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Octopus Energy raises renewable energy tariffs, blaming an outdated market and rising gas prices

Octopus Energy’s boss has been forced to explain why his customers’ energy bills are rising, even though the power supplied is ‘100 percent renewable’.

Recent forecasts have predicted that Ofgem’s price cap could peak at £4,266 a year by 2023, and along with virtually all other energy companies, Octopus – the UK’s fourth largest supplier – is raising the cost of its tariffs.

But with the current energy crisis brought on by the rising cost of wholesale gas, Octopus customers took to Twitter to ask why their bills were going up, given that the power they’re getting is labeled 100 percent “green.”

Octopus Energy raises renewable energy tariffs blaming an outdated market

Octopus Energy founder Greg Jackson took to Twitter to explain why the green energy company raised its prices and blamed the National Grid pricing structure and wholesale gas prices.

The UK currently has an estimated nine million households with green energy tariffs. Many are customers of Octopus, as it only offers sustainable deals.

After a customer tweeted, “Octopus raises our prices but claims to be 100 percent renewable. Has the price of wind gone up, guys?” Jackson recorded a video explaining why it made the decision to raise the bills.

Blaming the way the UK energy market works, he said: ‘In the current outdated system, the most expensive type of energy (usually gas) sets the price for ALL types of energy, including renewables. It’s crazy.’

Jackson explained in the video that the UK has an “outdated way of running its electricity market” and that this had driven up the cost of renewable electricity.

He went on to say that companies like Octopus pay a single price set by the National Grid to source energy, whether it comes from fossil fuels or renewable sources.

Jackson added that the company will also face additional costs to offset the non-renewable energy used by its customers, as well as to pay for green power generation.

According to her website, “When you join a renewable energy provider, there’s no dedicated ‘green grid’ that sends only renewable energy to your home.

‘We make sure that we are 100 percent green by making sure that for every electron we supply from the grid, we invest in generating another ‘green’ electron to replace it.’

Where does my ‘green’ energy actually come from?

Opting for a green rate does not mean that you get your electricity exclusively from renewable sources, such as solar power stations and wind turbines at sea.

The energy comes from the National Grid and is exactly the same energy that someone with a non-renewable energy tariff would receive from another energy company.

HOW MUCH CAN YOUR BILLS RISE WITH THE PRICE CAP FORECAST?
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
Source: This is Money, based on Cornwall Insight’s 9/8/2022 energy price ceiling forecasts

The National Grid gets its energy from a range of different sources, such as coal, gas, wind, solar, and nuclear, and then redistributes it across the country.

Currently, about one third of the national grid’s electricity comes from renewable sources, one third from natural gas and the rest from other fuels.

Your household electricity is always supplied from a mix of sources, regardless of which green tariff you have chosen.

So if Octopus customers don’t receive a mix of renewable and non-renewable energy from the National Grid, what makes it a “green” tariff?

Green energy companies should be required to demonstrate that they have contracts with clean energy producers, have made direct investments in sustainable projects or have obtained Renewable Energy of Origin (Rego) certificates.

Rego certificates are issued for every megawatt hour of sustainable energy produced. They can also be purchased by suppliers, meaning suppliers can claim to support renewable energy while providing power from fossil fuels.

This has led to accusations of ‘greenwashing’, of promoting environmental performance without actually producing clean power.

How did Octopus customers react?

Angry Twitter users followed up on Jackson’s video complaining about the way the UK energy market works and criticizing the rising profits recorded by providers.

One user (schismmonger) said: ‘You are part of the problem. Yes, we need to develop renewable energy sources, but also all other sources such as gas, fracking and nuclear energy. Renewable energy on [their] own are useless and insufficient.’

While another user (DPawsonGas) wondered, “But where does the difference (presumably gain) in price go?”

Jackson also recently told the BBC that the UK is in a fossil fuel crisis, urging the UK to ‘escape from the clutches of fossil fuels’ and move quickly to renewable energy.

Speaking to BBC Radio 4’s Today programme, he said: ‘You know, this is a fossil fuel crisis.

“Make no mistake, the root of this crisis is that we are too dependent on fossil fuels, often on regimes where, you know, we see what Putin is doing in Ukraine – the fossil fuels give those regimes both funding and leverage.

‘We need to escape the clutches of fossil fuels. And since I was a kid and probably before that, we’ve heard the occasional fossil fuel crisis.’

Jackson said the UK already had the option to phase out fossil fuels altogether by moving to a system powered by electricity “from homegrown renewable sources”.

He added: “We have the opportunity to build a system that is no longer dependent on fossil fuels, and it will be cheaper than the system we were in, even before the crisis, and it will prevent us from at the mercy of crises. similar.’

Household energy debt has already reached a record high of £1.3 billion as prices continue to rise.

Indebted charities have called for more government support after energy delinquencies have become the most common form of debt for struggling households.

Meanwhile, campaigns like Don’t Pay UK are growing in online support.

More than 100,000 people have now signed up for the massive payment strike, despite experts warning of the negative consequences.

Ten energy-saving tips

The Energy Saving Trust has listed these ten tips, along with how much they can save an average household on energy and water costs per year. Read more on the energy saving tips here.

1. Switch appliances off standby: £55

2. Draught-Free Openings: £45

3. Turn off the lights: £20

4. Wash at 30 degrees and reduce use by once a week: £28

5. Avoid Tumble Drying: £60

6. Limit showers to four minutes: £70

7. Swap a bath for a shower a week: £12

8. Don’t overfill the kettle and fit a tap aerator: £36

9. Reduce your dishwasher use by once a week: £14

10. Insulate Your Water Heater: £35

Source: Energy Saving Trust, based on a typical three-bedroom gas-fired house in Great Britain, with April 2022 price caps

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