Octopus Energy CEO: Powering bargains with renewables
Octopus Energy has grown to become the biggest energy company in the United Kingdom, serving a total of 7.4 million households. As Jackson observed, “We’re growing rapidly in France, Italy, Germany and Spain. We got renewables in 20 countries. And yet half the value of our company is the technology that digitizes the energy. The secret of the growth has been that we used digitalization to turn renewable energy from a back-end industry hidden from the public into something that the public desperately want to buy.”
Not only does this stimulate the deployment of renewables, but it helps to counteract the rising backlash against green energy. As Jackson remarks, “citizens are being told that [green energy] is pushing their energy bills up.” Part of the problem are “old market structures” that cannot properly handle the surge in renewable energy. Instead what is needed is putting renewable energy plants into “a flexible digitalized system” to unleash their full potential and stop the current curtailment crisis. According to Jackson, the UK spends “GBP 20 million per day curtailing wind.” Fortunately, “a flexible digitalized system” is not the world of tomorrow; as the success of Octopus Energy shows, “it’s the world of today” in Jackson’s words.
The journey started with the Octopus Energy team experimenting with variable electricity pricing. Thankfully, the experiment showed that households were ready to shift a large part of their electricity consumption out of the most expensive times. The company’s next move was to offer cheap electricity during windy days. Amazingly, 800,000 customers signed up for this offer in just one month. The next step was to create an offer for households in areas with a lot of rooftop solar, but a distribution grid with insufficient capacity to export that electricity to the transmission grid on sunny days. Again, people loved the offer and 80,000 households signed up in that region.
The most recent initiative is Intelligent Octopus, an offer designed for households with an electric vehicle (EV). Tapping “the technology that digitizes the energy,” which for Jackson comprises half of the company’s valuation, along with five billion data points the company captures every day, Intelligent Octopus forecasts how much battery you are going to need every day. According to Jackson, the outcome is a no-brainer for the end-user: three times cheaper than the grid average for EV charging and seven times cheaper than fueling a gasoline car.
The same backlash that is hitting renewables is also cutting demand for EVs. For Jackson that’s unacceptable given the powerful economics in favor of renewables. As he puts it, “It’s absolutely crazy that citizens around the world are beginning to move away from renewable energy and away from electric vehicles because they think it’s a compromise, it’s more expensive, it’s a downgrade. And they only think that because we’re not giving them the benefits of these products and services.”
Clearly Jackson and Octopus Energy are out to change that perception in the European countries they’re operating in. In their home market, the UK, they have already tapped the opportunity created by bidirectional EV charging. If you let Octopus Energy optimize when you charge and plug your car into the wallbox at least fifteen times per month, then the company will give you 20,000 km for free. It’s only a matter of time until public perception will switch and the combination of cheap renewable energy and digitalization (and related technologies like AI) promise to accelerate this shift in mindset, which should also give a big boost to the deployment of renewable energy, helping us get to the goal of tripling renewables globally by 2030.
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