Bastian Gierull from Octopus Energy in the “climate laboratory”: energy poverty, wind turbine tariffs, cheap heat pumps

A rule of thumb says: Anyone who spends more than 10 percent of their net income on energy costs suffers from energy poverty. This affected approximately 2023 43 percent of all households. To help, the British energy supplier Octopus Energy offers its customers electric blankets: You can heat a person more cheaply than a room, explains the Germany boss Bastian Gierull in the ntv “climate laboratory”. But this does not combat the causes of energy poverty: many people can no longer afford electricity and heat. Octopus Energy therefore not only distributes electric blankets, but also breaks new ground. The company connects its customers directly to wind turbines and reduces electricity prices when the wind blows strongly. In Northern Ireland, the company is developing particularly cheap heat pumps so that no one invests in oil or gas heating anymore: “The additional costs of these will really hurt in the next 10 to 20 years,” says Gierull.

ntv.de: You offered your customers 1,800 electric blankets. How many did you send?

Bastian Gierull: Everyone, the demand was great. We had 400 inquiries within ten minutes, and several thousand within a day. That was depressing. Energy poverty exists.

What have people written about why you need one?

Some have said that because of high energy prices and especially heating costs, they only heat one room, often the children’s room.

And feel cold even in the living room?

Yes. We have also heard from pensioners who only keep warm with blankets and jackets. Many people have drastically reduced their consumption, only heating certain rooms or on days when they are at home longer in order to get costs under control.

The campaign was definitely great marketing for you and Octopus Energy.

We’re not about marketing. We want to be the most customer-friendly energy provider. With this promise we entered the business in Great Britain in 2015, because there and in other countries there is extreme imbalance. Many customers are being exploited, lured with lure offers by their energy providers and then pushed into ever more expensive tariffs. We want to do everything differently: There are people for whom even the fairly priced energy tariff is too expensive. And it’s much cheaper to heat one person than an entire room.

And for you as an energy supplier, does it pay off if your customers use less?

Nobody benefits if someone can’t pay their bills. We don’t and it’s not pleasant for customers to slip into a debt relationship. But of course, when customers use a lot of energy, the cash register rings. There are certainly players in the market who act like this and try to increase their margins.

Also in German?

In any case. We are talking to politicians and the regulatory authorities about it and trying to show which mechanisms in the market make this system even possible.

How big are the price ranges between a cheap provider and an expensive one?

First of all: We are not the most expensive energy provider, but we are not the cheapest either. Our promise is to be as affordable as possible. The price isn’t raised a little higher every year in the hope that customers will forget what they paid three years ago. That’s the big difference: What does a new customer pay? What do customers pay who have been with the same energy provider for four years or, as we often see in Germany, for ten or 15 years?

Much more.

Exactly, in some cases it is ten or 20 cents per kilowatt hour more than with the new tariffs. For some providers, it is part of their business model that existing customers pay a little more than new customers. Other players take it to the extreme and lure customers with offers that are far too good to be true. Then the prices are increased drastically in the following years. In some cases, this happens in the first year of the contract despite the price guarantee. These providers speculate on customers who do not know that they can change provider immediately in the event of an unscheduled price increase. You will receive a long email in which this notice was hidden. The providers do this two or three times a year and determine which people won’t change and who they can continue to skim off. We launched in the UK eight years ago and are now the largest energy provider in the country. Our switching rate is almost zero because our customers feel well treated.

And be able to pay the bills?

Renewables are the cheapest energy and are becoming even cheaper every year. Everything else is an additional cost that has nothing to do with the energy source. But we need to reimagine the energy market of the future because we can no longer switch on coal or gas power plants as soon as people get home in the evening, turn on their electronic devices and turn up the heating until they go to sleep. I can’t turn renewables on and off. Production is sometimes high and extremely cheap and sometimes low. And if I have flexible production, I have to make consumption more flexible.

If you come home from work in the evening in December and want to turn up the heating so you don’t freeze, you don’t really have any flexibility.

No, but we operate, for example a wind turbine in Großräschen in Brandenburg. Residents nearby can be connected to it via a smart meter and use a flexible tariff: If there is a lot of wind and therefore a lot of electricity is produced, it becomes cheaper. There are two stages. If the wind blows strongly, customers save 20 percent on their electricity costs. The wind blows very strongly, even 50 percent.

And you tell people that now would be a good time to do laundry?

Yes, they receive a message on their smartphone from our app and see: Oh, the electricity only costs half as much. Then they start baking, doing a second load of laundry or charging the electric car and the batteries. If electricity production decreases again, they reduce consumption. Sure, that doesn’t always work, but we see that people change their behavior and save money as a result.

But then you have to do that Wind turbine in front of the front door accept. Many people don’t want that.

We already have five wind turbines in the UK and surveys show that acceptance of local wind power increases by 80 percent when people are directly connected to it. That’s the problem with this energy revolution: there are an incredible number of advantages that don’t reach customers. They are often only involved in the costs of infrastructure expansion. In Great Britain, the neighboring villages outside the wind turbine radius are now complaining about why we haven’t built one in their area yet.

They said there was also one for that Smart meters necessary. Are these smart electricity meters?

Exactly, they calculate how much electricity is used down to the minute or second. Classic electricity meters can’t do that; they simply add up the consumption.

Surely they’re not cheap? In addition, you have to be well positioned digitally to receive push notifications from you, own a house in the country and ideally also an electric car to make the offer worthwhile. That doesn’t sound like people suffering from energy poverty.

We install the smart meters for our customers free of charge, because this is the key technology of the energy transition. But clearly, the goal cannot be to make rich Tesla drivers even richer. If the energy transition becomes a luxury product, we will fail. This has to happen faster and, above all, cheaper so that everyone benefits. But new technologies such as smart meters and heat pumps are unfortunately always expensive when they come onto the market because there is no mass production yet and therefore no economies of scale.

That’s why sales of gas heaters fell last year new record value reached. It looked similar with oil heaters…

Yes, we need effects like those on cell phones or laptops. They were initially unaffordable, then the costs fell. Today they are indispensable. We have to get there with smart meters and heat pumps. The fact that so many people invested in new oil and gas heating systems last year is tragic, because they will pay so much more for them in the next few years. They were simply lied to. The additional costs will really hurt in the next 10 to 20 years. This promotes energy poverty.

Because oil and gas are becoming more expensive?

It will be more expensive and there will be CO2 compensation taxes on top. They didn’t open this invoice, they just said: The gas heating costs 5,000 euros, the heat pump costs 30,000 euros. That’s why the heat pump has to be cheaper. That’s why we bought a heat pump manufacturer in Northern Ireland and have been developing one over the past two years with the central aim of making it cheaper to produce and less maintenance so that it can run longer. The result: a government-subsidized heat pump costs around £15,000 in the UK. We can offer ours with funding for 3000 pounds, which is about 3500 euros. The first ones are currently rolling off the production line and being installed. With these costs, it is no longer a question of what people will install.

Clara Pfeffer and Christian Herrmann spoke to Bastian Gierull. The conversation has been shortened and smoothed for better clarity. You can watch the entire conversation in the podcast “Climate Laboratory” listen.