7th November 2020

The Answer, my friend: now is the time to lean into wind

Pete Miller, Head of Customer Experience

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It would appear my email of Thursday was not well received in the Clark household.

“If it wasn’t miserable enough being told that I have to spend the next month at home,” Mr Clark writes “now I have ‘Pete’ from Octopus Energy emailing me and asking if I would mind terribly turning off a few appliances between 4.30pm and 6.30pm.”

I’m delighted to learn Mr Clark is a customer of Octopus Energy – thank you. The email in question was an invitation to take part in a smart energy trial we were running.

This experiment offered everyday customers free electricity in return for halving their energy use during two specific hours.

During those two hours, National Grid was planning to offer up to 10 times the normal price of electricity to fossil fuel generators as an incentive to switch on and help meet demand (Mr Clark is mistakenly under the impression Octopus Energy had to pay these prices, but our prices are hedged and fixed months ahead).

Mr Clark has ascribed this week’s difficulties in balancing the grid to our “over-reliance” on renewable wind generation.

It would appear Mr Clark wasn’t factoring in the planned outages of several of the country’s nuclear reactors – so often touted as bastion of reliability against the whims of renewable energy – nor the long-term unavailability of three gas power plants after their owner entered administration.

But what strikes me most about Mr Clark’s writing, is he seems to be of the impression price volatility in energy is a new phenomenon – a symptom of the “smart electricity grid”.

Of course financial traders have been making the most of the ups and downs of energy markets for decades – the actual new news here is that technology now allows customers to benefit from these movements, rather than just the city boys.

And what a time to be joining in: according to the IEA, solar PV is now the cheapest form electricity in history, coming in cheaper than the cost of new gas or coal fired electricity all over the world, and wind power is there or thereabouts, and both are getting cheaper year in year out.

Simple economics is driving the renewable energy revolution as much as the imperative to tackle climate change. Put simply, with no input costs, wind and solar are incredibly cheap – and our grid is increasingly benefiting from this.

Indeed, thousands of Octopus customers have been enjoying cheap – even free – energy from the abundance of renewable electricity over much of this year.

Customers on Agile Octopus, our smart energy tariff that follows the half-hourly wholesale prices, have actually been paid for the energy they’ve used on more than 20 different occasions over the past 12 months, as plentiful renewable energy has driven prices into negative figures.

I often talk to Agile customers who average sub 10p / kWh prices – a good 30% less than today’s cheapest fossil-fuel deals.

Which should go some way to allay Mr Clark’s sense of impending doom over the lack of battery storage, which he bemoans as essential, and yet too expensive.

What better way to improve the economics of batteries, than to allow them to make the most of that volatility, and be paid to soak up the glorious excess produced by a country uniquely blessed with easily captured wind energy.

And like other technologies, batteries are getting cheaper every year. Lithium Ion batteries have fallen from $1160 per KWh to $153 over the last 10 years, and continue to fall.

Electric cars are rapidly becoming the new normal, with sales 185% up on a year ago. At this rate, we’re just three or four years from these being the most popular cars.

With the ability to soak up abundant green electrons in batteries parked in streets and garages across the country, they’re the perfect accompaniment to a dynamic energy system.

The paradox of Mr Clark’s fulminations is that if he is fond of fossil fuels, he can just ignore my email and pay what he was going to pay, and do what he was going to do.

Should he change his mind about when he wants to use his electricity, as well as how his electricity is generated, then he too can enjoy the economic benefits of the cheapest form of electricity in the history of the planet, and join tens of thousands of customers who have already “gone with the wind”.

I don’t see the downside.

ps. for a read of Mr Clark's article:

https://www.spectator.co.uk/article/gone-with-the-wind-why-electricity-shortages-are-becoming-the-norm/amp

image of Pete Miller

Pete Miller

Head of Customer Experience

Hey I'm Constantine, welcome to Octopus Energy!

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