Octopus Energy for Business plans to quadruple its customer base in the next couple of years. Director Zoisa Walton thinks creating products for business verticals will help power growth.
The company has just launched a new tariff for vertical farmers – companies developing novel agricultural methods, and who tend to grow indoors (Bristol-based Lettus Grow is a good example).
Powering indoor lamps burns a lot of energy, which can make up to 40% of operating costs, hampering the sector’s growth potential, according to Walton. She says Octopus’ new tariffs – one avoids evening peak costs, the other priced half hourly – enable them to cut energy bills by 8-12%.
She says that is quite a big carrot, literally.
“Currently, vertical farmers might be [billed] using average energy pricing, but through these tariffs we can help them flip the day into night,” she says. “It doesn’t matter to a carrot if it is day or night [when the lights are on], because it is an artificial environment. So using these tariffs, and by altering the circadian rhythm of the carrot, they can cut their costs, which helps them to innovate and scale more quickly.”
Since launching in January 2018, Octopus Energy for Business has accrued 5,000 customers, mostly SMEs, supplying them with 100% renewable power. Walton, a country director at Dutch utility Eneco prior to joining Octopus, has significant experience of the industrial and commercial energy market. But she believes the SME to mid-market is where opportunity lies.
“We call them the industrial and commercial customers of the future,” says Walton. She thinks Octopus can amass 20,000 of them over the next 12-24 months and creating niche products is a key strategy. The company already has Arsenal on its books, and Walton hinted further products for sports venues and breweries may be in the offing.
Local energy models and tariffs are another strategic aspect. The company launched its first local tariff in Leicester, using a local solar asset to supply local firms. Walton says the reaction has been “fantastic,” with hundreds of businesses signing up within the first few weeks, and Octopus targeting a further 500 by the year end.
“They are extremely engaged and extremely loyal – and they want to know what comes next,” says Walton. In future, that may be packaging on-site solar or other generation assets to business customers, says Walton. But for now, replicating the model in other cities takes priority and Brighton is next on the roadmap.
Though Walton has ambitious targets to hit, she says Octopus will not undersell itself.
“I want to achieve that scale of growth using our technology and insight, and by adding value, not from buying contracts.”
She says that if businesses can adapt to time of use tariffs and change their behaviour as a result, the GB system will become smarter and leaner that much sooner – laying the foundation for SME involvement in things like demand-side response (DSR).
“That will come for small businesses, but first we have to get them engaging with time of use and dynamic tariffs,” says Walton. “That is what we do.”