Blackouts and rationing: The Iran crisis is our wake-up call to just how vulnerable the UK is
greg Jackson responds with a rueful smile. “There is evidence that they are listening,” he says of the government. “But there is more low-hanging fruit for them to pick.”
Jackson is the founder and chief executive of Octopus Energy, the UK’s largest electricity and gas supplier. He is a supporter of green energy and is a member of the Cabinet Office Board. “The Iran crisis shed light on our energy needs,” he says. “The UK should not be this vulnerable when something like this happens.”
As the Iran war’s impact on global fuel prices fades, the message is getting through loud and clear. Recent attacks on facilities in Iran, the Ras Laffan complex in Qatar and oil refineries in Saudi Arabia and Kuwait indicate that the crisis is deepening. The UK’s vulnerability to events beyond its control was thrown into sharp relief, as Trump only had to tweet a threat at CAPS that would cause prices to rise even further. Businesses and consumers are understandably starting to panic. They are angry too. Something must change.
Jackson is determined that the UK must quickly review its approach to energy. His is a pragmatic and thoughtful approach that you would want politicians, energy commentators, those with historical interests to follow. The power debate in the UK is mostly binary, with little room for compromise. The result, as shown once again, is exposure.
They could do worse than listen to Jackson, who launched Octopus in 2016 and transformed it from a formidable supplier to a global powerhouse in less than 10 years. Combining technological advances with customer service, Octopus has annual revenues of £16bn, employs 11,000 people in 27 countries on six continents and serves 11 million customers worldwide, including 8 million in the UK. In the process, it has become the UK’s most admired energy supplier, being named a ‘Which? Recommended Provider’ for nine consecutive years.
England needs to step in. The sovereign must have energy, meet his own needs, and not be so dependent on others, yet the combination of “ideology, wishful thinking, nostalgia, and the culture wars,” as Jackson puts it, overwhelms reason. He continues: “The big picture is that the UK became self-sufficient in gas from the mid-80s to the 2000s. Two factors explained this: we produced enough in the North Sea to meet our needs and there was less international gas trade.” Since then, “two major swings” have greatly weakened the UK’s position: “The North Sea has run out of easy-to-access gas, and gas is now traded internationally.”
The North Sea is part of the solution, but only a part and a small part. “We are fooling ourselves if we think we can get enough out of the North Sea in a market where the price is set internationally. So we need to ask: How do you create a safer system with enough supply and the right price?”
He says Iran should “serve as a wake-up call for Britain”. We must re-evaluate and find a cheaper, more efficient outcome.
We must continue to move forward on nuclear, but remember that new nuclear power plants take 10 to 15 years to build and can be costly. This means the private sector takes more financing risks without relying on the public budget.
In the meantime, we must cut our dependence on gas, cut waste, add wind farms and solar power, and install heat pumps in homes where they are suitable. This will help us move closer to self-sufficiency, increase security and mean we are not so dependent on global markets.
Jackson’s recipe also includes reforming how we store more of our electricity. He says it’s “crazy” that we pay wind farms to shut down on windy days. We must store the electricity produced by turbines. We are too concerned about peak demand and peak periods when we need to “store and use electricity and flatten the grid.”
He also says that we urgently need to re-evaluate the huge expenditure planned for new grids and networks. Electricity demand is 25 percent lower than it was 20 years ago, and modern technologies allow us to get much more from existing infrastructure. DLR, or dynamic line rating, is a technology used in other countries to ensure that power lines can handle an additional peak load of 20 percent or more. It’s in very good condition. “We also shouldn’t be paying billions of dollars for expensive distractions like carbon capture and hydrogen. We also need to break the link between electricity costs and gas costs.”
More realism should be implemented. Margaret Thatcher closed coal mines because they were uneconomic; Not because net zero is zero (although he was the first global leader to speak about climate change at the UN; as a scientist, he knew it was real). We have shale gas reserves and can do fracking, but we also have a much denser population and a much less productive geology than the United States, which are enthusiastic supporters of fracking. This means it won’t make sense and won’t make enough sense for the problem.
“Now is the time to act like James Bond, take the threat seriously and plan our options calmly and carefully. A crisis is a time to stimulate reflection on underlying issues,” says Jackson. We’re on our way to an electric, net-zero route; Now we’re reversing that, going quickly in the other direction. “There is no more powerful lobbying and public relations machine in the world than the fossil fuel industry. After the last energy crisis, which cost the Treasury £100bn in subsidy bills, I am stunned that they have regained the debate by claiming that more oil and gas is the only solution.”
Look at Norway, he says. “Only 5 per cent of Norway’s heating comes from fossil fuels. Norway’s forward-thinking approach means 97 per cent of new cars sold in Norway are electric. From where we stand, only 5 per cent of the UK vehicle fleet is electric. As a nation, they are immune to energy shocks. Here we are exposed to a powerful lobby saying we should slow down the rate of electrification when we should be upgrading.”
He says the rhetoric in the UK is “all about charging and batteries, whereas the reality is that most people won’t have to charge very often – the average commute in the UK is just 11 miles.”
Jackson said, “We’re being held to ransom by established European automakers who can’t make money on electric vehicles. That’s because they’re too expensive and they can’t sell them. The problems are inherent in the companies, not ours. Chinese automakers are doing very well on electric, thank you.”
Because they are new companies that understand new technology better. “Look at Rupert Murdoch, the most successful media baron in history. He bought MySpace and destroyed it within two years. Incumbents rarely understand technology.”
“Donald Trump’s ‘drill, baby, drill’ quote may seem sensible, but 10 years of clean energy progress has widened the gap between fossil fuels and electrification so much that the UK looks like an underdeveloped country rather than one of the most successful countries in the world. In the UK, it’s as if we’re all nostalgic for the polluted air of Teesside, where I grew up in the 1980s.”
He says the technology is available for vehicles, for heating with pumps. “It took the Wright brothers 10 years to first fly the planes that would be used in World War I; 15 years from the creation of gasoline cars to the Ford Model T. Technology moves so fast.”
We must move through it and move with it. Instead, we are in thrall to fossil fuel companies and incumbents, and blame clean energy when we should be embracing it.
“Fossil fuel companies have the deepest relationships with governments in 100 years, and the deepest budgets in 100 years,” Jackson says. “They have very low morals, which allows them to say and do anything. They built a pretty solid wall to fight back. We saw it with tobacco. They denied that smoking caused cancer. Then they created a smokescreen, so to speak, of low tar and filters. Finally, they admitted that smoking caused cancer. Every step of the tobacco playbook is repeated, but the fossil fuel companies are even stronger; their resistance to change is stronger.”
Iran is shaken. We’ve been through this before. For him, the choice is to do nothing or use it to reform. Jackson smiles again. He knows the answer. He wants the government and Britain to smile with him.
