How to make green energy cheap energy
Green policies don’t win votes unless they cut bills too. Britain has a chance to transform its system to make energy affordable and grow the economy at the same time, says Octopus Energy Generation CEO Zoisa North-Bond
The government’s clean power 2030 action plan is looking to ensure the economic benefits of clean energy and net zero are felt by people across the country.
Slashing red tape for grid connections, overturning the onshore wind ban in England and allowing more special offers to reduce energy bills are steps in the right direction.
But we need to keep our eye on the ball. Any policies need to help deliver cheaper energy bills and put new infrastructure like wind farms in the right places.
This comes at a poignant time – and couldn’t ring truer. We’ve seen from the outcome of the US election this year that green policies that don’t cut bills don’t win votes.
While the US Inflation Reduction Act unlocked significant investments in green industries and turbo-charged the renewables rollout, it didn’t put more money in Americans’ pockets.
Without tough decisions, Britain risks following the same path. UK households currently face the highest electricity bills in Europe – but it doesn’t have to be this way.
We can learn from this, be bold and make some vitally important decisions that will ultimately transform our energy system, so the greenest electron is the cheapest electron too.
With the right mindset, we can unleash a global green revolution that makes energy affordable for everyone and grows our economy.
Stop wasting wind
We have a world-leading offshore wind programme and have made major strides in renewable energy. Solar and wind power are already the cheapest ways to generate electricity – and unlike gas, they don’t cook our planet.
But the outdated rules that govern our energy system mean a huge amount of this homegrown green energy simply goes to waste.
You’ll be shocked to learn that the UK pays millions to shut down Scottish wind farms when it’s windy and turn on gas power stations in southern England instead.
The UK pays millions to shut down Scottish wind farms when it’s windy and turn on gas power stations in southern England instead
Last year alone, this cost consumers around £1bn and wasted green electrons that could have powered over a million homes.
The worst thing is, there’s no end in sight. If this unsustainable status quo remains, the costs of running this broken system could rise to more than £6bn by 2030.
Reinventing the rules of energy
The problem is our energy system is decades out of date, designed for fossil fuels rather than renewables. Imagine having the latest Macbook Pro and running it on Windows 95 – that’s how outdated our energy system is.
The way our energy system is currently designed means all households pay the same high prices. It’s like everyone in the country being charged London-level rent.
What we need is an overhaul – a software update for our energy system.
Price signals exist in many other industries – think supermarkets or airlines – and indeed in energy in lots of other developed economies like Norway, Italy, or Sweden.
A modern market that reflects regional energy availability could cut energy bills by £2bn immediately and save over £30bn over the next 15 years. In this system, all households would see bills drop, with regions rich in renewable infrastructure seeing the biggest savings.
What’s more, it would drive investment from energy-intensive businesses like data centres and factories to areas where green energy is abundant.
Imagine having access to cheap energy when the wind is blowing or the sun is shining locally instead of wasting it.
It’s not a bug, it’s a feature
But what happens when the wind doesn’t blow and the sun doesn’t shine? Well, it’s always windy and sunny somewhere, and more interconnectors would allow us to export excess green energy when it’s abundant and import it when needed.
In addition, the nature of these zig zags in green generation creates huge opportunities to reward consumers for flexible energy usage. It allows households to store excess green electrons in their batteries or electric cars and sell them back to the grid.
The UK is already a world leader in this space. At Octopus Energy alone, millions of customers have embraced smart tariffs and collectively saved over £100m.
Britain has a major opportunity to lead the global transition to a greener, cheaper and fairer energy system. But that is going to take more than just building new renewables. It’s about having a system that makes the most of them, as well as rolling out new technologies and electric products that can help save the planet and our wallets.
The Prime Minister has made the direction of travel clear – and being voted in with a mandate to push ahead with green policies is just what we need to get the wheels in motion.
The renewables push worldwide is massive and other countries are catching up fast, so we need to take this chance now and make some brave decisions – and quickly – on what we want our energy system to look like. If we do this, we can demonstrate to the world that clean energy can be cheap energy too.
Zoisa North-Bond is, CEO of Octopus Energy Generation