Andy Burnham can slash energy bills by £200 a year with these policies, says Octopus Energy founder
One of Britain’s biggest providers could cut energy bills by almost £200 a year if Andy Burnham reversed one of the previous government’s biggest energy decisions, he said.
Octopus Energy has called on the incoming prime minister to overhaul the market and introduce a system that will reduce the bills of every home and business in the country, saving typical households of up to £114 a year.
The firm said families could save another £75 a year on their electricity bills if the government shifted taxes to general taxation, with higher earners bearing more of the cost through the tax system. The firm said businesses and industry could save a further £6bn a year through market reform, resulting in total savings of up to £83bn by 2050.
But the energy giant warned that reforming the UK’s electricity market would take two years and urged Mr Burnham to take action as soon as possible.
Greg Jackson, founder and CEO of Octopus Energy, said: “The new prime minister has a golden opportunity to turn the tide on energy bills, increase electrification and reduce costs for families and businesses.
“It is clear that market reform has been rejected without a Plan B, and that the path we are now on will lead to rising bills in the coming years. Reversing this would put us in line with many OECD countries and lower costs for everyone without compromising clean energy targets.
“In effect, it will enable us to get more out of wind farms and pay less, ending the chaos that currently has British batteries charging when they need to be discharged, interconnectors importing electricity when we have a surplus and exporting when we have nothing to spare, and paying eye-watering sums to gas utilities to offset this.”
Mr Jackson is a Labor donor and unofficial adviser to Sir Keir Starmer’s government. He is one of the most dynamic technology innovators and has seen his energy grow from its inception into a £20bn company within a decade.
His intervention poses a major challenge for the new government as Mr Burnham has vowed to boost growth in every postcode. This is also a powerful challenge, as energy prices are vital in the government’s fight against the cost of living.
Household energy bills rose by £221 in July, taking the average annual electricity and gas bill to £1,862.
The significant increase was driven by a rise in global energy costs caused by Donald Trump’s war on Iran, and was exacerbated by Iran’s closure of the critical Strait of Hormuz, through which one-fifth of the world’s oil and natural gas moves.
Octopus also warned Britain’s electricity market was wasting billions of dollars, explaining that expensive gas often sets the price even when cheap renewable energy is available.
The energy company said wind farms were shut down when they could have been generating, batteries were being discharged when they needed to be charged, and interconnectors were importing energy when it should have been exported.
Wind farms are paid to shut down because the grid cannot transfer all the electricity they produce, while gas plants are fired up elsewhere. The company warned that this added £1.5bn to household energy bills last year alone and is predicted to rise to up to £10bn a year by 2030 unless the system is replaced.
It said reforming the market would make the system more efficient, unlocking the full potential of wind, batteries, interconnections and flexible demand, and cutting unnecessary grid upgrades that could cost £30bn over 21 years.
This will not only lower costs for everyone in the country, but also provide a boost to renewable energy. A further £20bn could be saved if the full potential of smart grid flexibility is unlocked, Octopus estimates.
