Jack Richardson is Head of Policy at Octopus Energy, and the James Blyth Associate Fellow at the Council on Geostrategy. He’s a former government adviser and former Head of Energy and Climate at Onward.
The newly nationalised energy system operator has published its advice on how the government might reach a net zero emissions electricity sector by 2030. Putting to one side whether it’s actually credible, the operator says the government will need “flexibility” in energy consumption. Flex is critical for cutting energy costs but it needs to service people rather than government targets.
There are concerns among conservatives and in the Times and the Telegraph that flex is energy rationing by another name. If you read the Sun’s story on the advice, you might think you won’t be able to boil your kettle when you want in 2030, in the name of easing pressure on the grid. A more worrying example would be hard pressed parents shifting their kids’ tea back an hour to save a few quid.
Conservatives are right to be suspicious of anything that sounds like a 1970s-style turndown, but that’s not what flex should be about. Flex and the use of smart technology is the only route back to cheaper electricity in the UK, other than the government finally deciding to stop placing levies on bills. We’ll always be a price taker on gas. Unlike France and Korea, we don’t have a fully-fledged, nationalised nuclear sector, the ability to build anything big at warp speed, nor the appetite to keep energy costs down with taxpayer cash.
Flex is how – even when we have the highest electricity prices in the world – you can still cut your car’s fuel costs by £1600 per year with smart charging. It’s how Octopus eliminates household energy bills altogether for a new house, with no change in behaviour, by using a heat pump, rooftop solar, a battery, and automatic management software. At its most basic, it’s using price signals to drive down costs, which conservatives shouldn’t fight wholesale.
At a bigger level, flex is doing things like getting supermarkets to switch off their freezers for an hour or two during peak times, without jeopardising food safety. Because costs are highest at peak demand like any other market, using technology and common sense to cut waste means big savings for everyone. Tesco alone is 1% of our national electricity consumption, so asking them to not waste electricity when it’s dearest makes sense.
But the fact is when it comes to consuming energy in a developed economy, hardly anyone is homo economicus. We expect energy to be there when we need it and many don’t think about the price. It’s becoming common practice to set appliances like dishwashers to do energy-hungry tasks overnight when prices are lower, but politicians can’t expect everyone to time everything to ease strain on the grid.
Smart technology is how we maximise flex without sacrificing convenience. Smart tech is the secret weapon we didn’t have in previous energy transitions, which were all about harnessing more energy from denser and denser fuels. The future of energy will be squeezing energy for every useful drop as efficiently as possible to eradicate waste, without even noticing we’re doing it. Genuine abundance – cheapness – through efficient consumption, regardless of the original source of energy.
Realistically, to execute the 2030 plan, the government would have to mandate smart meters yesterday and install hundreds of thousands of smart heating appliances for free. That probably won’t happen. But they should not stand in the way of consumers opting for cost-cutting technologies, as they do now.
The government should finally take action on levies. They’re out of control and they’re on bills by choice. The burden is already around getting towards £200 per household per year and will get bigger with incoming hydrogen and carbon capture levies (a scandal, given neither of those technologies will be used by households). We need reform. You can’t expect people to go smart electric while taxing the hell out of it.
We should scrap stupid planning regs that stop people installing cost-cutting technology in their own homes. That means the planning department finally scrapping the primaeval ‘one metre’ rule for heat pumps.
The electricity market needs fixing. At the moment there are no locational signals. That’s not just driving constraint costs up to billions per year, it’s also terrible for enabling bill savings through smart tech. Moving to local electricity pricing, which is how Norway and Sweden have much lower bills than we do, is vital.
And we should realign our fuel poverty programmes from a sole focus on insulation and bill support to getting cost-cutting tech into fuel poor homes. The Treasury might complain that it’s not value for money because batteries’ costs are constantly plummeting compared to a £15,000 refurb, but at least we’d make a bigger difference for those who need help the most for less money.
Adequate supply will always be important. But flex, tech, and better markets are our best hopes for really getting prices down. In an age of AI and rockets being caught by chopsticks, it isn’t as unrealistic as too many conservatives too often assume, especially when smart appliances are already now commonplace in many households.
We should support flex, as long as it serves the consumer first.
