To mark the ten-year anniversary of the Climate Change Act, the UK Government has launched its very first Green GB Week, highlighting the benefits and the potential of clean energy in the UK.
Imagine if all black cabs were electric and owned by their drivers, who pay for their vehicle per each mile that they drive. “These are zero-emissions vehicles, installed with telematics that can measure how many miles are driven and, at the end of every month, the owner pays an invoice based on their energy consumption,” says Dan Saunders, Investment Director at Octopus Investments and leader on zero and ultra-low emissions Transport-As-A-Service.
Dan is describing Octopus’s latest clean energy-finance hybrid. Once a cab driver has driven a set mileage, there is nothing more to pay. “The more they drive, the more money they earn, and the sooner the outlay on their vehicle is repaid. Our interests are aligned with theirs,” adds Dan.
Incidentally, Dan predicts we’ll see long-distance, battery-operated heavy goods vehicles dominating our motorways in five to seven years’ time, and (legislation permitting) he expects to see increased shared ownership of fully autonomous domestic vehicles to become the norm by 2028.
Driving demand for renewables
Already being used by fleet vehicles operating out of Heathrow, and with the same initiative also being applied to buses and commercial vehicles, the scheme is just one example of the innovation in thought and action that Octopus applies to society’s problems.
It is ten years almost to the day since the UK’s Climate Change Act was signed, holding the government to the international commitments on greenhouse gas emissions agreed in the Kyoto Protocol. To mark the anniversary, this week, Westminster has declared the first Green GB Week, giving organisations of all sizes the chance to showcase the benefits of clean growth.
The UK has been in the vanguard of creating wealth alongside emission reduction. Between 1990 and 2016, it cut its emissions by over 40 per cent, while the economy grew by more than two-thirds – the best performance in the G7 on a per person basis.
Taking stock of what has been achieved over the past decade, Green GB Week highlights the financing of the low-carbon economy, and how clean energy can be used as a business opportunity.
There at the outset
As the largest investor in solar in the UK, Octopus has been part of the country’s clean growth success since 2010, when it launched its energy investments arm. This was the same year that the Government started subsidising solar energy.
“Then, even with the subsidy, solar and wind were still viewed as an interesting sideshow on the periphery of how to satisfy energy needs,” says Matt Setchell, Head of Octopus Energy Investments.
Over the past eight years, the cost of solar energy has fallen from around £1 per watt to less than 20p per watt – a reduction of more than 80 per cent. “We’re now in a very different place”, explains Matt. “The Government achieved what it intended: the subsidies meant a huge increase in the roll-out of renewables, and the scale then drove down cost. Now, solar and on-shore wind don’t need to be subsidised – the technology is now competing on a level playing field with fossil fuel plants.”
Backing UK plc
This technology has also established the UK as a reliable leader in the sector. Octopus Energy Investments has just raised £100 million from a group of Korean investors looking to come in on UK assets. “The post-Brexit message is that the UK is open and ready to do business,” adds Matt. “We’re proving that inwards investment is fine, and that the world is aware of what UK plc does best – building, implementing and investing in clean energy is right up there.”
A virtuous circle
Now, via initiatives like Green GB Week, the government is encouraging the clean growth conversation to move onto tomorrow’s technologies, and businesses like Octopus are there already. “We’re investing in the technologies, and building the products and services required, for tomorrow’s – consumer-led – energy system,” says Simon Pickett, Investment Director at Octopus Investments.
“What is interesting now is that we are bringing new capital to the UK clean energy market to further growth. We’re recycling some of our entrepreneurial capital into innovating, and replacing it with that long-term funding.”
The big questions still loom, like how to deal with variable renewable energy and what role storage will play in solving this. Yet “the fundamental thing here is flexibility,” says Simon.
“How do you control renewable energy use? The charging of millions of vehicles is often framed as yet another challenge. But in reality, the flexibility provided can be part of the solution: charge your vehicle when you’re asleep and the wind is blowing.” Simon Pickett, Investment Director
Technology has a big part to play
Two years ago, the team invested in Reactive Technologies, which uses cloud-based technology to unlock the smart grid: like varying supermarket demand (turning their freezers up or down) depending on available clean energy supply. As Simon puts it: “turning a turkey into a battery”.
The ‘three Ds’
Matt hopes the government will continue to take a comprehensive approach to clean energy. “This market is becoming increasingly joined up; you can’t look at parts in isolation. There will be increasing demand for electricity from the electrification of transport and heat, and we also see rising social good pressures on corporates to shift their demand to green energy. Matching this demand with increased renewable energy generation, whilst managing the variability, is all part of this connected story.”
With the tech-enabled consumer-led era of energy already upon us, concomitant questions around ownership, monetisation and storage are enabling fundamental change. “Decarbonisation is yesterday’s trend and needs to be today’s business as usual. Now, the question is how: how do we, as a world, decentralise, digitalise and deregulate our energy markets?” says Simon.
Green GB Week might be the ideal opportunity to laud progress here, but with major grids around the world now going through enormous change – in Asia, the Middle East, Sub-Saharan Africa – Octopus is gearing up to export its know-how to the rest of the world.