Octopus Energy - electricity suppliy in the UK

overall Rating:

1.75

planets

Elmira Kubenova
7/28/2021
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In England, all electricity supply is distributed to homes via the National Grid. Electricity suppliers buy electricity from generators, or generate it themselves, to supply it into the grid. This power comes from different sources and is pooled together and distributed to the consumers. Ofgem, a government regulating body for electricity and gas markets, issues certificates to renewable electricity generators for each MW of power they produce. Unfortunately, companies like Octopus Energy can purchase those certificates separately, whilst buying electricity ‘wholesale', possibly from non-renewable sources. I feel that this certification scheme provides an easy way for companies to greenwash their customers into believing that electricity they use is renewable, whist not being transparent about their actual sources. In addition to this, another issue in switching to renewables is matching supply and demand, since there is no (or little) storage capacity in the grid. Octopus Energy's approach to this problem is to encourage a shift in consumer habits using various tariffs and smart technologies. Overall, I am dissapointed at the lack of transparency within this sector overall and Octopus Energy in particular, but I appreciate their innovative approach.

what it's made of:

1

Octopus Energy claims to provide 100% green electricity. In England, each renewable energy generator is issued a Renewable Energy Guarantee of Origin (REGO) certificate for each MWh of power they produce. Electricity suppliers can then purchase that electricity from them to input it into the National Grid to supply their customers. However, these certificates can be purchased separately from electricity by companies that want to claim that they are 100% renewable whilst purchasing energy from non-renewables. REGO certificates can also be used by those companies when writing their annual Fuel Mix Disclosure report, so a company can be ‘green’ on paper. Octopus Energy has openly stated on their website that they buy their electricity ‘wholesale’ and then purchase those certificates separately, thus funding renewable generators. Although this is true, various articles state that REGO certificates are inexpensive compared to electricity (somewhere around 30-50p per megawatt). Having said that, Octopus Energy and their sister company Octopus Renewables do generate renewable energy and are said to be the largest investors in solar power in Europe. Their portfolio includes solar, wind, biomass and landfill gas that generate 2 TWh annually and have a net worth of £3.4 billion. In addition to this, they buy electricity from 93 independent and 84 community renewable energy generators. I am not certain if Octopus Energy buys any electricity from non-renewable sources, but I feel it would be fair to assume that they do, since they purchase REGO certificates. Overall, I am disappointed at the lack of transparency, and I feel that some of the wording on their website could be misleading for customers. 

how it's made:

2

One of the challenges of switching to renewable electricity is bridging the gaps between supply and demand, since renewable sources often depend on weather conditions at the time. Thus, at peak demand (4-7pm) renewables may not supply enough and at lower demand, renewable energy could be wasted if no one is using it. Octopus Energy has several different schemes to shift the demand patterns to meet the supply, including their partnership with Amazon Alexa and different tariffs to encourage a change in consumer habits. Their tariffs include: Agile Octopus with prices changing every half an hour depending on demand and amount of renewable generation in the grid, Octopus Go – a tariff for electric vehicle owners with lower prices overnight to allow them to charge their batteries and rewards for discharging their batteries back into the grid during peak demand and Supergreen – allowing customers to offset emissions of their natural gas usage by planting trees in the UK and funding Renewable World (a UK-based charity working to provide renewable electricity to people in low-income areas). Their partnership with Amazon Alexa (as well as platforms that they have developed) will enable the use of smart devices to shift usage to times when renewable energy is generated. I like the approach that Octopus Energy has taken to shift consumer habits and I hope it proves effective in the future. 
Octopus Energy has stated that their renewable energy generation is saving 1.8 million tonnes of CO2 a year compared to an average supplier in the UK. Whilst operational emissions of most renewable sources of electricity are zero, manufacturing, transportation and maintenance of solar panels or wind turbines will still have a significant carbon footprint. Octopus Energy have not openly accounted for those emissions and have not been transparent about them.

who makes it:

2

Octopus Energy is part of the Octopus Group, a financial services and energy firm, 75% owned by it's employees (it is not clear to me who owns the other 25%). Octopus Group is B corporation certified, having achieved 94.2 points on their assessment, although it is not entirely clear what that score means or where it comes from. This group also owns a charitable foundation, Octopus Giving that donates £300,000 every year to charities like FoodCycle, Choir with No Name, MyBnk and Downright Excellent. Octopus Energy's subsidiary company Kraken Technologies is allowing other electricity suppliers to use a platform it has licensed to improve their customer service. This company has excellent customer service as shown by their 5-star rating on Trustpilot, as well as their 2019 Company of the Year Award for their customer service from the Association for Renewable Energy and Clean Technology and the 2020 and 2021 Uswitch Energy Supplier of the Year Awards. In addition, their average bills are £95 per household per month, which is similar to the average across UK. Overall, I appreciate that the company wants to make renewable electricity affordable, but I feel that they could be more transparent.