Hearts & Minds: Cutting through by cutting out the jargon – an object lesson

The rules and regulations governing markets are often complex and cloaked in jargon, Which can make arguing the case for reform extremely difficult. Nowhere is this more marked than in the craziness of UK energy pricing.

In The Times, Greg Jackson of Octopus Energy and the paper’s science editor, Tom Whipple, highlight the absurdity of the system and how it prevents energy bills from coming down and actively discourages decarbonisation. They use language and examples that laypeople can understand.

Wind and solar should supply cheap energy. Yet, ‘the more we build, the more expensive it gets.’  That’s because, Jackson says, it’s as if we have designed the motorcar but not the tarmac road.

It helps that Jackson has a personal story to tell. He grew up in a single-parent household and wanted to help families like his. But today, as head of Britain’s biggest energy supplier, he finds himself selling them his expensive electricity.

The problem is how energy is sold and the fact there is one countrywide price. Every half-hour every ­generator tells the grid how much it will sell electricity for. The grid then accepts the offers, starting at the cheapest, until it has met the nation’s demand. What a Scottish wind farm, say, receives is not what it bid, but what the most expensive generator accepted ­on to the grid bid. This means the wind farm could offer to provide electricity for £10/MWh but if another plant bids £70/MWh and its electricity is used, ­everyone gets £70.

Having accepted the Scottish wind farm’s bid, it may be that the grid does not have the capacity to shift its electricity to where it is actually needed - in the south, say. The wind farm is still paid - its bid was accepted - but its turbines do not turn.

Instead, another turbine in the south - a gas one, likely owned by the same energy company - is paid emergency prices to switch on. ‘It’s unconscionable. We’ve built a whole load of wind farms where there’s no grid and then compensate the wind farms for the fact that there is no grid. If you built a factory where there are no roads and then demanded that you get paid by taxpayers for the stuff you could have made, that would be grotesque. But that’s the electricity system we’ve created.’

It is nuts. Jackson and Whipple have shown how. Comms folk, please note.

Chris Blackhurst is one of the UK’s foremost business journalists. He was previously Editor of The Independent and City Editor of the Evening Standard.