there are minor blips like current inflation in offshore wind, however even that was pushed by the inflation and rates of interest, which largely got here from our habit to fossil fuels. 

So, the trail needs to be clear, and what we’d like from policymakers are these courageous selections that say: “Hey, look, there are going to be some losers on this course of.” However…the faster we’re clear about that, the extra we will embrace, for instance, the employees in these sectors and make it possible for they’ve obtained a vivid future, as we transition, and the extra we will handle the transition in a approach which shall be good. Good for the individuals who have been affected by it. 

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CB: Can the market do all of this? Or Labour’s speaking of GB Power, and also you hear about nationalisation or quasi-nationalisation of the railways. What do you make of the concepts like GB Power? 

GJ: Yeah. I don’t assume there’s any read-across from railways. It’s a completely completely different sector. And the truth while you take a look at power, I imply, to start with, GB Power isn’t the type of nationalised power provider, which is sweet, by the way in which. I imply, power retail is among the best sectors within the UK. Margins are 2%, if power firms are fortunate. 

The large drawback in power is the remainder of the associated fee stack. It’s largely these sorts of very regulated, typically monopoly elements of the system, which want reform. And so I believe if GB Power is about, for instance, serving to pioneer stuff that isn’t but prepared for market danger…I imply, take tidal for instance. Possibly we must always have tidal energy, perhaps GB Power can be an effective way of kick-starting that, in the identical approach as authorities subsidies kick-started a variety of wind and photo voltaic. However, more and more, we might run wind and photo voltaic on a service provider foundation, i.e. an unsubsidised foundation in lots of power programs for those who’ve had the market reform I talked about. So, if GB power helps kickstart stuff we’d like, that may be unbelievable.  

If GB Power helps get authorities backing for initiatives to allow them to, for instance, overcome a number of the planning and connections points that I’ve described, that may very well be nice. So it actually is dependent upon the position GB Power is enjoying. 

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CB: Earlier than we began talking, I used to be taking a look at this Ladybird guide from 1981, which I picked up from a charity store, speaking about power conservation. Clearly, no matter that’s, 40-odd years in the past [and we’re now] speaking about 2050 [for net-zero emissions]. What, in your view, does the UK power system, EVs and all the remainder of it seem like then? What does the UK seem like in 2050? And what does it have to seem like?

GJ: So, to start with, I suppose the query right here is, if this [book] was roughly 30 years in the past and 2050 is roughly 30 years away…how effectively did this predict the place we’re at present? Or how dated does it look, proper? 

Look, I believe an actual problem with targets like 2050 is that nearly everybody who units these targets shall be retired by then. They’re not chargeable for it. Certainly, nearly everybody who’s working for them shall be retired by then. It’s extremely straightforward to set a goal that you just’re not going to be round for. 

So, I’m rather more of a believer in setting a lot shorter time period targets. And provided that we’ve got the applied sciences we’ve got accessible at present, we will set actually difficult targets. If you’re speaking about 2030, for instance, net-zero electrical energy, that’s a way more tangible time. As a result of it tells us concerning the selections we have to make proper now. 

I believe one of many attention-grabbing issues about predicting the longer term, is how flawed we get it, particularly in sectors like power, the place you’ve obtained very highly effective incumbents who’ve very robust views about what the longer term shall be, however are sometimes flawed. I imply, Kodak’s view of the longer term was flawed, Nokia’s view of the longer term was flawed, Blockbusters’ view. They have been all flawed. However they didn’t get to foyer for his or her view of the longer term, they only needed to compete. And the market and know-how made the choice for them. 

So I believe if I take a look at power, wind and photo voltaic, [they] have repeatedly overwhelmed each goal. They get cheaper, sooner than anybody’s ever estimated. And it retains on occurring. It’s like Groundhog Day while you take a look at the revised forecasts, as a result of each forecast that comes out, type of seems to be again and goes: “Whoops, we underestimated how effectively photo voltaic would do or how effectively wind would do.” After which they make an estimate, after which they should go and do the very same course of once more as a result of it retains beating it. 

It’s been the identical, by the way in which, with batteries. Battery costs carry on plummeting approach forward of expectation. And EV adoption has saved on accelerating forward of expectation. So, all of the clean-energy applied sciences beat the forecasts. 

By the way in which, the one ones that don’t are the dirty-energy applied sciences. Nobody forecast the horrific gasoline disaster we’ve simply lived via. Nuclear retains getting – and I’m not anti nuclear – however it retains getting costlier and slower than anticipated. And so I believe the problem with setting issues like 2050 is, if we begin constructing infrastructure primarily based round our greatest guesses now, it’ll nearly actually under-deliver and it’ll price an excessive amount of. We’re much better off with the type of issues I talked about at first, which have been market reforms, so we will quickly deploy the applied sciences we’ve already obtained.

An unbelievable factor that occurs in know-how is, every time you deploy one thing, it teaches you about what is feasible. When the iPhone launched, nobody foresaw that QR codes would get you out of a pandemic, or that Uber would change the worldwide cab business. 

In the identical approach, for instance, we’re already discovering that if we give individuals, if we combine our applied sciences straight with individuals’s electrical automobiles, we will cost them at three or 4 occasions lower than grid price, as a result of we’re capable of seize the electrical energy when it’s most considerable. That signifies that, at present, for a few of our prospects, they will drive electrical automobiles for £2.30 for 100 miles, whereas with a diesel automobile it will be £18. 

Now, nobody forecast that type of factor. It’s simply what we uncover, once we construct out new know-how. And that’s why, you already know, I actually consider we’d like the reforms to allow us to construct the know-how. And we’ll uncover it will get cheaper, sooner, simpler and higher for shoppers, way more rapidly than anybody realised.

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CB: What do you make of the present temper in sure sections of the media, which could be very unfavourable, relentlessly attacking EVs, electrification, photo voltaic? What’s your view on that? It’s nearly like organised misinformation, it typically seems like. 

GJ: I believe there are two layers to it. I believe a few of it’s organised and a few of it’s cultural.

Let’s speak concerning the cultural first. Let’s take a look at EVs. EVs are usually not simply an electrical model of petrol automobiles, they’re a essentially completely different creation. So, the idea that, for instance, the long-standing automobile makers, the producers of Europe and elsewhere, have been going to have the ability to simply begin making EVs, is type of flawed. Proper? They spent 100 years changing into unbelievably good at complicated transmission and drive shafts and the entire engineering required to take what is definitely a remarkably complicated factor, a petroleum or diesel engine, and switch it right into a shopper machine. 

In the meantime, for the final 20 years a bunch of Chinese language firms that simply got down to construct EVs from the start, or Tesla, which has solely ever performed EVs, have re-engineered automobiles, constructed across the fundamentals of an EV, wherein issues like transmission turns into a lot less complicated, however your skill to construct actually good battery administration, actually good software program is definitely a aggressive edge. 

Now, what we’re seeing in the intervening time is EVs rising that conventional automakers discover very, very troublesome to compete with. And, so, their reply is: “Dangle on, we will’t generate profits in EVs. Subsequently, one thing’s flawed with EVs.” As a result of no firm ever says there’s one thing flawed with us. 

Now, that signifies that everybody in these firms, there’s large numbers of individuals there, good individuals, however which can be genuinely pondering EVs are too onerous, they’re too difficult, they’re not going to work. And so they’re the those who have a 20-year relationship with motoring journalists. Their lobbyists have had the 20-year relationships with the political correspondents, their CEOs are those which have the relationships with the enterprise journalists and with the editors. So, this isn’t a conspiracy, it’s simply that these firms are going through existential risk from one thing that’s actually difficult for them. And that signifies that all of the conversations these individuals have are concerning the issues with EVs, proper? 

Now, really, I’ve lived with an EV for seven years. There are very, only a few issues with an EV. And, you already know, for instance, the newest technology of EVs are getting cheaper and cheaper and cheaper, as all of the know-how scales up. And we get these nice price curves as batteries come down. However these automakers are usually not seeing it, in reality, this can be a risk to them. 

So, I believe the first layer right here is just that the influential individuals within the motoring business, merely don’t get EVs. 

I believe the second factor is, after all, there’s a backlash from the fossil gas business, together with some automobile firms, as a result of, even at present, I believe EVs have taken 1.8m barrels of oil off the street per day. Proper? That’s sufficient that the worldwide oil business is immediately seeing what used to seem like a minor inconvenience sooner or later is immediately an actual and current hazard. Now, we noticed the power of the tobacco business to foyer in opposition to tobacco restrictions. The oil business is vastly extra highly effective than tobacco ever was. And so, on prime of the type of cultural factor that I’ve described, you might have then obtained a real concern and lobbying efforts. 

And I suppose the final a part of that’s cultural wars. There are organisations who deny local weather change, who’re combining anti-climate change with anti-EV, with anti-renewables and a complete load of different social subjects to try to create political divides. That’s why after I speak concerning the market reforms that may make, for instance, clear power cheaper, it’s so crucial, as a result of if we will present individuals this transition is sweet for them, we type of undermine that try at a tradition conflict. 

I spend a variety of time speaking to, for instance, individuals on the political proper, as a result of they’re free entrepreneurs. They consider in entrepreneurship, they consider in effectivity and speaking to them about the way in which wherein renewables and EVs can result in a extra environment friendly aggressive world. Truly, we make the tradition conflict go away and we speak concerning the economics as an alternative. After which we will align individuals’s self-interest with that business, with that of the local weather.

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CB: Speaking a couple of tradition conflict, we clearly obtained an election right here within the UK looming, however we’ve clearly obtained a US election looming too and a really, very stark selection between a Biden versus Trump presidency. In that context, given what the Trump 1.0 presidency did, what do you make of the Paris Settlement? Clearly, Trump tried to tug, or did pull the US out of it after which Biden reinstated it. Do you assume the Paris Settlement has achieved issues up to now? Is it the worldwide framework system that we’d like, or not?

GJ: I’m typically impressed that almost all governments actually do take the commitments they’ve made critically. And, even, whereas on a political stage, I’ll typically hear these type of culture-war discussions, beneath that, you see the actual actions. 

Now, the US has clearly swung massively since you had the Trump rowbacks, however you then had, beneath Biden, the IRA [Inflation Reduction Act], which, by the way in which, is a really bipartisan programme. I communicate to individuals from the US administration and, simply yesterday, [we talked] concerning the type of danger of a rowback relying on what occurs in November and their view is, after all, there’s a very actual danger. 

However a variety of what the IRA has performed has been in pink [Republican] states. The Biden officers discuss touring America and assembly all these mayors, Republican mayors and governors in pink states, who’ve seen the advantages of jobs and the economic regeneration created by it. And so that you hope that a variety of that may imply that the underlying programmes survive any political change. 

I believe when it comes to the worldwide image, we’ve additionally obtained to be a bit trustworthy about this. Paris was about 1.5C. I believe final yr we exceeded 1.5C. Now, local weather comes and goes, it’s crucial all of us recognise that, however, we’ve obtained to simply accept that we’re going through an accelerating problem and we’ve obtained all of the instruments to resolve it. 

I believe the place that we actually want political management now could be to have the ability to take a look at industries and say: “Look, some industries are going to be the longer term. And their success is just not solely going to profit the local weather, it’s going to create extra financial alternative than we lose as we permit some industries to start out declining.” And so they’ve simply obtained to be courageous about this. 

I noticed that G7 has simply agreed to phase-out coal by 2035. [Laughs] I imply, you might be proud to be British on this one, as a result of that is our final coal yr, and even then it’s miniscule. The concept that we in some way want these types of power for one more 11 years is mad. And, so, I’m concurrently happy that governments actually do take these commitments critically. However I’m additionally apprehensive that they fail to understand the chance that a much more speedy change might ship better financial development, better outcomes for his or her residents, than of their present form.

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CB: Clearly, taking a look at this [Ladybird] guide, and searching again over earlier many years, I’m all in favour of your individual private epiphany, for those who like, on local weather change. What was the factor, that second…was it a guide, TV programme, movie, a lecture, a dialog with a colleague or member of the family, the place the penny actually dropped and also you thought: “OK, local weather change is a factor and it’s fairly rattling critical”?

GJ: I used to be a toddler within the 70s and I joined Greenpeace after I was 15. And the factor that first obtained me into it was really native air air pollution greater than local weather. As a result of again then you might actually see the diesel fumes belching out the again of buses, out of automobile exhausts, typically very seen, and you might actually odor and really feel it within the air. And I assumed it was fully unacceptable, that one individual’s option to drive a automobile that did that created this large unfavourable influence on the individuals behind them. 

And also you keep in mind that when leaded petrol was banned, which was performed nearly in a single day, it was due to the influence on children’ brains in dense city areas with a variety of automobiles. It’s simply unconscionable. And I believe again then what you might see was that there have been clear options. This wasn’t about sackcloth and ashes. It wasn’t asking individuals to surrender the large advantages of commercial progress. It was simply we would have liked methods to allow individuals to decide on higher options on the identical or decrease price. 

And in order that was all the time my philosophy and I believe, as I grew to become increasingly conscious of local weather change, precisely the identical utilized. 

Now, I believe the actual two factors of epiphany for me on local weather have been, to start with, realising there’s an answer. I believe for a very long time, you type of really feel like, how can we energy our society with out burning stuff? And you then take a look at the associated fee curves for photo voltaic and wind and all the opposite applied sciences. And, truthfully, it’s going to be cheaper to cease burning stuff. That was an incredible second, after I realised that we didn’t have to rearrange the forces for saving the planet in opposition to the drive of economics, as a result of they really lined up. 

I believe the second factor was Al Gore’s film, An Inconvenient Sequel. We’d really began this firm, we began the corporate in 2015-16. In 2018, it regarded like we have been doing fairly effectively. And we went away for a few days for a administration off-site. And, after a tough day slaving over clipboards or no matter you do, I organized for everybody to look at a film and so they all got here in and I believe they thought that we’re going to get one thing enjoyable. And when An Inconvenient Sequel opened up, all of the individuals within the room, you might see their faces drop, as a result of I used to be forcing them to look at one thing worthy. 

However you already know what, 5 minutes in, everybody’s WhatsApp messages begin pinging, and it was like, “wow, we’ve got to do extra”. As a result of it was displaying the very actual results of local weather change, which, by the way in which, are solely worse now. After which on the finish of the film it had hope, it ended with a deal on photo voltaic for India. And, after all, it was for dramatic impact, however the actuality of that is that we do have hope. 

After the film completed, all of us simply sat down and stated how can we speed up the power our firm has to do one thing about this? And so, I believe, hope is as essential, realizing there’s a answer, is as essential as realizing there’s an issue.

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CB: You could have talked very confidently about the associated fee advantages of wind and photo voltaic and also you talked about earlier how, a few years in the past, authorities auctions made offshore wind look extremely interesting. After which we had a failed public sale and now it seems to be like fairly a distinct image. Warmth pump installations within the UK are nonetheless very sluggish, prices are excessive. The price of electrical energy versus gasoline makes them most likely cheaper to run, however not undoubtedly. How would you reply to a number of individuals saying: “Is it really cheaper? It’s going to be costlier, we have to think about maybe utilizing boilers?” How do you reply to these very critical issues? 

GJ: The very first thing we’re going to do is recognise that at present’s markets don’t replicate the underlying physics and economics, which is why I discuss market reform on a regular basis. The second factor we have to do is recognise that there’s all the time going be short-term blips, these public sale failures have been pushed just by short-term inflation and rates of interest, each of which have been largely the consequence of the gasoline disaster, i.e, our habit to fossil gas is so damaging, it even makes the options to fossil fuels costlier. 

After which we discuss issues like adoption of warmth pumps and so forth. A yr in the past, two years in the past, nobody had heard of a warmth pump. Now, the local weather change denying elements of the media have made warmth pumps well-known. Thanks very a lot. We’ve obtained to keep in mind that we’ve obtained long-term transitions and nearly every thing we talked about there are short-term points. 

So, if we break it down a bit, we will generate electrical energy from renewable sources within the UK, for between 4p and 8p a kilowatt hour (kWh). New technology in photo voltaic and wind can try this. 

Customers historically within the UK have paid 17p/kWh. In the course of the power disaster our payments have been paid for by the federal government, however they went to 40p/kWh or 50p/kWh, proper? I.e. the producing price, the associated fee to generate electrical energy, is approach under what individuals pay. We’ve simply obtained a crazily inefficient system for getting it from technology to consumption. We have to repair that. Which is why that was actually the primary set of insurance policies that I talked to you about.  

Simply by means of instance, electrical energy roughly trebles in worth within the UK between the purpose it’s generated and the purpose you eat it. Milk, which is far more durable to transmit, will get schlepped about in diesel lorries, it must be bottled and pasteurised, is saved on refrigerated cabinets in supermarkets with actually costly actual property. I believe milk goes up by 50% between the farm and the purpose you purchase it. Our electrical energy system is simply essentially far too inefficient. And we’ve got to repair that. And that’s the market reforms. 

However then when it comes to, for instance, working prices of warmth pumps…on a sensible tariff they’re nearly actually cheaper for the overwhelming majority of houses than a gasoline boiler to run. And that’s in at present’s loopy world the place the entire local weather and social levies are sitting on electrical energy. If you happen to take away that distortion, working warmth pumps on electrical energy is dramatically cheaper than a gasoline boiler. 

We’ve nonetheless obtained to make warmth pumps cheaper to purchase and set up. That’s why, once more, going again to first ideas, I used to be impressed right here by Michael Dell, of Dell Computer systems. When he was doing his MBA, he sat in his dorm room and he learn an article that stated {that a} $3,000 IBM PC solely had $1,000 of elements. However, you already know, you had an inefficient provide chain, a great deal of wholesalers and, while you take a look at warmth pumps, it’s simply the identical. So we’ve began making our personal, so we generally is a bit like Dell, by going direct to make them cheaper. And already we’re seeing a giant price profit. However the extra we make investments, the extra we scale up, the extra we’ll see that, and different firms are doing the identical. 

So what we’ve obtained is a state of affairs the place we’re at first of a know-how change. And for those who take a look at the primary iPhones, they price £435 and at present you’d really feel such as you’re holding a brick that hardly carried out. However they have been sufficient to kick begin the smartphone revolution and that’s simply the method we’re going via with the warmth pumps. 

The UK has very particular wants for heating, not solely do we’ve got poorly insulated houses, however we’ve obtained a really temperate local weather. We additionally warmth our houses with moist radiators, whereas most nations that use warmth pumps have used air to warmth the house. And so we’ve wanted to make warmth pumps which can be UK particular. All of that is occurring in the intervening time and it simply offers me large optimism. 

And if I evaluate this to the choice, by the way in which – the concept of, for instance, piping hydrogen into individuals’s houses – I don’t know the place to start out.

We will begin with engineering. Hydrogen is the smallest molecule within the universe. When a rocket launch is delayed by a gas leak, which they’re, that’s hydrogen. Rocket scientists can’t hold it in a really closed and punctiliously designed system. You realize, there are bits of our gasoline community which can be unmapped, which can be 100 years outdated, I believe there are bits of the piping that have gotten wooden in them! Anyplace you’ve obtained a leak, hydrogen can get out. And so, earlier than you may pipe hydrogen [into homes], you’ve obtained to make it possible for each single dwelling, each single inch of each pipe in each dwelling, each valve and each joint, each equipment goes to have the ability to hold the hydrogen in. And that is unbelievably complicated.

I noticed the opposite day a hydrogen cooking hob, with an invisible flame, actually invisible flame. I don’t know why you’d need a type of in your kitchen, so that you’ve obtained an explosive leaky substance with an invisible flame, or you might have an electrical induction hob for roughly the identical quantity. The identical price to run, wipe clear, completely protected, extremely controllable and also you don’t want all these items piped into your private home. 

And that’s simply wanting on the piping, nevermind the place’s the hydrogen coming from! 97% of the hydrogen on this planet in the intervening time is unabated carbon emitting hydrogen. And that is years after we have been advised we’d be beginning to get inexperienced hydrogen accessible. After which, for those who’re going to make use of hydrogen to warmth a house, if it’s inexperienced hydrogen, you’ve obtained to create renewable electrical energy, you then use that to energy electrolysers, you then should compress the hydrogen, pump it into the house and burn it. Finish-to-end, 40% environment friendly at turning the electrical energy you began with into warmth. And, in the meantime, the warmth pump is end-to-end 250% to 400% environment friendly. 

There we go. I’m very optimistic as a result of all you ever should do is return to the physics of these things. 

Oh sorry, the opposite factor you talked about, you already know…is electrical energy costlier than gasoline? Nicely, after all electrical energy is about 3 times costlier per unit, perhaps 4 occasions with the distorting taxes that must be taken away. However electrical energy is a lot extra environment friendly. An EV turns 80% of the power and electrical energy into movement, a petroleum engine is 25%. A warmth pump, you get 300% effectivity effectivity, a gasoline boiler offers you 85%. So electrical energy is a lot extra environment friendly. 

After which the actual magic with electrical energy is that it’s fungible. If you happen to’ve obtained an EV, it might retailer the electrical energy on the most cost-effective occasions, you may’t try this type of factor with gasoline. In reality, more and more, some EVs can put that power again into your own home at peak occasions, lowering your power prices. 

Basically, I believe there’s one factor right here which is that electrical energy places shoppers way more in management. In the event that they select to, they will get photo voltaic panels and largely get rid of their dependence on anybody else. However with fossil fuels, we’re completely depending on the nations and, to a level, firms that present that molecule. One cause they don’t wish to let go is that management offers them energy and it offers them cash. And we noticed that through the gasoline disaster. 

Any comparability of gasoline prices versus electrical energy prices has to keep in mind that, infrequently, we expertise these fossil gas crises, as a result of we’re depending on individuals in management. And through the worst of the gasoline disaster, the worth of gasoline went as much as 30-fold. There was a really actual probability that Europe was not going to have sufficient gasoline. In reality, it’s probably the case that we have been saved from a gasoline disaster by a light winter. 

So we must always by no means permit anybody to get away with this concept that electrical energy is costlier than gasoline, as a result of they cherry-pick the occasions that gasoline is reasonable and so they overlook concerning the occasions that gasoline or different fossil fuels brutalise our economies. I believe it price the UK £100bn, the federal government paid two-thirds of our power payments through the disaster. That’s how dangerous fossil fuels are. 

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CB: You’ve talked already about market reform and the way essential you assume it’s. One of many key arguments from people who find themselves in favour of this transition that the financial system goes via, is that dramatic reform of the electrical energy markets places in danger the investments we have to get 2030, 2035 or no matter our targets are, which at present depends on the system as it’s at present. How do you reply to that?

GJ: It’s simply not true. After all, buyers fairly rightly, when buyers write a big cheque, they’re making an enormous dedication and they should realize it’s obtained a great probability of delivering a return. And, so, each time buyers have gotten snug with a method of doing issues, they after all wish to see that keep on. 

However, to start with, there are many different buyers accessible. While in electrical energy, buyers have lengthy had these type of assured returns via completely different mechanisms, oil and gasoline buyers make their colossal investments in opposition to huge know-how danger, huge political danger and massive market danger. After they determine to start out extracting or to purchase the licences for an oil or gasoline discipline after which make an enormous funding required to extract the stuff. After which large investments in LNG tankers and terminals. They don’t know what the longer term worth of oil or gasoline shall be. And so they can nonetheless make these investments. So you can also make large investments in opposition to levels of uncertainty. 

And what we’ve seen already in electrical energy up to now was, for instance, once we moved to the CfD [contracts for difference] regime, from the RO [renewable obligations] or FiTs [feed in tariffs] or no matter. Lots of buyers stated: “Nicely, that may kill funding.” All of it [still] occurred. 

Equally, once we’ve seen, for instance, plenty of states within the US have launched dynamic zonal pricing, the investments carried on unaffected. So, on the finish of the day, individuals want electrical energy. In reality, the demand for electrical energy is barely going to go up. And when there’s demand for a product, you may spend money on producing it.

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CB: One of many issues that Octopus has been fairly concerned in is the demand flexibility service being run by the electrical energy system operator. And that’s clearly encouraging prospects to chop their use at peak occasions. How a lot significance do you placed on that type of system as we transition to a net-zero energy system? 

GJ: To start with I’d say Octopus was pioneering that for 4 years earlier than the ESO brilliantly launched it. As a result of the type of legacy power system stated: “Clients gained’t do that stuff.” All the things we’d invested in, in trials and experiments with prospects confirmed that they cherished that. 

It was good the way in which the ESO launched it. And Octopus Saving Periods accounts for 50% of the entire participation. As a result of we’d nurtured relationships with prospects. 

These are usually not power geeks, by the way in which. Power geeks have been already on dynamic tariffs and good tariffs, which meant, really, it was type of onerous for them to take part within the Saving Periods, as a result of they have been already absolutely optimised. This was one and a half million for us, one and a half million strange households that lastly had the chance to buy discount electrical energy the way in which that they already do with supermarkets. 

And giving individuals the chance to chop prices, particularly in a disaster, but additionally to have company, to have the ability to make selections, is so critically essential. And I believe that this isn’t about renewables, that is nearly the way in which the power system has handled prospects as dumb offtakers, fairly than them being the very cause we exist. And as quickly as we really embraced prospects, we uncover all these methods wherein we concurrently present them with higher service and higher worth via a extra environment friendly system. It’s simply the equal of supermarkets pricing items to clear, fairly than letting them go off. 

I believe the large problem for the power sector now – and there’s an actual danger that legacy pondering kills this – however the actual alternative and problem is to make this the norm. It shouldn’t be a bizarre add-on in a single winter in a disaster. It’s like every single day, there are a bunch of individuals, turning electrical technology on and off. There’s a complete bunch of firms investing closely in issues like batteries. And the power to shift demand round is simply as massive, a possible contributor to an environment friendly system. In reality, it’s higher since you don’t have to purchase any property. And so I believe we shouldn’t be pondering this has been an add-on system, it’s the system.

It’s insanely standard, too, simply be actually clear. We obtained 100,000 prospects asking for good meters throughout that programme simply to take part.

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CB: The final query neatly segues into this. Expertise is a key a part of having the ability to try this, but additionally your broader pitch to prospects. An enormous a part of this transition to EVs requires integrating very effectively along with your know-how. However how do you take care of prospects that aren’t updated? Who don’t essentially have smartphones, who aren’t digitally savvy? How do you make sure that they’re not left behind? 

GJ: I inform you what, these prospects have been being brutalised within the outdated power business. In the event that they’re calling a legacy power firm that has obtained a 45-minute wait on the telephones and you then get via to somebody and so they can’t provide help to, as a result of it’s obtained to be a distinct division, in order that they promise to name you again and so they don’t name me again, after which they hand me via to a different division, and also you simply do the entire safety questions, simply as they’re closing the road, that was the expertise these individuals had in power. 

So the very first thing is nice know-how allows you to present all people with a greater service. Octopus’s magic is that while you cellphone us up, 95% of the time, the individual you might be chatting with can type out your drawback there after which, due to know-how [which is known as Kraken]. Fewer issues go flawed, due to know-how. 

Second factor is, I’m so sorry, I can’t keep in mind the quantity, however, really, there are comparatively few individuals within the UK that don’t have entry to a smartphone. And if we take into consideration issues like every thing from common credit score to the power to purchase an unlimited vary of merchandise and  companies, it requires a smartphone. And crucial factor is ensuring that wherever somebody has obtained the entry, we allow them to change into a part of an environment friendly system. 

For the very small variety of those who don’t have these applied sciences, it’s not possible you’d have an EV and never have a smartphone. And so a variety of the applied sciences we actually have to optimise to make the system environment friendly for everybody, like EVs, naturally you’re going to discover the those who have the equipment. 

So I believe crucial factor is you take a look at all people, no matter the place they’re, however you don’t get held again by saying that every thing’s common, proper? In any case, Aldi and Lidl, nice supermarkets, however we don’t forestall them from rolling out as a result of some individuals may not be capable of get there. In reality, the extra they’ve rolled out, the extra they’ve been capable of change into nearer to being universally accessible anyway. 

You realize, issues like when the iPhone launched it was £435 plus I take into consideration minimal £35 a month. It was an excellent premium product. However, inside 5 years, it paved the way in which to the $50 Android, $20 Android, the ever-present Android that has remodeled not solely the lives of individuals in rich nations, however many creating nations, too. 

Individuals who attempt to maintain new know-how to the bar of universality are usually defending some type of legacy in opposition to the know-how enhancements that profit shoppers and we must always not have a lot endurance for that. 

For instance, somebody not too long ago wrote to me as a result of their 700-year outdated home had a warmth pump that didn’t all the time work effectively – by the way in which, I believe it was badly put in and we will repair that – however there’s not that many 700-year outdated homes, and I’d like to serve them. However 20% of households don’t have gasoline within the UK, so warmth pumps are held to this concept that they have to work for everybody in all conditions, which, by the way in which, they’re higher than gasoline as a result of each home has obtained electrical energy and solely 80% have gotten gasoline. So even once we discuss universality, we’re normally utilizing it for a false comparability anyway.

CB: Thanks.

GJ: Thanks.

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