Towards a fairer energy system

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It might seem like an odd time to talk about fairness in energy; in the middle of a crisis when things seem so very unfair. But for years, people have been saying that our antiquated, dirty, centralised energy system has been a source of unfairness and injustice in our society; the energy crisis of 2022 - driven by issues with gas supply - is just the latest item on a long list. 

Renewables provide part of the solution, they’re already making energy greener, more secure, and less expensive than it would be otherwise… So the big question is this: how do we use renewables to build an energy system that works to make the world a fairer, cleaner, greener place?

Our dirty energy system: a climate disaster

One obvious source of unfairness is the climate emergency - and our energy systems happen to be at the centre of it.

It’s a story most of us know well by now: The UK’s energy grid was designed around large, dirty, expensive fossil-fuel-burning power plants, and that’s only just beginning to change.

image of a smokestack pouring smoke

To make matters worse, we’ve exported our energy system all over the world, with carbon copies cropping up over all industrialised and industrialising nations. In the mid-twentieth century people began to realise that all the coal, oil, and gas we’d been spewing into the atmosphere had been trapping heat. In effect, we’ve been turning the Earth into a giant greenhouse; raising temperatures - and so sea levels, and creating ever more extreme weather events, from hurricanes to droughts.

Now obviously the climate crisis feels unfair in a general sense - none of us really had a say in all of this (we’ll come to that in a minute). But it’s also unfair in a much more immediate way.

Over the last few decades, study after study has shown that those who contribute least to the climate crisis experience its very worst effects. Here in the UK, people who are worse off generally have far smaller carbon footprints on average, yet are much more exposed to the impacts of the climate crisis. To take just one homegrown example, when Shropshire was affected by flooding associated with Storm Ciara and Storm Dennis in 2020, those who were less well off - and unable to pay for flood insurance (often upwards of £7,000 in those areas) - were left far more exposed, and came off far worse. This same disparity is repeated all over the world, and is especially visible in Asia, Africa, the Middle East and South America. 

How’s any of that fair?

Given that today, our energy system still relies on burning fossil fuels, all this climate injustice has been hard baked into the system, but fortunately, efforts are underway to fix this mess..

Renewables: a fairer way to keep the lights on

A graphic showing that while in 2019, renewables made up just 10% of the energy in the grid, in 2019, they made up almost 40%

One obvious way to make energy fairer is to remove the harmful, expensive fossil fuels at the centre of our system. Renewables like wind turbines and solar farms are, of course, an invaluable tool in this fight.

Given that they don’t burn any dirty fuel to run - and so have a much lower carbon footprint - they don’t exacerbate existing climate-related injustices in the same way. And as they continue to outperform, and replace fossil fuel generators, renewables reduce climate related injustice, making the system fairer overall. 

Here, Octopus Energy is helping to lead the charge

Octopus is one of Europe's largest investors in renewables: operating £4 billion worth of green energy generators across 7 countries - enough to power 2.1 million homes. In fact, we run 1 in 10 solar farms across the UK. And we're not stopping there. Earlier this year, for example, Octopus Energy Generation signed deals to boost its wind capacity by 90% - enough to power half a million more homes. (Find out more about Octopus Energy Generation).

What’s more, as one major study explains, undoing dirty energy options ‘is needed as much as installing renewables in order to achieve a higher level of energy equity’, and fortunately, we're working hard in this arena too.

When it comes to ending our reliance on gas, electrification is key. With an increasing portion of our electricity coming from cheap, green renewables, electrification is good for the climate, for energy security, and for our wallets.

An image of a heat pump

With that in mind, Octopus has set up a multi-million pound program for the decarbonisation of heating, aimed at reducing our dependence on gas and providing cheaper, fairer, greener heating to people across the UK. This is vital, because it reduces per household gas consumption by an average of 80%, massively reducing our reliance on fossil fuels overall, bringing down the price of energy for everyone, and making crises like the one we’re in at the moment much less likely.

In a similar vein, Octopus Electric Vehicles are driving down the price on EVs, reducing our dependence on fossil fuels by working to help phase out fossil fuelled cars. 

An graphic, showing two runners - one renewable themed, and one coal themed, with the renewable runner in the lead

Dirty fossil fuels = unfair pricing

Recently, the price of fossil fuels has skyrocketed, leaving people struggling the world over. Renewables on the other hand, remain the world's cheapest energy sources. Even without subsidies – renewables were cheaper than gas and coal long before the energy crisis. What’s more, because the ‘fuel’ they use to run (sunlight, wind, and waves) doesn’t cost a thing, renewables aren’t exposed to the same risks as fossil fuels, and so those risks aren’t passed on to energy users.

In this current crisis, for example, a supply bottleneck, due in part to the Russian invasion of Ukraine, is responsible for pushing gas prices to record highs, but it’s much more difficult to imagine an issue like that in a system with renewable energy at its heart.

The current crisis has also made it that much clearer that our wider energy pricing system could be a whole lot fairer; there are clearly issues with how the costs are distributed.

For example, in the UK's system, there's a single, constantly-changing 'wholesale' price that applies to all types of energy, and that price is dictated by the most expensive energy source. These days, this generally means cheaply generated renewable electrons cost the same as outrageously expensive gas-generated ones. And so customers (and suppliers) don't save money by buying green power. We've long been calling for this to change. Here's Octopus CEO Greg Jackson explaining how the system works.

Promisingly, the government have recently announced a major review.

Fairer energy doesn’t just mean greener energy generation, or cheaper pricing, it means a fairer energy system overall

The thing is, our fossil-fuel-based energy system isn’t just unfair because of all the carbon it spews into the atmosphere - or because fossil fuels are more expensive. It’s also unfair in the way it’s been organised.

When most of us think about energy, we picture power plants, pylons, and plug sockets. The thing is, energy isn’t just technological - it’s social - it impacts almost every aspect of our lives.

Sure, it’s the reason the lights come on, but not only does energy underpin the vast array of technology that we rely on, it also has a huge amount to do with the way our world is organised; from the design of our cities to the workings of our economies.

Energy has been central to the transformation of society over the last 200 years. In a quest to overcome the huge initial costs needed to get an industrial energy system off the ground, and later on, for ever greater, and more efficient generation, the original planners of the energy grid pursued an evermore centralised system. At its heart, they placed huge, dirty, powerplants. These, in turn, were supported by subsidised railway networks and a spidery transmission grid to send energy to the industrial towns and cities that grew up around them.

What’s more, in their quest for centralisation, those who presided over the energy system also increasingly centralised control over that system, distancing its design and day-to-day running from local decision-making processes. In other words, the energy system we’ve inherited is also unfair because people barely have any say in how it’s run. We’ve had little say in deciding what kinds of energy are generated - leaving us exposed to everything from climate issues to bottlenecks in fossil fuel supply, leading to the gas crisis that we’re experiencing at the moment. 

An image of a coal power station in the middle of a town

We haven’t had much of a say about where energy is generated either. For example: historically, smaller, disadvantaged communities have been forced to put up with dirty energy infrastructure, from coal, gas, and oil power plants, to nuclear power stations. These communities have had little choice to weather pollution and other risks - which have become increasingly normalised - while larger, and often wealthier communities in cities far away actually benefit from the lion's share of that energy.

Today, the vast majority of people have been reduced to passive energy consumers, with very little chance to engage, influence and benefit from the energy system in meaningful ways. When it comes to energy consumption, for example, the system has turned into a one way street - consumers use energy, and the grid simply burns more fossil fossil fuels to meet that demand - when it could be engaging energy users in smarter, greener ways.

Energy: decentralised

When push comes to shove, there are lots of different ways a renewable energy future might look. As Zoisa North-Bond, CEO of Octopus Energy Generation, explains:

A renewable energy system has the potential to be just as unfair as our current one – we've got to build a green energy future that centres people, with fairness at its very core.

What Zoisa means here is that you could build a renewable energy-based system that still repeats the unfairnesses of the past. For example, you could still have a centralised, ‘one-way’ system, but merely swap out our huge fossil fuel generators for equally huge renewable ones. Sure, the risk of pollution would be reduced, but people would remain distanced from decision making - unable to engage with or benefit from energy in meaningful ways.

The thing is, renewable generators don’t have to be centralised like fossil fuel generators do. Where it would have once been difficult (and undesirable) to have lots of little, evenly distributed coal based power plants up and down the country, that’s totally possible with renewables. With this in mind, Octopus is pushing for a decentralised, democratic energy system, with fairness at its heart.

The Octopus Collective

Central to the mission is Octopus’ new model - The Octopus Collective, which is already turning energy investment on its head. Here, people have the opportunity to invest in and part-own a local renewable generator - massively reducing the distance between energy users and the energy system. These communities then get cheaper power when the wind is blowing or the sun is shining - allowing them to directly benefit from local generation.

An graphic showing a landscape full of renewables, with a little octopus holding up a sign saying the collective

It’s hard to underestimate quite how big this is. Where governments and energy investors once had to force communities to accept new energy projects, 8,000 communities are already asking for a Octopus Collective-style ‘Fan Club’ project in their area.

So far, two are already up and running, one in Yorkshire, and one in Wales, with communities already benefiting, and thousands more are in the pipeline.

Community energy

In another push for decentralised, democratic energy, Octopus is also supporting ‘community energy’. Here - rather than huge dirty energy generators - people generate energy themselves, supporting their communities in the process.

an image showing lots of communities surrounded by clean energy generators

Via their joint venture with Midlands Cooperative - Younity - Octopus supports the majority of the UK's local, community owned renewable generators, buying the energy they generate to supply customers on Octopus’ Community Power Tariff.

They also help get new projects off the ground, with a £1.5million revolving fund, and are making it easier for customers to invest in community energy projects via their bills too.

Making energy more engaging

Renewable Energy needn’t be such a 'one-way street' either. It’s totally possible to build an energy system where people can engage and benefit in a whole range of meaningful ways. In fact, in a renewable-led system, encouraging people to engage is vital for making the most of our green electrons.

Thanks to renewable energy, we finally face the prospect of virtually unlimited clean, green generation - but we have to work with the natural world, not against it. In other words, we have to be able to line up our energy usage with the availability of renewables, paying attention to when the sun shines and the wind blows - using more energy when they are abundant, and less when they are scarce. Engaging energy users is one way to make this a reality.

With that in mind, Octopus aren’t just pushing for a democratic renewable energy system where ordinary people are closer to supply - we're also opening up avenues for people to engage in energy in ways where everybody benefits.

Smart Tariffs

Octopus’ smart import tariffs, like Agile, Go, and Intelligent Octopus are the UKs very first, designed to reward customers with cheaper rates when they use energy in ways that line up with the availability of renewables. Last year, Octopus’ smart tariff customers did as much as the UK’s largest energy storage systems to help make the most of renewable energy, and saved a pretty penny in the process.

An image of a house with solar panels on the room

Encouraging home energy generation

Octopus also offers the UK’s first smart ‘export’ tariff - OutgoingOctopus. This means that those with home energy generation - like solar panels - and/or home energy storage, are incentivised to sell their energy back to the grid when renewables are scarcer, and can benefit from higher prices at the same time.

Here, Octopus is hitting two birds with one stone. Allowing people to make the most out of their home solar panels further encourages decentralised generation, while giving people more opportunities to engage with the energy system and benefit in the process.

Smart Trials

At the same time, Octopus have been running cutting edge trials to empower and reward customers to collectively change energy use to reduce our reliance on fossil fuels. For example, earlier in 2022, Octopus ran the Big Dirty Turn Down trial, rewarding people for ‘turning down’ their energy usage at a point when energy was in especially high demand, meaning that the National Grid didn’t have to rely on as many dirty fossil fuel generators.

The trial was so successful that the National Grid are going to roll it out across the UK so more people can benefit. By engaging with energy in this way, it's expected people will be able to save £100 a year, while simultaneously making the grid greener.

Lessons from the energy crisis

The current energy crisis is putting huge amounts of pressure on people up and down the country, but being so clearly rooted in our legacy energy system - it’s also showing us what so desperately needs to change.

To guide customers through these tough times - Octopus has chosen to spend hundreds of millions on subsidising bills, eschewing profits in the process. While one company can’t fix the entire crisis alone, Octopus are working to help people everywhere by taking apart the system that exposed us to this particular shock, replacing it with a greener, smarter, decentralised, democratic energy system that will reduce the possibility of crises like these in the future.

Still, when push comes to shove, there are many different ways our green-energy future could look. As we move away from our outdated, unfair, dirty energy system, it’s clear that there’s still tonnes of work to do when it comes to thinking about how the costs and the benefits are shared in whatever system comes next. Even with renewables at the centre - the clean, green, smart system of the future must make sure that people are protected, represented, and empowered, no matter what crops up.

Published on 25th July 2022 by:

image of Jackson Howarth

Jackson Howarth

In-house Writer

Hey I'm Constantine, welcome to Octopus Energy!

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