Octopus Energy has raised concerns that the net zero transition could see public support rapidly erode should energy prices rise further, as the ongoing cost-of-living crisis places significant financial burden on consumers. While the UK’s net zero ambitions remain popular, with twice as many people supporting net zero than not (43% vs. 20%), seven out of ten supporters (71%) say that their backing hinges on energy prices not rising.
Citing their recent survey of 2,000 UK adults in conjunction with Opinium[i], Octopus Energy found that the cost-of-living crisis remains the most pressing issue facing the country- with 90% of those surveyed saying they are concerned about rising energy prices. Further, 88% said that cutting energy bills would be the best way for the government to help reduce household expenses. This was placed ahead of reducing supermarket prices and cutting mortgage & rental costs.
In addition, reducing bills could have the knock-on effect of increasing public support for net zero, where 65% of people who currently oppose net zero say they would reconsider their position if the policy led to lower bills.
Greg Jackson, founder of Octopus Energy, said: "British people support net zero, but not if bills rise. We need to reform the market urgently to maintain public backing for cutting emissions. Clean energy can be cheaper to generate, but our outdated market means consumers don’t benefit.”
He added: “Billpayers are forking out billions to switch off wind farms on windy days while households and industry struggle with high bills - instead of enjoying cheaper energy. A modern market could save tens of billions over the next 15 years."[ii]
Jackson refers to the current methodology used in running the UK’s energy market (marginal price-based) where gas effectively sets the price for all power sold on the trading on spot (or day-ahead) wholesale market. The power exchange ‘Nord Pool’ accepts bids in price order, from lowest to highest, until demand is met, in what is known as the ‘merit order’: sources of electricity with the lowest marginal cost of generation (typically renewables) are the first bids to be accepted, and sources such as gas are the last[iii].
The marginal producer of electricity in the UK is most often gas because it is one of the most expensive sources, so is chosen last in the ‘merit order’ on the spot market, it is also easy to switch on and off to meet urgent demand. It means that even though gas is responsible for around a third of energy supply in the UK, it is the key factor for determining the price of nearly all energy sold.
The UK has among the highest electricity prices in Europe, with household electricity costing almost 25p per kilowatt-hour[iv], even though the percentage of energy in the UK from renewables has grown from 10.7% in 2014 to 36.1% in 2023.
The UK government is expected to announce plans for the future of the nation’s energy system in the coming months. The Government said in December 2024 that it will plan an energy system "based on what the country needs". In a press release published on 13th December, it said that these measures would include:
· cleaning up a dysfunctional grid system by prioritising the most important projects and ending the ‘first-come-first served’ system;
· speeding up decisions on planning permission by empowering planners to prioritise critical energy infrastructure;
· expanding the renewable auction process to stop delays and get more projects connected[v].
“Over this Parliament the government will be working relentlessly to translate the much cheaper wholesale costs of clean power into lower bills for consumers.”[vi] The release adds.
At the time Lucy Yu, CEO at Centre for Net Zero (which was founded by Octopus Energy), said:
“We must not forget the central role of consumers and communities in the energy transition. The British public’s support will be key, and the government must ensure clean power delivery has their interests at heart to keep us on track for 2030 and the critical decades beyond. Here, the promised Low Carbon Flexibility Roadmap and the decision on wholesale market reform can have a pivotal role in lowering bills and attracting private investment for clean energy projects. Many in the industry will feel that both are several years overdue, and strong decision-making and accountability in those areas will spell the difference between success and failure for this critical mission”.[vii]
[i] https://www.opinium.com/wp-content/uploads/2025/01/UK27375-Octopus-Energy-project-nat-rep.xlsx
[ii] Future of net zero at stake if energy bills go up | Octopus Energy
[iii] Electricity market | Institute for Government
[v] Government sets out plan for new era of clean electricity - GOV.UK
[vi] Ibid
[vii] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
