Octopus Power raises renewable vitality tariffs, blaming an outdated market and rising fuel costs

The boss of Octopus Power has been compelled to elucidate why its clients’ vitality payments are going up, though the ability provided is ‘100 per cent renewable’. 

Latest forecasts have predicted that Ofgem’s worth cap might peak at £4,266 a yr in 2023, and together with nearly all different vitality corporations, Octopus – the UK’s fourth largest provider – is elevating the price of its tariffs. 

However with the present vitality disaster attributable to the rising value of wholesale fuel, Octopus clients took to Twitter to ask why their payments have been going up, as the ability they get is labelled 100 per cent ‘inexperienced’. 

Greg Jackson, Octopus Power’s founder, took to Twitter to elucidate why the inexperienced vitality agency was elevating its costs, blaming the Nationwide Grid pricing construction and wholesale fuel costs

The UK at the moment has an estimated 9 million households on inexperienced vitality tariffs. Many are clients of Octopus, because it affords completely renewable offers.  

After a buyer tweeted: ‘Octopus is placing our costs up, however declare to be 100 per cent renewable. Did the worth of wind go up lads?,’ Jackson recorded a video explaining why it had taken the choice to extend payments. 

He blamed the best way that the vitality market works within the UK, saying: ‘Within the present outdated system, the costliest kind of vitality (normally fuel) units the worth for ALL kinds of vitality, together with renewables. It is bonkers.’

Jackson defined within the video that the UK has an ‘outdated method of working it is electrical energy market’ and that this had pushed up the price of renewable electrical energy.

He went on to say that corporations like Octopus pay a single worth set by the Nationwide Grid to obtain vitality, no matter whether or not it comes from fossil fuels or renewable sources.

Jackson added that the agency additionally faces additional prices to offset the non-renewable vitality utilized by its clients, and pay for inexperienced energy to be created as a substitute. 

In line with its web site: ‘If you be a part of a renewable provider, there is not a particular “inexperienced grid” that sends renewable-only generated vitality to your house. 

‘We be certain that we’re 100 per cent inexperienced by ensuring that for each electron we provide from the grid, we put money into the technology of one other “inexperienced” electron to take its place.’

The place does my ‘inexperienced’ vitality actually come from?

Choosing a inexperienced tariff doesn’t imply that you simply obtain your electrical energy from completely renewable sources, resembling photo voltaic crops and offshore wind generators.

The vitality comes from the Nationwide Grid, and is the very same vitality that your somebody on a non-renewable vitality tariff with one other vitality agency would obtain.  

April 2022: £1,971 October 2022: £3,582  January 2023: £4,266
Annual  Annual  Annual
£1,000  £1,820 £2,160
£1,500  £2,730 £3,240
£2,000  £3,640 £4,320
£2,500  £4,550 £5,400
£3,000 £5,460 £6,480
£3,500 £6,370 £7,560
£4,000 £7,280 £8,640 
Supply: That is Cash, based mostly on Cornwall Perception vitality worth cap forecasts 9/8/2022 

The Nationwide Grid takes its vitality from a variety of various sources resembling coal, fuel, wind, photo voltaic and nuclear, and that is then redistributed throughout the nation.

At present, round a 3rd of the electrical energy from the Nationwide Grid comes from renewable sources, a 3rd from pure fuel and the rest from different fuels. 

Your family energy is at all times provided from a mix of sources, no matter which inexperienced tariff you have got opted for.

So if Octopus clients aren’t receiving a mixture of renewable and non-renewable vitality from the Nationwide Grid, what makes it a ‘inexperienced’ tariff?

Inexperienced vitality companies have to be required to point out that they’ve taken out contracts with clear vitality producers, made direct investments in renewable initiatives, or obtained Renewable Power Assure of Origin (Rego) certificates.

Rego certificates are issued for each megawatt-hour of sustainable vitality that’s produced. They will also be purchased by suppliers, which implies suppliers can declare to be supporting renewables whereas supplying energy from fossil fuels.

This has led to accusations of ‘greenwashing’, of selling environmental credentials with out really producing clear energy.

How did Octopus clients react? 

Indignant Twitter customers adopted up Jackson’s video complaining about the best way the UK vitality market works, and criticising the hovering income recorded by suppliers.

One consumer (schismmonger) mentioned: ‘You’re a part of the issue. Sure we have to develop renewables but additionally all different sources like fuel, fracking and nuclear. Renewables on [their] personal are ineffective and inadequate.’

Whereas one other consumer (DPawsonGas) questioned: ‘However the place does the distinction (presumably revenue) in worth go??’

Jackson additionally not too long ago informed the BBC that the UK is in a fossil gas disaster, urging the UK to ‘escape from the clutches of fossil fuels’ and transfer to renewable vitality swiftly. 

Talking to BBC Radio 4’s At present programme, he mentioned: ‘You already know, this can be a fossil gas disaster.

‘Make no mistake, the reason for this disaster is that we’re too depending on fossil fuels, typically from regimes the place, you realize, we see what Putin’s doing in Ukraine – the fossil fuels give these regimes each the funding and the leverage.

‘We have to escape from the clutches of fossil fuels. And we have heard fossil gas crises periodically ever since I used to be a child and doubtless earlier than that.’

Mr Jackson mentioned that the UK already had the choice to ditch fossil fuels altogether by shifting to a system powered by electrical energy ‘coming from homegrown renewables’.

He added: ‘We’ve the power to construct a system that is not depending on fossil fuels anymore, and it will likely be cheaper than the one we’re in even earlier than the disaster, and it’ll cease us being on the mercy of crises like this.’

Family vitality debt has already hit at an all-time excessive of £1.3billion as costs proceed rising.

Debt charities have known as for extra Authorities assist after vitality arrears turned the commonest debt kind for struggling households.

In the meantime, campaigns resembling Do not Pay UK have been rising in assist on-line. 

Greater than 100,000 folks have now signed up for the mass-payment strike, regardless of consultants warning of the damaging penalties.

Ten vitality saving ideas

The Power Saving Belief has listed these ten ideas, together with how a lot they might save a typical family might on vitality and water prices per yr. Learn extra on the vitality saving ideas right here.

1. Change home equipment off standby: £55

2. Draught-proof gaps: £45

3. Flip off the lights: £20

4. Wash at 30 levels and scale back use by one run per week: £28

5. Keep away from utilizing the tumble dryer: £60

6. Restrict showers to 4 minutes: £70

7. Swap one bathtub per week for a bathe: £12

8. Do not overfill the kettle and match a faucet aerator: £36

9. Cut back your dishwasher use by one run per week: £14

10. Insulate your sizzling water cylinder: £35

Supply: Power Saving Belief, based mostly on a typical three-bedroom, gas-heated house in Nice Britain, utilizing April 2022 worth cap costs

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