What’s Next For Octopus Energy? Exclusive Interview with Phil Steele

[00:00:00] Gary: As far as I'm concerned, Octopus Energy is the best energy provider out there and for a whole host of reasons. Today, Tim from Tim & Katz Greenwalk and I are interviewing Phil Steele, Future Technologies Evangelist for Octopus Energy, to get the inside track on where they're heading next. Where do you hear what he had to say? Hi there, I'm Gary and welcome back to my channel Gary Does Solar. As many of you know, I've been a customer and a massive fan of Octopus Energy for years now. Their innovation in the home energy space is genuinely second to none, especially when it comes to their smart tariff offerings. Octopus Energy launched in the UK back in 2016 and have since grown into one of the most forward-thinking energy companies in the world, now operating in eight countries. They've also just been named which recommended provider for the ninth year in a row. If that doesn't show you just how good Octopus Energy is, I honestly don't know what does. If you're not already with them but would like to be, feel free to use my referral link here and you'll get £50 credited to your account. I'll also receive £50 which really supports my channel and thanks to everyone who's signed up with my link already. Octopus has consistently led the market ever since they launched and despite growing competition over the years, they keep pushing the boundaries. In today's video then, Tim from Tim & Katz Greenwalk and I are looking to see where Octopus is heading next. And for that, there's no better person to speak to than Phil Steele, their Future Technologies Evangelist. Here's our interview with him. So, hi Phil, thanks for taking the time to join Tim and I today. We've got a few questions for you and those include some questions from our respective Patreon supporters. But maybe just to get to start then, your job title at Octopus Energy is Future Technologies Evangelist, which sounds amazing. But what does that role mean in practice? And are you at liberty to say what kind of technologies you're looking into at the [00:01:54] Phil Steele: moment? Yeah, it's great to be here. Thanks, Gary. Thanks, Tim. I'm glad we're doing this together. It's really interesting. So, my title is a mixture of R&D and public-facing things. You saw me speaking at our Energy Tech Summit two weeks ago, two weeks ago today, and the Everything Electric show and various other industry events as well. On the R&D side, it means I'm looking at what we're doing with new tariffs, how we launch those tariffs, what we're doing with new devices and what other companies are doing really interesting things as well. So, it's a broad range. Yeah, and that's been my title since I joined Octopus seven, eight years ago. In 2018, I joined after, when Octopus actually, before I joined Octopus, there was the Agile Hackathon around the Agile tariff. So, I joined as a participant of that and then I got myself acquired by Octopus at the time. Yeah. Well, let's fire away with the questions [00:02:49] Speaker 3: then. So, Tim, I think you've got a question there. Yeah. So, Octopus Energy has always kind of pioneered and has led the way in terms of smart tariff development with innovative tariffs like sort of flux and Agile and things like that. But only recently has sort of the competition started to improve on from other suppliers. But what keeps Octopus kind of motivated to stay competitive with developing these smart tariffs and to ensure that you keep on top of the game? Right. Let's start [00:03:23] Phil Steele: off with the purpose of the smart tariffs because that'll kind of help extend the question. So, if you look at, say, Cozy or Flux or Go, it's about getting the best possible rates for your tech. So, Cozy for the heat for the car, Flux for the home battery system. And we want to encourage all of us that are driving cars and investing in solar and putting in heat pumps to get the right tariff for those bits of tech. But actually, the tariff is taking advantage of what's going on on the grid. So, we see, I mean, the Agile tariff is the obvious one. When you look at the Agile tariff, it has a different price every half hour of the day because it's reflecting what the wholesale market is doing. So, if you layer that and you see where the peaks and troughs are, then you can see why the Cozy tariff works the way it does and what we do with the flux on the import and the export and so on. So, the point is, what's the best tariff for the tech? And how do we get that tariff to react, as it were, to what the grid is doing? And then you layer on top of that the flexibility markets versus the transmission system or the distribution that the operators need to reduce demand or the spare generation, then how do we tap into that to get the best offers to customers as well? [00:04:28] Gary: Okay. And I have got a question around one of your particular tariffs, which is intelligent Octopus flux. I mean, to me, it's a really great example of innovation from Octopus. It's got an identical import and export rate, and it's also got a built-in virtual power plant. But we did see that sign-ups were paused, I think it was around March, due to the energy price volatility that's going on at the moment, and it still remains unavailable today. Is there a chance that intelligent Octopus flux could return, either in its current form or perhaps some kind of modified [00:05:03] Phil Steele: version in the future? Flux, which is a split rate, still exists, but not the IO flux one that's on course. But what we have got is the ChargePack offer that came out about three or four weeks ago. So ChargePack is like an add-on to other tariffs. So you can add it on top of Intelligent Octopus Go or Go or Flexible Octopus or the fixed tariff. We haven't done it cosy yet, but it'll come. So as an add-on, it's kind of doing something similar to IO flux, and it is saying, right, well, let's balance the battery according to what the grid is doing. But also when we get flexibility opportunities, then let's credit you for helping balance the grid, because we're going to say, right, let's top up the battery from the grid or let's push them back out on the export side of things. So that's what we've started to focus on now, is how do we use ChargePack on top of other tariffs? And we might see more of that than instead of like a stand-alone tariff like IO flux was. I mean, you know, because the issue that we're starting to see now is that there are plenty of us, I'm one of them, who've got more than one [00:06:03] Speaker 3: piece of tech in our home. So related to that, we've recently been hearing about the... Are you getting background noise? We're getting a little bit, but it's not too much. [00:06:14] Phil Steele: Because 30 students just turned up. Oh my goodness! [00:06:21] Gary: That's all right. [00:06:23] Phil Steele: Right, give me a second. So after that brief interlude, sorry, so just to explain what happened there, we have an internship programme in the summer, so about 30 students suddenly surrounded me in the open space where I was talking. So I've relocated now to what we call my workshop space. So behind me is a 3D printer and all sorts of various other tech and experiments. This is the experimental corner. [00:06:56] Gary: Ah, right. I kind of recognised some of the things there, yeah. [00:06:59] Phil Steele: Tim, do you want to ask that question again? [00:07:00] Speaker 3: I'll ask the question again, yes. Okay, hang on. So we've recently been hearing about this new export tariff that you're going to be introducing called Octopus Prime. Can you tell us more about when that's likely to appear? It's this interesting tariff where you have an export rate that's higher during the peak sort of 4-7pm period of 16p per kilowatt hour and then 9p per kilowatt hour the rest of the time. And is that likely to completely replace the flat outgoing tariff of 12p per kilowatt hour, or are the two tariffs going to be offered as options depending on the preference of the customer? [00:07:39] Phil Steele: Hmm. Good question. What we saw over the beginning of this year, actually, was a request from customers saying, hey, I can export more during the peak time. And isn't that when the grid is under the most stress? Surely we could have a bit of a time of use element to export more. You know, we've always had the Agile export tariff, which tracks the wholesale market, but this is the first time we've done a two-rate export tariff. We soft launched it during the Energy Tech Summit. You'll have seen my video on Twitter explaining what it does and when it's coming out. So it's out now. People can sign up to it. It's on the main Octopus outgoing page, and it's listed against the other three tariffs as well. The point is you can export at a higher rate than the current flat rate between four and seven, which is great for the grid. But then it's a lower rate than the flat rate during the rest of the day, obviously. If you took just a straight flat line average, then it's it's worse. You know, you only get less revenue from it. But the fact is, if you've got a battery system and you can program it to export at that time, this is going to be the right tariff for you. So to answer your other question, Tim, we won't change the current flat rate tariff. Never say never, but there's no plan at the moment to change that tariff to change its rate or to remove it completely. Because for some customers who haven't got a battery, actually the flat rate one still makes a lot of sense. But if you've got a battery, then it's Prime that makes the most sense. And on my blog, I did do some calculations as to the kind of size minimum size battery you're going to be able to use with the [00:09:17] Speaker 3: Prime tariff. So I have a follow up question actually related to the way people use their batteries currently, in particular, with combining the flat outgoing with the very low overnight import rate for Intelligent Go, for example. And some people actually cycle their battery charging and discharging during that off-peak period to take advantage of that arbitrage between the import and the export at that time. Obviously, I think that's sort of somewhat against the kind of ethos of the smart tariffs. So was there any discussion about introducing a super low export tariff overnight as part of Prime? Or were you sort of happy to accept that maybe a small amount of arbitrage would be acceptable? [00:10:04] Phil Steele: So it's designed for electric cars, but it is a popular tariff if you have got a battery system and you can take advantage of that cheap energy overnight. But the wholesale market is low overnight. Sometimes it's a bit higher and a bit lower, but take it. It doesn't cause us too many issues. So no plans at the moment to put in a lower off-peak period during that period. People that have got IO Go and are charging their car and have to be charging the battery as well, it's not an issue. And if you look at the size of a car battery, right, it's 50, 60, 70, 80, up to 100 kilowatt hours. So your home battery is typically kind of a 10 kilowatt hour to maybe 20 kilowatt hour. So in the scheme of things, it's not too big of an issue at all. [00:10:48] Speaker 3: It's more around the kind of the fact that people can charge and discharge their battery repeatedly within that off-peak period, which sort of... [00:10:56] Phil Steele: Yeah, I mean, you know, battery, battery kilowatt hour rate, a kilowatt rate is going to be either 3.6 if that's what the inverter is, or maybe five kilowatts. So you've got to, you've got to try quite hard to be able to get a full charge and then also a full discharge and charge again in the six hours that we've got of the IO go off rate period. So not too much of an issue. [00:11:19] Gary: Well, I think you've already answered the next question that I had, which came from one of my Patreon supporters, which was all about charge pack. So what I find interesting is that you are treating it as a bolt on for existing smart tariffs, because at the moment, I mean, Octopus Energy has a whole range of smart tariffs. Do you think that's the approach that you're going to be taking, you know, as we move forward to try and... because it's very difficult for customers when they see so much choice and they're not quite sure which one to go for, depending on what equipment they have, that maybe the bolt on approach is a kind of a preferred route for Octopus going forward? [00:11:58] Phil Steele: Maybe. And I can't say either way. I mean, typically we work really quickly and you'll suddenly see one and we can launch something else in three weeks' time and it hasn't actually crossed our horizon yet. So who knows? I think bolt-ons do work well. I do like the idea of add-ons because that is probably easier to comprehend, I think, and to explain and you can see how it relates to a particular technology. So yeah, we might well see more of those, but I can't say it either way for now. [00:12:26] Gary: Yeah. And I understand you did a, I don't know whether you call it a test session the other day or [00:12:31] Phil Steele: not. Did that go well? Yeah. I haven't got the numbers, so I can't share how well it went, but yes. You know, we're controlling batteries and we're setting them up to charge and discharge against it. So yes. [00:12:41] Speaker 3: Yeah. So I've never tried Agile. I'm kind of intrigued by it, but I think a lot of people are maybe put off by the fact that it's so variable and to really optimize, if you've got a battery system, for example, kind of properly optimizing against Agile requires some sort of third-party equipment, maybe like Home Assistant, for example. But one thing I really like about Intelligent Flux is the way that you can just sort of hand over control to Octopus. So it's sort of ideal for people who want that hands-off approach. Would you ever consider introducing something along the lines of Intelligent Agile where Octopus controls the charging and discharging of a battery sort of to optimize it against the Agile, both import and export? Actually, we did, and we have, [00:13:27] Phil Steele: and it's still there. It has been for about six or seven years. It's a bit of a hidden secret. So if you go to, I think the URL is octopushome.net. That's the labs environment that my team and I run. And we searched up six or seven years ago actually based on Agile because we could, you know, I was getting customers saying, oh, got Agile, but the peak rate keeps changing. How do I take advantage of that to charge a car or to charge a battery or whatever or to turn something on or off or provide signals in the home or whatever? You know, the moment we made Agile available back in 2018, that was the obvious question is, well, how do you connect something to it? Just for a bit of fun in our office back in 2018, we actually had green and amber and red lights, which were just showing what the status was of Agile through the day. And that was an integration through If This Then That to Philips Hue light bulbs. And actually, we even created, it still exists, we've got an Alexa skill. So you can ask Alexa, what's the price of Agile now? What's the forecast for the day ahead? And what's it going to be at a particular time? And how much to best spend? And so on. So all that is through our labs environment. And that labs environment is where we do launch new, really new things that maybe not going to be scaled just yet, but we want to see how well they work until we get something built and supported properly in Kraken. So yeah, you'll find that we've done it there in Agile. But of course, on top of that, because the tariff has an API, and that was the hackathon back in May 2018, there are lots of independent developers, individuals, and companies that have created all sorts of fascinating things connected to it as well. So you see that, you know, Home Assistant uses that API, the infamous Bottle Cap Dave, and the Red Bat plugins and things to it, which are really popular. And I actually really like seeing all of that kind of third party stuff that is connected and integrated. So I mean, to answer the question, the answer is yes, we did. It's still there. And there's lots of other companies or individuals that are doing it as well. [00:15:39] Speaker 3: Is there any sort of direct control through, for example, the Octopus app that would sort of do that automatically without you having to kind of set up any third party APIs or anything like that? [00:15:50] Phil Steele: Just the labs environment for Agile at the moment. So actually, the labs environment has its own R&D Labs Octopus app as well. And within that, we built a scheduling tool so you can set it and say, well, I should charge my battery whenever the price is below 15p or something and export it whenever the export is above 18 pence or whatever. You can play with the numbers and you can set it according to days of the week and times of the day and so on. So yeah. [00:16:18] Gary: All right. I think I'll put a link onto the video then of the lab environment so that people can check that out then. It sounds like an interesting place to be. So, Phil, my next question is all about potential conflicts between services offered by different third party providers. So you might be aware that Axel Energy has been offering an energy trading service for some time now. And there's a growing discussion on social media about potential conflicts with certain Octopus tariffs. So, for example, I think it's clear that if you want to use Axel and Charge Pack that you described earlier together, that would be a conflict. It's a conflict. Yeah. But for someone who's on Intelligent Octopus Go and wanted to use Axel instead of Charge Pack, my understanding, and you can correct me on this, is that that would be restricted by Octopus Energy's terms and conditions as they stand today. I can't see a direct conflict myself, but perhaps you could clarify on that particular scenario, Intelligent Octopus Go and Axel why that would be prohibited. So the issue is they kind of call it the reporting entity. What is [00:17:36] Phil Steele: it that we are bidding into the flexibility market to give you the decent rates? So typically that's the MPAN, your meter identity, the 16 numeric reference of your home. So the MPAN is at the smart meter level. What we're probably missing in the industry, it's not quite there yet, is the ability to record this per device. So IO Go, yeah, really what we're controlling is the device, but we report at the meter. So therefore the property level, not at the device level, which is why that we say you can be on one or the other, but not both, even with IO Go as well as with Charge Pack. That will probably change and make that a little bit more flexible as it were for customers over the next, it might take a year or 18 months for that to come through because we haven't got that true flexibility at the asset level piece [00:18:32] Gary: across the industry yet. All right, that's good to know. So we'll watch this space then to see what [00:18:36] Speaker 3: happens. Yeah. Okay. All right. Thanks, Phil. So obviously solar is brilliant and you've got your flux tariff that caters to people with solar and batteries. But more and more commonly now, people are getting battery-only installs and obviously Optimus are now also providing or going to be introducing your own battery systems. Are you also going to be thinking about introducing tariffs to cater to battery-only type situations that don't necessarily include solar? [00:19:08] Phil Steele: There's a risk of over-complicating with too many tariffs. Flux is good. IO flux, although that's on port at the moment. We've obviously got Charge Pack and Charge Pack can be laid on layered on top of any of our tariffs. IO go-go, flexible fixed and cozy coming soon. So I think for the moment I would say watch this space because it's going to be another, it'll be a while yet before we have those battery systems out. But there are customers who are installing battery-only systems and just using the flux tariff for that at the moment or Charge Pack. So yeah, watch this space for [00:19:46] Gary: what happens and then yeah, see what happens. Okay. So one question that I had then from Patreon members, this came up quite a lot actually. It seems that right now, no matter what combination of solar, battery, heat pump or EV someone has, it's the EV tariffs because of their very cheap overnight rates. They're just very hard to beat. And the problem is for those customers who don't have an EV, they kind of feel excluded from that. What do you think can be done to help those customers? And are those low overnight rates, are they sustainable over the long term with those EV tariffs anyway? Right. I mean, IO go is [00:20:30] Phil Steele: great for those car drivers, as you say. I mean, we have to bear in mind that you are then spending quite a bit more on top of your normal energy bill to drive your car and you're getting the benefits of that. But if you haven't got the car, then you've got to look at the flux and the causes or the Agile tariff. And even on Agile, you know, when you use our tools, so there's another tool, you can actually plug in your Octopus account API key and get an estimate of how much better you'd have been off on the Agile tariff. And when we did the original report back on it a few years ago, it was like 90% of customers were better off on the Agile tariff. But you have got to be a little bit aware of the peak between four and seven and time shift on that tariff. But you could get a plug-in battery. Plug-in batteries are coming. We announced ours at the Tech Summit as well. So if you haven't got an electric car and you can't put solar or an air source heat pump, maybe it's apartments and so on, then that battery is going to make a difference as well. There'll be some revenue and therefore reduced bills from that from plug-in batteries coming as well. Balcony solar that's coming. That'll be a new thing. So again, even though it's only two solar panels, so it's like 800 watts in all.8 kilowatts generation, it will still make a bit of a difference. So that's coming as well. So there's lots of things [00:21:49] Gary: that we can all do. Yeah. And to that second point in the question, with so many more people getting EVs and charging their EVs generally overnight when the rates are cheaper, does there become a point where that's no longer sustainable? Or do you think there's plenty of room in the grid overnight for [00:22:10] Phil Steele: such rates to continue? Yeah, no, I don't see an issue for the moment. In fact, what we are seeing is that we've got a bit of a dip coming up in the middle of the day, particularly with this really bright, sunny weather, you know, there's plenty of solar energy coming on. So we're going to have, I think what we see is the cheaper periods are going to start to get spread around. Quite a lot is going to become more dynamic, depending on what renewal generation is doing. You know, we perhaps think too much about the historic peak period of four till seven, and therefore overnight must be the cheaper. But actually, it could be happening throughout the day. This is the change in the energy system. As we get more wind and solar generation on the grid, we're going to see a lot of the variety of times a day. I mean, you know, we say, we now say a lot now, particularly with the chargeback tariff, stay plugged in as often as you can, because you're going to then grab those slots throughout the day, not just overnight. [00:23:06] Speaker 3: I mean, that probably almost covers what the last question is going to be, which is the future of smart tariffs and how you feel things are going to evolve in the markets. Do you think smart tariffs are going to sort of stay in their current form or do you think there's going to be a time where we will no longer need smart tariffs or are they just going to become more and more important as things like the renewables form a more consistent part of the grid? [00:23:33] Phil Steele: Yeah, I think we're going to see a lot more happening with smart tariffs, particularly with flexibility. So the forecast for flexibility of the next electric forecast goes right out to 2050 if like four to five times as much flexibility as we've got now and doubling the amount of renewable generation that we've got on the grid and getting off gas and so on. You know, there'll be a lot more around storage that's going on as well. So I think we're going to see more on tariffs, more flexibility built into tariffs. Would we have more of a flat rate lowish because it's balancing everything or not? I think actually as a customer, I actually quite like to see that there are variations in the tariff because then I would do different things. You know, I've got enough discretionary stuff that we do, the dishwasher, the washing machine, dryer, not quite the children's games machine. This is the one thing I can't encourage time of use of. But there's enough discretionary stuff that we'll do differently around the house because you're watching what the cost of the tariff is doing. So I wouldn't, I don't think we would get to a world of flat because it's kind of averaged out because we've automatically moved the energy. Who knows? But I think a variable price, a time use price actually is still really interesting for a large number of customers. Not everybody, you know, some people just don't want. They just want the peace of mind. Give me a fixed tariff, that's it, it's fixed forever. [00:25:00] Gary: Well, because we don't really know what's going to happen in the future, I think your job's just going to get more and more interesting as time goes on, as you try and figure it out. Well, listen, Phil, thank you very much for giving Tim and I time today. We know you're very busy. There's a lot going on in the office today, it seems as well, but we really appreciate it. And have a great rest of [00:25:21] Phil Steele: week. Yeah, no pleasure. Really good to join you and share some of my thoughts and what we see happening on the grid. So yeah, have a good day. Thank you. Thanks, Gary. Thanks, Tim. Cheers, then. [00:25:32] Gary: Thanks, Phil. I hope you enjoyed the interview with Phil Steele and thank you, Tim, for joining me today to help ask all those questions that we collated. And a big shout out to our respective Patreon supporters, too. You sent in so many great questions. It was really tough to choose which ones to use, but hopefully we selected a good mix that answered most of what you wanted to know. If you haven't already done so, please like and subscribe as this really helps my videos get more exposure in YouTube land. All the best and see you soon. [00:26:17] Speaker ?: Bye.