Greg Jackson is fighting a battle but you would not know it. The Octopus Energy boss reclines at the back of a red bus emblazoned with his company’s branding, midway through his annual “tech fest” event in Battersea Park, south London. Stephen Fry, Prof Brian Cox and Al Gore have all made appearances – a testament to Jackson’s convening power.
In the energy world, however, he cuts an increasingly divisive figure for backing zonal pricing, a proposed scheme that would carve Britain up into different energy price regions. The policy could save consumers £3.7bn a year by making the power grid more efficient, according to Jackson. “It is the single most important thing we can do to drive bills down,” said.
But it has also sparked a ferocious lobbying blitz that has pitted him against Labour mega donor and fellow energy tycoon Dale Vince. A flurry of newspaper op-eds, paid-for research reports and off-the-record briefings ensued this year. One industry executive called it “the most vicious policy fight I can remember in energy… I have fallen out with friends.”
By April, the debate had grown so heated that Jonathan Brearley, chief executive of regulator Ofgem, called for calm – a rare intervention.
Vince has said “it’s a stupid idea”, adding: “Greg Jackson cites this physical problem of needing to ship more power down south from windfarms in Scotland and thinks we can solve it with a new trading arrangement in zonal pricing. That’s bullshit. We just need a few more pylons.”
Both men – who have apparently never met – are extraordinarily well connected in Westminster. Vince, founder of green energy company Ecotricity, handed Labour more than £5m before the election, making him its biggest donor. Jackson, meanwhile, was last year described as a “friend” by the energy secretary, Ed Miliband. Octopus bagged 16 meetings with energy ministers in the six months after Labour assumed power, according to official records.
Zonal pricing would replace the single price for power, with varying rates for each region. Costs would be based on how much electricity is created locally, meaning Scotland, with its array of windfarms, would have lower prices, while households in the south-east would pay more.
Proponents say it would make the electricity grid more efficient, ultimately saving money for everyone. Critics counter that it will increase investor uncertainty and reduce what they are willing to invest in AR7, the forthcoming and crucial fundraising round for new generating capacity.
Vince says it would create a postcode lottery, deepening inequality on bills. Moreover, Labour is pushing to decarbonise the grid by 2030, which will require tens of billions of pounds of private sector cash. The bosses of British Gas, SSE and ScottishPower have also come out against the scheme, saying it could kill that investment.
Jackson has a different take. “People who are doing well out of an existing market don’t want it to change,” he said. “The energy industry has always been too cozy. Decisions are made in rooms where no one is representing consumers, pushing bills up, year in, year out. That’s what we’re fighting against.”
A final decision from the government is due within days. Last week, Bloomberg reported that ministers were leaning against the policy, which the Department for Energy Security and Net Zero denied. A spokesperson said: “No decision has been made.”
Jackson points out that Ofgem chief Jonathan Brearley, plus the national energy systems operator, which runs the power grid, have also said zonal pricing could cut costs. “This is more about [energy] producers versus consumers than it is about one company versus another,” he said.
As for his opponent? “It comes across as one person’s pet project,” said Vince. “I hope it perishes in the cold light of day.”
