Greg Jackson is Founder and CEO at Octopus Energy. As a technology entrepreneur, Greg built and sold ecommerce company C360, built HomeServe’s innovation business and is an angel investor in a wide range of tech startups. He’s also a non-executive director of Fintech pioneer, Zopa and Healthtech innovator, Consultant Connect.
He is speaking at our upcoming retail conference, Fairness and competition in the retail energy market, on 22 November.
The challenges and opportunities for businesses are often best understood in the context of societal trends. We see trust in society at astonishingly low levels. Inequality, polarisation and perceived unfairness are global realities. Political upheaval and radical choices – from Trump to Brexit, from Corbyn to Macron, are indicators of the sign of dissatisfaction with the status quo.
The energy sector is at the nexus of so much of this – on the one hand we face the growing realisation of the existential threat brought about by climate change. On the other we face the opportunity of low cost clean energy. And on a more basic level in the UK, we see people who are confident that they know how to play the system paying 1/3 less for their energy than those who don’t.
Across so many sectors, people feel the system is rigged against them, and express the anger not in the way they’re “supposed to” (such as switching energy supplier) but by voting against the system. Whether they vote Brexit or Corbyn, they’re expressing frustration that the system doesn’t work for them.
Of course, no-one based their vote on energy switching being too hard, but they see they are set up to lose in market after market. Insurance, broadband, mobile phones, savings – so many staples of everyday life seem too much hassle, too expensive, like you can never win. These all contribute to life feeling (and being) “too hard”. It’s dog eat dog for even the most basic of services. All whilst real incomes are falling.
All too often I hear wealthy people saying “I know I should switch, but it’s too much hassle – at least I can afford it.” The corollary is obvious: “It’s too much hassle for me, but poor people really need to do it.”
I’m stunned at what I hear in energy. Stephen Fitzpatrick, Ovo’s boss, recounted what he was told by Roger Witcomb of the CMA – essentially, customers need to be caused more pain by excessive bills in order to force them to engage. I hear that “high differentials between fixed and default tariffs are necessary to incentivise switching”.
This is astonishingly warped logic. A market that is so broken it needs to inflict pain on its customers is precisely why people end up getting angry and voting to overturn the political system.
I’d like to see liberal capitalism survive. I’m not alone. Paul Polman, CEO of Unilever (53bn Euros revenue, so hardly a naïve idealist) says “What I want is sustainable and equitable capitalism”.
That’s what so many challengers in energy are striving for. Equitable capitalism requires us to challenge short-term profit maximisation, and to stop justifying screwing one group of customers whilst others get stunning deals. This doesn’t lead to Witcomb’s world of perfect markets of engaged customers - it leads to political extremism and riots in the streets.
And sustainable capitalism also means sustaining the planet on which we live.
Many challengers offer greener energy. Some do it as their main marketing message, others do it because it’s right.
(Nearly) every challenger has raised millions of pounds of investment, sometimes from friends and family and sometimes by putting their own home on the line. Some have crowdfunded. What most have in common is that they chose to enter this market because they have the drive to fix something. Of course, some just want to get rich - but there are easier ways.
Many challengers I’ve spoken to are shocked that the legacy energy companies campaign against green taxes and blame them for price rises - often whilst their group companies benefit from renewables subsidies. Meanwhile, to most people the spectacle of energy companies publicly debating which groups of consumers should be protected from their own overcharging is kind of missing the point. In most markets, the winning companies demonstrate that they bring prices down for everyone – whether it be Amazon or Argos, Tesco or Lidl, Ryanair or EasyJet, bringing prices down for customers is a relentless pursuit.
According to Ipsos Mori’s Global Trends Survey, 60% of British consumers believe that the most successful brands will be those which make the most positive contributions to society beyond just providing good products and services. However, price is still most important – 72% of UK consumers make that the most important element in choosing between brands.
So for new suppliers, the opportunity is to find groups of consumers to whom they can offer genuinely good value, with an appropriate wider promise of the good the supplier does for society. The value needs to be real, not just clever marketing tricks, or they stand to build up the same well of mistrust which has so damaged this market. And the good they do for society needs to be just as real – greenwashing or other shallow claims are a hostage to fortune. This is brutally difficult in a cut-throat market with razor-thin margins – but in a sector as large and critical as energy it’s a huge responsibility and a phenomenal opportunity to make the difference that so drives innovators.
Greg Jackson will be speaking at Cornwall Insight’s fourth annual retail energy markets conference on 22 November.
The conference, Fairness and competition in the retail energy market, takes place in London. Experts from Cornwall Insight will debate these issues in more detail alongside industry leaders, policy-makers and consumer representatives.
Book now for £595 + VAT per delegate.