A firm that offers cheaper electricity to people living near wind farms and ensures affordable green energy

UK climate tech has boomed despite Rishi Sunak’s decision to weaken net-zero policies

Anyone in marketing who looked at how countries handled the launch of renewable energy would be appalled.

First, companies turned up at countryside beauty spots to build wind farms. Then, people were told a charge would be added to their energy bills to help cover the cost of the farms, which had to be built because of a distant climate problem that some did not believe was real.

This is a condensed version of what Greg Jackson, founder of one of the UK’s most interesting companies, Octopus Energy, told a Financial Times climate conference recently. The situation is particularly absurd today, he added, because renewable energy is so much cheaper but is still being sold in a system that is “just not designed to give consumers that benefit”.

Since its 2016 launch, Octopus has become the UK’s second biggest retail energy supplier and an international player that invests in wind farms, installs home heat pumps, provides electric cars and backs subsea green power cables

Listening to Jackson speak, I thought how refreshing it was to hear a green energy leader touting the potential of renewables for ordinary bill payers. And Jackson is not just any green energy leader.

Since its 2016 launch, Octopus has become the UK’s second-biggest retail energy supplier and an international player that invests in wind farms, installs home heat pumps, provides electric cars and backs subsea green power cables.

It also offers cheaper electricity to people living near wind farms and makes a big deal of ensuring green energy is affordable.

There is a crucial point about this: Jackson may have joined Greenpeace in his teens but at heart he is a tech person. He left school at 16 to write computer games. Octopus’s hidden success is Kraken, a software platform for utilities that is a backbone of its operations and which it licenses to other energy companies.

The company is repeatedly cited as an example of something the UK is surprisingly good at: climate tech, or technologies that help to cut emissions.

I was reminded of this the other day when I went to visit someone who turned out to work in a busy green tech workspace on the fifth floor of London’s County Hall, just across the Thames from Westminster.

The place opened less than a year ago and is already at bursting point, with 115 groups working on everything from “smart air bricks” that cut energy use to cleaner tyres for electric cars.

That makes it Europe’s biggest climate tech hub according to Andrew Wordsworth, one of the brains behind it. He is a co-founder of Sustainable Ventures, a green start-up investment and advisory firm, and is already planning more workspace hubs in Manchester, Glasgow, Birmingham and beyond to cater for a sector that has, as he says, “really, really exploded”.

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In the years since his firm started in 2011, climate tech investment in London has soared, from $177 million in 2014 to $3.5 billion in 2023. The city was number two for climate tech investment globally last year, Dealroom data shows, beaten narrowly by Stockholm. And nationally, climate start-ups last year raised a record $6.2 billion, or 29 per cent of all UK venture capital investment.

This is of course a small fraction of the global investment in established clean energy technologies, such as solar and wind power. And the problem with start-ups is they can shut down. But successful firms can galvanise the impact of older green technologies, and create a lot of jobs.

In a country like the UK, the first big economy to put a net zero emissions target into law, you might think this climate tech story would be better known

Octopus employs 6,000 people in the UK and another 1,000 overseas. Sustainable Ventures has created or maintained about 5,500 jobs since starting.

In a country like the UK, the first big economy to put a net zero emissions target into law, you might think this climate tech story would be better known. But I suspect more people have heard about British prime minister Rishi Sunak’s September speech announcing he was weakening a string of net zero policies.

That’s a shame in a country with a history of bipartisan support for climate action, especially when the US and EU are ramping up green industrial policies.

The person I went to see in county hall was Rachel Solomon Williams, head of the Aldersgate Group green business alliance. She told me “brilliant” climate policy work was still being done in the UK, despite the headlines about Sunak’s green rollback. The trouble is, a lot of people only read the headlines, including some investors.

UK climate tech has succeeded despite this so far. But imagine what it might do with a government that wholeheartedly backed net zero action, instead of grudgingly going along with it. — Copyright The Financial Times Limited 2024

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