September 3, 2025 • 35 mins
Octopus Energy has over 11 million customers worldwide and a reputation as an innovator—but Octopus NZ COO Margaret Cooney says that in Aotearoa, market settings are holding them back.
In the face of security of supply issues and rising costs, Margaret believes our energy sector has been “complacent” for too long. So are there smarter ways to optimise power delivery? Should we be importing innovations like 'zero-bill homes'? What will it take for the country to get ahead of the demand curve? And if we have more than 50 electricity providers, why does Margaret say choice is dwindling for Kiwi households?
Plus, Margaret explains how technology can help consumers schedule their demand to reduce power bills and support the adoption of renewables.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Cura and welcome to Shed Lunch, brought to you by Cheesy's.
I'm Helen Mattison. Today we look at the perspective of
the UK's fastest growing energy supplier, Octopus Energy. We ask
what in roads has Octopus made since it's been here
in New Zealand, does the electricity sector allow for fresh
competition and how much will technical innovation helps solve our
(00:27):
power problems. In a moment, I'll be joined by Octopus
Energies Chief operating Officer, Margaret Cooney. But before we get started,
here's some important information.
Speaker 2 (00:38):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend reading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.
Speaker 1 (00:52):
Welcome Margaret, love you to have you in the studio.
Speaker 3 (00:55):
Thanks for having me.
Speaker 1 (00:57):
Now, before we dive into who Octopus it and what
you're doing here in New Zealand, let's look at your
background from what I can gather. For about twenty years
now or probably more, you've been in the energy sector
and various guys. As I think you started off as
an analyst in the market and regulatory scene. You've worked
for Meridian, Powershop Electric, I think you consulted for in
(01:20):
the like and obviously a big stunt in the UK.
What is it that fascinates you about the electricity sector
or the energy sector.
Speaker 3 (01:29):
Look, I think that electricity sector is really interesting and
obviously underpins our economy, so I think that's you know,
that's important to me that it's a really well functioning sector.
But also we're in this phase of significant change, so
the economics of energy are changing significantly. The need to
(01:51):
decarbonize our economy is really important, and I think it's
a fantastic growth opportunity. So it's a really interesting sector
to be a part of, and I feel really fortunate
that I've had some amazing opportunities in the sector. So,
you know, early on in my career I was involved
in setting up power Shop, which was a very innovative
(02:15):
company and really bought the benefits of smart meters that
have just been put into many New Zealand homes, brought
those benefits through to consumers for the first time. But
I think that early experience of doing things differently, of
driving change, you know, that's something I've tried to continue
(02:37):
in my career as well. So that leads us to Octopus.
Speaker 1 (02:41):
So give us an idea of how long you've been
here and really what's your point of difference.
Speaker 3 (02:47):
Yeah, so Octopus has been in the New Zealand market
since twenty twenty. We initially set up here to service
a bunch of technology projects in the APEC region. So
we've actually we've got a team of about one hundred
and fifty in New Zealand and the vast majority of
them don't work on anything to do with New Zealand.
(03:08):
They're actually providing support to our operations globally. Or there's
a team KRACKN that's increasingly separate from Octopus now who
are helping transform energy businesses in the APAC region. Some
of them are working on the Meridian project close to home.
(03:30):
So yeah, we have a few things going on. We
have a small retail business as well of seven thousand customers.
We would love to grow that, but we've been very
clear that the current market settings don't work for us
to grow that. So it's been experimental, I guess today.
Speaker 1 (03:50):
So we look at the backers of the company to
it's a private company. The parent being obviously in the UK,
you've got some big backers like Origin Energy, which is
out of Australia. There did You've got Tokyo Gas, who
I think you're working with to deploy octopercentergy in Japan?
Speaker 2 (04:07):
Is that right?
Speaker 3 (04:08):
Yes, that's right. We've got a joint venture with Tokyo
Gas in Japan. Their market got liberalized a few years back,
and so we've got entrant retailer that we're doing with them,
and then we've got our technology going into the rest
of the Tokyo Gas business as well.
Speaker 1 (04:28):
So let's look at krack and then, because that is
what you're famous for, what does it do? You know
for the lay person? You know what's so amazing about it?
Speaker 3 (04:37):
Look, I think one of the big benefits of Kraken
is that it's modern, a modern technology stack, and there's
accessible data and the platform is very user friendly. So
it's the combination of those things that allow retail businesses
to operate more efficiently but also develop new products. So,
(05:02):
you know, we're all familiar with electricity as kind of
bills ending up in your email or in the post,
but increasingly there's this opportunity to help consumers shift their
demand around and drive down the cost of energy for
those consumers. And in order to be able to offer
those types of products, you need a level of sophistication
(05:26):
in terms of your technology stack. You need deep data
and you need tools that allow you to offer that
in consumer ways of engaging and ways of managing their
devices within the home. And that's really what Kraken underpins.
Speaker 1 (05:44):
And if we look at cracking in terms of its competitors,
the technology I'm talking here, I mean it's the likes
of gen Track, who also work with energy companies and
utilities for the smart.
Speaker 3 (05:57):
Tech that's right. Gen Track are called SAP. All of
these big big names are the competitors for krackin so
cracking is really a B to B products. So Kraken
is sold to large utilities around the world. So the
likes of edf or as you mentioned, Origin Energy in
(06:21):
Australia er gone in Australia, So that's a product that
helps them operate their their retail business really smartly. For
us as an electricity retailer, there's an opportunity to use
that platform to deliver really innovative products.
Speaker 1 (06:40):
And if you look at the percentages of where the
focuses for the business I mean, is the B to
B are much bigger part than says you see, the
retail is quite small.
Speaker 3 (06:49):
So globally, Kraken is increasingly becoming separate from the Octopus
Energy operations, and that's really because we're serving so many
of our competitors through that technology licensing. But they're both
really significant businesses in their own right. And Octopus Energy
(07:13):
as a retail supplier supplies over about over eleven and
a half million consumers around the globe. So we've got
retail businesses in the UK, in most of Western Europe,
the Japanese one which you mentioned, the US, and our
seven thousand very important customers in New Zealand. What about Australia, No,
(07:37):
we don't have a retail business in Australia.
Speaker 1 (07:39):
What about generation assets because obviously the competition here eighty
five percent I think are the big four if you like, Contact, Genesis,
Rominian Mercury, they've got kind of the line's share of
the market and they are they've got the generation assets
as well as the retail arm Would I know you've
gotneration assets in other parts of the world. Would Octopus
(08:02):
consider that here?
Speaker 3 (08:04):
Look the New Zealand market is in the scope of
the funds that we have for investing in new generations,
so it's a possibility. Again, we've signaled to government and
regulators that the current market settings don't work well for
independent players, and so you know, we've got lots of
great opportunities around the globe, but today New Zealand hasn't
(08:28):
been a priority. As a New Zealander, I would love
it to be a priority, and I'm forever sending my
UK colleagues different projects and things that they can invest in.
But I think i'm you know, one of the things
I'm hoping that government does is part of this package
of reforms that they're looking at, is think about how
(08:49):
they can mobilize all that investment and know how from
companies overseas to come into the New Zealand market.
Speaker 1 (08:57):
Before we dive into the dynamics of the market and
what's happening at the moment, perhaps if you can give
us an idea of what you think the demand is
for electricity, I mean the likes of data centers and worldwide,
not just New Zealand. You know, it just seems like
we need more and more. But what sort of stats
can you offer for that.
Speaker 3 (09:16):
Yeah, so the global picture is quite interesting. So globally
we've traditionally growing energy electricity demand by about two and
a half percent per anim but over the past year
that's really tipped up, so it's almost double that in
a year.
Speaker 1 (09:35):
AI.
Speaker 3 (09:36):
It's a combination of a few things, So AI is
definitely a driver, but also the cost of solar and
the access to that, particularly in emerging economies, has driven
rapid electrification in India. And then China is going gangbusters
(09:57):
on electrifying and you know, is really an electro state
now and a real pioneer of you know, rapid deployment
of renewables. And also they manufacture so much of the
of the products that go across the electricity supply chain
(10:18):
as well. So the global picture for electricity is growth.
The New Zealand picture is more complicated. So, you know,
most listeners will have been aware that over the past
year we've had significant struggles in terms of security of supply,
(10:40):
but on top of that, we've had really high prices
since really about twenty eighteen they kicked up and as
a result of that, you know, we've had quite flat demand.
So and even last year it declined because we were
asking large consumers to curtail their usage, but I think
(11:06):
we should be more optimistic about the about what future
the future, and you know that if we can build
enough generation to service the demand, then you know we
should be realizing a significant increase in it. So we
already know that there there's you know, between half a
(11:30):
gig and a gig depends who you talk to. With
the data centers sitting there to be built before twenty thirty,
so that's pretty soon. So when you think if we've
got that much data center load, then in terms of
the new renewables to match off, we need you know,
(11:51):
if it's just a they're all an exact match, but
if it's wind and solar, then we need about you know,
four times the capacity of whatever's coming on to be built.
So there's the opportunity to realize those that growth from
data centers. We will continue to get some increase from
(12:14):
the residential space, and that will be driven by the
rate of house builds. So we see, you know, every
house that gets built that will edge consumption and the
rate at which they electrified their transport. So yeah, if
you buy an EV that will add kind of twenty
to thirty percent more consumption onto your household. So I
(12:42):
think if we get the clean car discount back that yeah,
we saw that that when that discount was in place,
we did see the rapid more rapid adoption of vbs,
but that's really Plata's recently and I think also the
economic climate impacts that. And the other thing is we're
(13:05):
also saying that many households are quite cost constraints conscious,
so actual residential consumption on averages is pretty flat, but
it's that new build that's adding to the system as well.
Speaker 1 (13:21):
So Margaret, on a world scale, then how progressive actually
is New Zealand when it comes to electrifying and putting
money into renewable energy generation.
Speaker 3 (13:32):
So if we look at the performance over the last decade,
you know, New Zealand we've added on a per capita basis,
so probably max about forty fifty watts per person. In contrast,
Australia is about four times that. In contrast, again, China
(13:54):
is probably about ten times that. Almost five hundred watts
was in the last year alone. So we've been very
modest in the way that we've scaled our system and
I think that's our immediate challenge is really getting that
uptick and new supply the.
Speaker 1 (14:14):
Un residential though, I mean, are we a place in
the world where if it's data centers all the like,
where you know, we could be seen as somewhere where
we could generate electricity and pass it on beyond our
shores sort of thing. Yeah.
Speaker 3 (14:29):
Look, I think the other thing I should have mentioned
is obviously we've got this need to electrify industry that's
currently using gas, and that's a really immediate need. So
if you think about many of those large gas users
like Fonterra or others, they've got a massive shift that
they need to do very quickly in terms of New
Zealand being an appealing place to come and set up. Look,
(14:53):
I think the Minister of Finance has talked about, you know,
one of the most common complaints she has is the
price of it in New Zealand and that that has
been prohibitive in recent years. But when we look at
the cost of building new electricity generation, actually we should
have some confidence that we should go after these opportunities
(15:16):
and really our challenges getting ourselves into a position that
we're building ahead of the ahead of the demand, so
that we don't have the crazy prices that we have had.
Speaker 1 (15:28):
Okay, let's look at the sector at the moment. We've
got two reviews, a sort of parallel if you like.
I think one of them is worth the Minister for
Energy that was done by Frontier Economics, and that was
focusing on the whole sector really in many things. And
then obviously the Electricity Authority and the Commerce Commission have
(15:51):
been looking probably more at competition and whether or not
the big four, the four Gen tailors really have a
sort of a dominance that they make it a bit
un fear. Are you hopeful that there will be some
change with I mean, we've had reviews before and many
of them.
Speaker 3 (16:09):
Look, we're starting to see some change come through from
the regulator. So we had some announcements last week about changes,
which we think, you know, they're just announcements of consultation
at the moment, so I'm lied to kind of put
too much stock in them until we've seen the detail. Yes,
(16:31):
but they signal. The signal is really positive. You know,
we've had real problems with the contracts market that actually
underpins the trading between the big gen tailors and between
independent players and large industrial consumers. That has not worked
(16:54):
well and that's probably not a surprise when we've got
so much vertical integration and such moments in the sector.
But you know, it has been frustrating that these these
are kind of well flagged issues, they're not new, but
the regulatory response has been too slow. But you know,
(17:14):
the electricity authorities moving at pace now and I think
our job is to work with them to try and
make those rules as effective as possible. The frontier review,
we're all yes, yet to know what's in there. We've
(17:35):
you know, heard different snippets about, you know, this idea
of thermal co or nationalizing some of the thermal assets.
I think, though, you know, the priority needs to be
on how can we get out of this current build
after the demanding you know, we need to break that cycle.
(18:00):
But also I think I think generally the sector has
been resting too much on its laurels and been quite
complacent about a deteriorating situation. So there will no doubt
be some well, I think there needs to be some
changes in there around the governance of this of the
(18:22):
industry and the monitoring of security of supply, because very
scarily in a dry yet last year we got down
to days of coal stock file left and for such
a critical industry, you know, we can't. We can't run
it like this. We need to be making sure that
(18:43):
we have that downside risk covered because that's what ultimately
costs New Zealand businesses so much, either in the price
that that that risk translates to in terms of higher
prices in the market or having to down their production,
which you know, it's bad if we don't. If we
(19:05):
can't make stuff and ship stuff, we can't earn money
to build the hospitals and roads and things that we
need in New Zealand. What do you think of.
Speaker 1 (19:15):
The four gen tailors have got together and sort of
a backup, if you like, with coal through Genesis and
they're thinking about they would have an agreement whereby there
would be a backup using coal and it's got to
have Commerce Commission approval and the like, but would supposedly
open the door for retailers like yourselves to have access
(19:37):
to something like that too.
Speaker 3 (19:40):
Keeping the generation in market is really important because we
absolutely need it, you mean coal that well. Keeping that
hunting plant plan in market is really critical because we're
losing all the gas generation that we have had, so
we just can't afford to lose it. It's obviously not
(20:01):
ideal that it's coal, but you know, we've got to
be pragmatic about these things. I think our preference would
be for an arrangement that was more accessible for people,
but I think we'll wait to see what the details
of that are because there's limited transparency over those around
(20:25):
those arrangements at the moment, so it's actually quite hard
to comment on whether they're good or bad. But I
think there is a comment to be made around the
suggestions that contracting will happen off the back of it.
What we've seen previously is actually there's been ongoing issues
(20:45):
around that contracting and continuous refusals to supply. So I
think as part of the Commerce Commissions approval of that,
assuming that happens, that they should be putting a conditions
on it, that there's a commitment around the volume of
trading that happens off the back of these arrangements, because
(21:10):
I think, you know, otherwise it's a hollow promise that
based on previous behavior hasn't borne out.
Speaker 1 (21:17):
So do you mean that like at the moment, as
a generation retailer, you can it would appear. I don't
know if this is actually how it happens, but they
would be able to sort of favor their own retail arm.
Speaker 3 (21:30):
That plus, as some of the work from the electricity
authority has picked up, there's been an ongoing issue of
just refusal to supply, so refusal to engage in contracting,
and very very low volumes of trading. So those are
some of the problems that make it really unsustainable for
(21:51):
independent generators and retailers to come into the market because
you need a level of liquidity in the market to
to make things work effectively to met Just still.
Speaker 1 (22:05):
On the independent retailer generator or retailer question, I mean
a lot of commentators, particularly Obseas, talk about New Zealand
having about fifty Is that actually right? I mean, is
that the amount of choice that consumers.
Speaker 3 (22:20):
Really do have? No, it's not. It's I mean, there's
fifty registered on the yahah, but like some of them
are random people or you know, it might be a
local airport that's just covering the shops in that airport.
So I think there's the if you look at the
(22:40):
level of available offers to consumers, that's actually declined significantly
over recent years. So we've had we've you know, we've
got about eighty seven percent of the retail market concentrated
in the Big four. We've had Flick going to Meridian Edge.
(23:00):
We've had Energy Club got sucked up a few years ago,
We've had Ecotricity acquired by Genesis. There's there's increasing contraction
concentration and less options available for consumers as a result.
And I think you that that bears out in the
(23:24):
data around the offers available to consumers and how innovative
they are or not. And also, you know, we have
seen that when when independent retailers come out of market,
like last year when Electric Key we stopped accepting customers immediately,
there was actually quite a significant increase in the prices
(23:47):
from the Big four that were on power Switch. So
I think there's a really important dynamic that that independent
competition introduces that is around price, but it's also around
the innovation that delivers lower cost for consumers. So that
would be things like if you look at the independence
(24:09):
the pioneering things like hour of power, the use of
hot water control, time of use, tariffs, each of these
can actually deliver material savings to the end consumer. And
we want to we want that dynamic to continue because
one of the biggest opportunities we have in driving down
(24:32):
the cost of energy for end consumers is actually engaging
that demand side more smartly, so that ability to if
you think about your energy usage, there's probably about sixty
percent of it that can be shifted to any time
of day without it interrupting your lifestyle, and that at
(24:55):
the moment that doesn't happen, and it's how do we
make that happen, Because if we could shift that into
the times when we've got like an abundance of wind
and prices are lower, it allows us both to reduce
the cost of your bill is a household, but also
(25:17):
it will help us accelerate the rate at which we
bring renewables into the energy system. And equally, you know,
a lot of the cost for consumers will be driven
from how much lines capacity we need to build. And
if we can do things like avoid charging our vehicles
(25:39):
at peak, this will stop us having to invest significantly
in really expensive poles and wires and transformers and things.
It will mean that we can use the existing infrastructure
much more smartly. So that's part of the role of
retailers is to bring more dynamicism in the way that
(26:04):
doesn't put the burden on consumers in terms of mental overhead,
but just makes it easier for them.
Speaker 1 (26:11):
Is that not happening now? Then surely there is innovation
going on. Given the competition even between the four dentators
for example.
Speaker 3 (26:20):
It's been limited. So as a result, we've seen that
the electricity authorities actually regulated the large four to require
them to offer time abuse tariffs. And you know they're
not all the same, so some of them were quick
to embrace things like hot water others that's taken them
four years to enable that for consumers, and speaking as
(26:45):
a retailer, that's not a hard thing to enable.
Speaker 1 (26:48):
Just thinking too, then of investors here, given that that's
our audience and the situation at the moment, I mean,
there's a lot of enthusiasm about investing in energy. As
you said it, you know, it's kind of the corners
own of our lives and the economy to some degree.
What would you say to retail investors when they're faced
with the situation we have now there's a lot of
(27:10):
change probably about to happen, or who knows really what
what that will end up being. But if they're looking
our investors particularly, I really can on innovation and tech
and you know, what would you say to them about
thinking about where they put their money in terms of
the sectors. I mean it's apart from some of the
listed entities, is probably not that many avenues for them.
Speaker 3 (27:33):
Well, it's interesting because the way our electricity system works
ultimately impacts so many of the companies that your investors
will be investing in. So whether it's you know, the
refrigeration at Mainfrage, or the production costs for milk powder,
the age two cells, or you know, the list goes on,
(27:55):
is such a fundamental ingredient. I think you know, as
as investors, you have influence over these boards. So it's
making sure that we're doing the right thing in terms
of the New Zealand economy and building out the electricity sector.
I think, you know, the fundamentals mean that it's a
(28:16):
sector that will continue to grow ultimately, and you know,
we should have confidence that would all be better off
by having a larger electricity market and system and more
diversity within that market. What about the.
Speaker 1 (28:35):
Risks there's always risks with investment, I mean, particularly in
the energy sector.
Speaker 3 (28:40):
I think the risks in the electricity sector at the
moment the biggest risk we have is continued de industrialization.
That's not good for anyone, and that's the current trajectory
we're on. So I look at the opportunity for change,
as you know, fundamentally it should add to the possibilities
(29:01):
for growth in the sector if we get the settings right.
Speaker 1 (29:07):
What would be getting the settings right for Octopus to
thrive and be a larger player, if you like, almost
significant player in New Zealand.
Speaker 3 (29:18):
Yeah. So in terms of what I think the New
Zealand needs to focus on, it's one we need a strategy,
you know, we should unlike many countries in the world,
the economics of electrication should work for end consumers. So
we don't have cheap fossil fuel here. We import huge
amounts of fuel and the more quickly we can displace that,
(29:42):
the more money we have in our wallets, and the
more competitive we should be. So we should be really
focused on making that change happen quickly. I think what
we've seen over the past, well over this decade, is
that you know, investors in large infrastructure and naturally conservative
(30:04):
because they've got large assets, you know, and that is legitimate.
How do we motivate them and incentivize them to invest
ahead of demand, and we've seen other countries have put
in place mechanisms to encourage that demand to come, that
supply to come ahead of demand. So I think long
(30:27):
term contracting arrangements, all of these types of things should
be considered for New Zealand. I think then there's a
question around how that market is working, and I think
some of what the Electricity Authority is working on at
the moment should hopefully address that. And then we do
(30:49):
need just better governance of the sector and coordination, especially
at the moment because we've got a really complicated situation
of fast declining gas and need to help those industries
exposed switch quickly into electricity, and the need to immediately
(31:11):
scale electricity. So I think, you know, there's only so
much different actors in the market can do to resolve that,
but it actually requires a bit of facilitation from government.
You know, if we were head confidence about the market
settings and the ability to grow with be more of
(31:31):
a mass market player. And we've got some great products
that we no have appeal with the general customer. We've
seen the success of them in other markets and are
excited about the potential to offer better choice to New
(31:52):
Zealand consumers.
Speaker 1 (31:53):
What's an example of one of those innovative products.
Speaker 3 (31:56):
Yeah, so we've got we've got one of these news
land as well, so a zero bell home. So we
are working with property developers in the UK. Basically the
cheapest time to put much of this technology into homes
is when they're getting built. But you get this incentive issue,
(32:16):
like if a property developers building homes, they're really cost conscious,
and how do we incentivize those builders to build homes
that are more energy smart? And so what we've done
is we've provided a five year guarantee that if a
new home is built and it meets a bunch of
(32:38):
criteria so it's got solar and battery and heat pumps,
that we can give a guarantee that we would there
will be no bill for that house for five years.
Obviously assumes normal consumption, but no bitcoin miners in these properties.
But you know, that is a really compelling proposition and
(33:03):
it's a fantastic one for social housing developers and things.
So we've been doing lots of these in the UK.
We're working with a bunch of property developers here around
the concept. It always takes quite long, yeah, you know,
go from concept of building properties. But that's an example
where we think, you know, a simple solution that delivers
(33:25):
great outcomes for the consumer. Another one is where we
have a product called Intelligent Octopus. We have actually about
ten percent of the UK's EV fleet and managed using
this product, and basically it helps if you on your
(33:45):
app use sele I need my car by X time
in the morning, and then we will determine when that
car is charged based on what's happening in the market
and deliver you a much lower price and return for
having control over charging it. And really excitingly, we're starting
(34:08):
to see vehicle to grid capable cars come into the
market at quite accessible price point. So then you imagine
that functionality with the ability to export into the grid,
the energy market starts looking quite different. It would only
take tens of thousands of these vehicles to totally nail
(34:30):
the peak problem that we have. So I think there's
these really exciting opportunities to use technology more smartly and
that will hopefully lower the cost of supply for all
of us.
Speaker 1 (34:44):
Well, great chat, Margaret. We could go for hours, but
we'll leave it there. Thank you for coming in. Thanks
so much for having me. Really enjoyed talking to you
and thanks everyone for tuning in. You can watch shed
Lunch on YouTube or follow us on your favorite podcast app,
leave us a race sting, or tell us what you'd
like to hear next. Matowa mm hmm
Cura and welcome to Shed Lunch, brought to you by Cheesy's.
I'm Helen Mattison. Today we look at the perspective of
the UK's fastest growing energy supplier, Octopus Energy. We ask
what in roads has Octopus made since it's been here
in New Zealand, does the electricity sector allow for fresh
competition and how much will technical innovation helps solve our
(00:27):
power problems. In a moment, I'll be joined by Octopus
Energies Chief operating Officer, Margaret Cooney. But before we get started,
here's some important information.
Speaker 2 (00:38):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend reading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.
Speaker 1 (00:52):
Welcome Margaret, love you to have you in the studio.
Speaker 3 (00:55):
Thanks for having me.
Speaker 1 (00:57):
Now, before we dive into who Octopus it and what
you're doing here in New Zealand, let's look at your
background from what I can gather. For about twenty years
now or probably more, you've been in the energy sector
and various guys. As I think you started off as
an analyst in the market and regulatory scene. You've worked
for Meridian, Powershop Electric, I think you consulted for in
(01:20):
the like and obviously a big stunt in the UK.
What is it that fascinates you about the electricity sector
or the energy sector.
Speaker 3 (01:29):
Look, I think that electricity sector is really interesting and
obviously underpins our economy, so I think that's you know,
that's important to me that it's a really well functioning sector.
But also we're in this phase of significant change, so
the economics of energy are changing significantly. The need to
(01:51):
decarbonize our economy is really important, and I think it's
a fantastic growth opportunity. So it's a really interesting sector
to be a part of, and I feel really fortunate
that I've had some amazing opportunities in the sector. So,
you know, early on in my career I was involved
in setting up power Shop, which was a very innovative
(02:15):
company and really bought the benefits of smart meters that
have just been put into many New Zealand homes, brought
those benefits through to consumers for the first time. But
I think that early experience of doing things differently, of
driving change, you know, that's something I've tried to continue
(02:37):
in my career as well. So that leads us to Octopus.
Speaker 1 (02:41):
So give us an idea of how long you've been
here and really what's your point of difference.
Speaker 3 (02:47):
Yeah, so Octopus has been in the New Zealand market
since twenty twenty. We initially set up here to service
a bunch of technology projects in the APEC region. So
we've actually we've got a team of about one hundred
and fifty in New Zealand and the vast majority of
them don't work on anything to do with New Zealand.
(03:08):
They're actually providing support to our operations globally. Or there's
a team KRACKN that's increasingly separate from Octopus now who
are helping transform energy businesses in the APAC region. Some
of them are working on the Meridian project close to home.
(03:30):
So yeah, we have a few things going on. We
have a small retail business as well of seven thousand customers.
We would love to grow that, but we've been very
clear that the current market settings don't work for us
to grow that. So it's been experimental, I guess today.
Speaker 1 (03:50):
So we look at the backers of the company to
it's a private company. The parent being obviously in the UK,
you've got some big backers like Origin Energy, which is
out of Australia. There did You've got Tokyo Gas, who
I think you're working with to deploy octopercentergy in Japan?
Speaker 2 (04:07):
Is that right?
Speaker 3 (04:08):
Yes, that's right. We've got a joint venture with Tokyo
Gas in Japan. Their market got liberalized a few years back,
and so we've got entrant retailer that we're doing with them,
and then we've got our technology going into the rest
of the Tokyo Gas business as well.
Speaker 1 (04:28):
So let's look at krack and then, because that is
what you're famous for, what does it do? You know
for the lay person? You know what's so amazing about it?
Speaker 3 (04:37):
Look, I think one of the big benefits of Kraken
is that it's modern, a modern technology stack, and there's
accessible data and the platform is very user friendly. So
it's the combination of those things that allow retail businesses
to operate more efficiently but also develop new products. So,
(05:02):
you know, we're all familiar with electricity as kind of
bills ending up in your email or in the post,
but increasingly there's this opportunity to help consumers shift their
demand around and drive down the cost of energy for
those consumers. And in order to be able to offer
those types of products, you need a level of sophistication
(05:26):
in terms of your technology stack. You need deep data
and you need tools that allow you to offer that
in consumer ways of engaging and ways of managing their
devices within the home. And that's really what Kraken underpins.
Speaker 1 (05:44):
And if we look at cracking in terms of its competitors,
the technology I'm talking here, I mean it's the likes
of gen Track, who also work with energy companies and
utilities for the smart.
Speaker 3 (05:57):
Tech that's right. Gen Track are called SAP. All of
these big big names are the competitors for krackin so
cracking is really a B to B products. So Kraken
is sold to large utilities around the world. So the
likes of edf or as you mentioned, Origin Energy in
(06:21):
Australia er gone in Australia, So that's a product that
helps them operate their their retail business really smartly. For
us as an electricity retailer, there's an opportunity to use
that platform to deliver really innovative products.
Speaker 1 (06:40):
And if you look at the percentages of where the
focuses for the business I mean, is the B to
B are much bigger part than says you see, the
retail is quite small.
Speaker 3 (06:49):
So globally, Kraken is increasingly becoming separate from the Octopus
Energy operations, and that's really because we're serving so many
of our competitors through that technology licensing. But they're both
really significant businesses in their own right. And Octopus Energy
(07:13):
as a retail supplier supplies over about over eleven and
a half million consumers around the globe. So we've got
retail businesses in the UK, in most of Western Europe,
the Japanese one which you mentioned, the US, and our
seven thousand very important customers in New Zealand. What about Australia, No,
(07:37):
we don't have a retail business in Australia.
Speaker 1 (07:39):
What about generation assets because obviously the competition here eighty
five percent I think are the big four if you like, Contact, Genesis,
Rominian Mercury, they've got kind of the line's share of
the market and they are they've got the generation assets
as well as the retail arm Would I know you've
gotneration assets in other parts of the world. Would Octopus
(08:02):
consider that here?
Speaker 3 (08:04):
Look the New Zealand market is in the scope of
the funds that we have for investing in new generations,
so it's a possibility. Again, we've signaled to government and
regulators that the current market settings don't work well for
independent players, and so you know, we've got lots of
great opportunities around the globe, but today New Zealand hasn't
(08:28):
been a priority. As a New Zealander, I would love
it to be a priority, and I'm forever sending my
UK colleagues different projects and things that they can invest in.
But I think i'm you know, one of the things
I'm hoping that government does is part of this package
of reforms that they're looking at, is think about how
(08:49):
they can mobilize all that investment and know how from
companies overseas to come into the New Zealand market.
Speaker 1 (08:57):
Before we dive into the dynamics of the market and
what's happening at the moment, perhaps if you can give
us an idea of what you think the demand is
for electricity, I mean the likes of data centers and worldwide,
not just New Zealand. You know, it just seems like
we need more and more. But what sort of stats
can you offer for that.
Speaker 3 (09:16):
Yeah, so the global picture is quite interesting. So globally
we've traditionally growing energy electricity demand by about two and
a half percent per anim but over the past year
that's really tipped up, so it's almost double that in
a year.
Speaker 1 (09:35):
AI.
Speaker 3 (09:36):
It's a combination of a few things, So AI is
definitely a driver, but also the cost of solar and
the access to that, particularly in emerging economies, has driven
rapid electrification in India. And then China is going gangbusters
(09:57):
on electrifying and you know, is really an electro state
now and a real pioneer of you know, rapid deployment
of renewables. And also they manufacture so much of the
of the products that go across the electricity supply chain
(10:18):
as well. So the global picture for electricity is growth.
The New Zealand picture is more complicated. So, you know,
most listeners will have been aware that over the past
year we've had significant struggles in terms of security of supply,
(10:40):
but on top of that, we've had really high prices
since really about twenty eighteen they kicked up and as
a result of that, you know, we've had quite flat demand.
So and even last year it declined because we were
asking large consumers to curtail their usage, but I think
(11:06):
we should be more optimistic about the about what future
the future, and you know that if we can build
enough generation to service the demand, then you know we
should be realizing a significant increase in it. So we
already know that there there's you know, between half a
(11:30):
gig and a gig depends who you talk to. With
the data centers sitting there to be built before twenty thirty,
so that's pretty soon. So when you think if we've
got that much data center load, then in terms of
the new renewables to match off, we need you know,
(11:51):
if it's just a they're all an exact match, but
if it's wind and solar, then we need about you know,
four times the capacity of whatever's coming on to be built.
So there's the opportunity to realize those that growth from
data centers. We will continue to get some increase from
(12:14):
the residential space, and that will be driven by the
rate of house builds. So we see, you know, every
house that gets built that will edge consumption and the
rate at which they electrified their transport. So yeah, if
you buy an EV that will add kind of twenty
to thirty percent more consumption onto your household. So I
(12:42):
think if we get the clean car discount back that yeah,
we saw that that when that discount was in place,
we did see the rapid more rapid adoption of vbs,
but that's really Plata's recently and I think also the
economic climate impacts that. And the other thing is we're
(13:05):
also saying that many households are quite cost constraints conscious,
so actual residential consumption on averages is pretty flat, but
it's that new build that's adding to the system as well.
Speaker 1 (13:21):
So Margaret, on a world scale, then how progressive actually
is New Zealand when it comes to electrifying and putting
money into renewable energy generation.
Speaker 3 (13:32):
So if we look at the performance over the last decade,
you know, New Zealand we've added on a per capita basis,
so probably max about forty fifty watts per person. In contrast,
Australia is about four times that. In contrast, again, China
(13:54):
is probably about ten times that. Almost five hundred watts
was in the last year alone. So we've been very
modest in the way that we've scaled our system and
I think that's our immediate challenge is really getting that
uptick and new supply the.
Speaker 1 (14:14):
Un residential though, I mean, are we a place in
the world where if it's data centers all the like,
where you know, we could be seen as somewhere where
we could generate electricity and pass it on beyond our
shores sort of thing. Yeah.
Speaker 3 (14:29):
Look, I think the other thing I should have mentioned
is obviously we've got this need to electrify industry that's
currently using gas, and that's a really immediate need. So
if you think about many of those large gas users
like Fonterra or others, they've got a massive shift that
they need to do very quickly in terms of New
Zealand being an appealing place to come and set up. Look,
(14:53):
I think the Minister of Finance has talked about, you know,
one of the most common complaints she has is the
price of it in New Zealand and that that has
been prohibitive in recent years. But when we look at
the cost of building new electricity generation, actually we should
have some confidence that we should go after these opportunities
(15:16):
and really our challenges getting ourselves into a position that
we're building ahead of the ahead of the demand, so
that we don't have the crazy prices that we have had.
Speaker 1 (15:28):
Okay, let's look at the sector at the moment. We've
got two reviews, a sort of parallel if you like.
I think one of them is worth the Minister for
Energy that was done by Frontier Economics, and that was
focusing on the whole sector really in many things. And
then obviously the Electricity Authority and the Commerce Commission have
(15:51):
been looking probably more at competition and whether or not
the big four, the four Gen tailors really have a
sort of a dominance that they make it a bit
un fear. Are you hopeful that there will be some
change with I mean, we've had reviews before and many
of them.
Speaker 3 (16:09):
Look, we're starting to see some change come through from
the regulator. So we had some announcements last week about changes,
which we think, you know, they're just announcements of consultation
at the moment, so I'm lied to kind of put
too much stock in them until we've seen the detail. Yes,
(16:31):
but they signal. The signal is really positive. You know,
we've had real problems with the contracts market that actually
underpins the trading between the big gen tailors and between
independent players and large industrial consumers. That has not worked
(16:54):
well and that's probably not a surprise when we've got
so much vertical integration and such moments in the sector.
But you know, it has been frustrating that these these
are kind of well flagged issues, they're not new, but
the regulatory response has been too slow. But you know,
(17:14):
the electricity authorities moving at pace now and I think
our job is to work with them to try and
make those rules as effective as possible. The frontier review,
we're all yes, yet to know what's in there. We've
(17:35):
you know, heard different snippets about, you know, this idea
of thermal co or nationalizing some of the thermal assets.
I think, though, you know, the priority needs to be
on how can we get out of this current build
after the demanding you know, we need to break that cycle.
(18:00):
But also I think I think generally the sector has
been resting too much on its laurels and been quite
complacent about a deteriorating situation. So there will no doubt
be some well, I think there needs to be some
changes in there around the governance of this of the
(18:22):
industry and the monitoring of security of supply, because very
scarily in a dry yet last year we got down
to days of coal stock file left and for such
a critical industry, you know, we can't. We can't run
it like this. We need to be making sure that
(18:43):
we have that downside risk covered because that's what ultimately
costs New Zealand businesses so much, either in the price
that that that risk translates to in terms of higher
prices in the market or having to down their production,
which you know, it's bad if we don't. If we
(19:05):
can't make stuff and ship stuff, we can't earn money
to build the hospitals and roads and things that we
need in New Zealand. What do you think of.
Speaker 1 (19:15):
The four gen tailors have got together and sort of
a backup, if you like, with coal through Genesis and
they're thinking about they would have an agreement whereby there
would be a backup using coal and it's got to
have Commerce Commission approval and the like, but would supposedly
open the door for retailers like yourselves to have access
(19:37):
to something like that too.
Speaker 3 (19:40):
Keeping the generation in market is really important because we
absolutely need it, you mean coal that well. Keeping that
hunting plant plan in market is really critical because we're
losing all the gas generation that we have had, so
we just can't afford to lose it. It's obviously not
(20:01):
ideal that it's coal, but you know, we've got to
be pragmatic about these things. I think our preference would
be for an arrangement that was more accessible for people,
but I think we'll wait to see what the details
of that are because there's limited transparency over those around
(20:25):
those arrangements at the moment, so it's actually quite hard
to comment on whether they're good or bad. But I
think there is a comment to be made around the
suggestions that contracting will happen off the back of it.
What we've seen previously is actually there's been ongoing issues
(20:45):
around that contracting and continuous refusals to supply. So I
think as part of the Commerce Commissions approval of that,
assuming that happens, that they should be putting a conditions
on it, that there's a commitment around the volume of
trading that happens off the back of these arrangements, because
(21:10):
I think, you know, otherwise it's a hollow promise that
based on previous behavior hasn't borne out.
Speaker 1 (21:17):
So do you mean that like at the moment, as
a generation retailer, you can it would appear. I don't
know if this is actually how it happens, but they
would be able to sort of favor their own retail arm.
Speaker 3 (21:30):
That plus, as some of the work from the electricity
authority has picked up, there's been an ongoing issue of
just refusal to supply, so refusal to engage in contracting,
and very very low volumes of trading. So those are
some of the problems that make it really unsustainable for
(21:51):
independent generators and retailers to come into the market because
you need a level of liquidity in the market to
to make things work effectively to met Just still.
Speaker 1 (22:05):
On the independent retailer generator or retailer question, I mean
a lot of commentators, particularly Obseas, talk about New Zealand
having about fifty Is that actually right? I mean, is
that the amount of choice that consumers.
Speaker 3 (22:20):
Really do have? No, it's not. It's I mean, there's
fifty registered on the yahah, but like some of them
are random people or you know, it might be a
local airport that's just covering the shops in that airport.
So I think there's the if you look at the
(22:40):
level of available offers to consumers, that's actually declined significantly
over recent years. So we've had we've you know, we've
got about eighty seven percent of the retail market concentrated
in the Big four. We've had Flick going to Meridian Edge.
(23:00):
We've had Energy Club got sucked up a few years ago,
We've had Ecotricity acquired by Genesis. There's there's increasing contraction
concentration and less options available for consumers as a result.
And I think you that that bears out in the
(23:24):
data around the offers available to consumers and how innovative
they are or not. And also, you know, we have
seen that when when independent retailers come out of market,
like last year when Electric Key we stopped accepting customers immediately,
there was actually quite a significant increase in the prices
(23:47):
from the Big four that were on power Switch. So
I think there's a really important dynamic that that independent
competition introduces that is around price, but it's also around
the innovation that delivers lower cost for consumers. So that
would be things like if you look at the independence
(24:09):
the pioneering things like hour of power, the use of
hot water control, time of use, tariffs, each of these
can actually deliver material savings to the end consumer. And
we want to we want that dynamic to continue because
one of the biggest opportunities we have in driving down
(24:32):
the cost of energy for end consumers is actually engaging
that demand side more smartly, so that ability to if
you think about your energy usage, there's probably about sixty
percent of it that can be shifted to any time
of day without it interrupting your lifestyle, and that at
(24:55):
the moment that doesn't happen, and it's how do we
make that happen, Because if we could shift that into
the times when we've got like an abundance of wind
and prices are lower, it allows us both to reduce
the cost of your bill is a household, but also
(25:17):
it will help us accelerate the rate at which we
bring renewables into the energy system. And equally, you know,
a lot of the cost for consumers will be driven
from how much lines capacity we need to build. And
if we can do things like avoid charging our vehicles
(25:39):
at peak, this will stop us having to invest significantly
in really expensive poles and wires and transformers and things.
It will mean that we can use the existing infrastructure
much more smartly. So that's part of the role of
retailers is to bring more dynamicism in the way that
(26:04):
doesn't put the burden on consumers in terms of mental overhead,
but just makes it easier for them.
Speaker 1 (26:11):
Is that not happening now? Then surely there is innovation
going on. Given the competition even between the four dentators
for example.
Speaker 3 (26:20):
It's been limited. So as a result, we've seen that
the electricity authorities actually regulated the large four to require
them to offer time abuse tariffs. And you know they're
not all the same, so some of them were quick
to embrace things like hot water others that's taken them
four years to enable that for consumers, and speaking as
(26:45):
a retailer, that's not a hard thing to enable.
Speaker 1 (26:48):
Just thinking too, then of investors here, given that that's
our audience and the situation at the moment, I mean,
there's a lot of enthusiasm about investing in energy. As
you said it, you know, it's kind of the corners
own of our lives and the economy to some degree.
What would you say to retail investors when they're faced
with the situation we have now there's a lot of
(27:10):
change probably about to happen, or who knows really what
what that will end up being. But if they're looking
our investors particularly, I really can on innovation and tech
and you know, what would you say to them about
thinking about where they put their money in terms of
the sectors. I mean it's apart from some of the
listed entities, is probably not that many avenues for them.
Speaker 3 (27:33):
Well, it's interesting because the way our electricity system works
ultimately impacts so many of the companies that your investors
will be investing in. So whether it's you know, the
refrigeration at Mainfrage, or the production costs for milk powder,
the age two cells, or you know, the list goes on,
(27:55):
is such a fundamental ingredient. I think you know, as
as investors, you have influence over these boards. So it's
making sure that we're doing the right thing in terms
of the New Zealand economy and building out the electricity sector.
I think, you know, the fundamentals mean that it's a
(28:16):
sector that will continue to grow ultimately, and you know,
we should have confidence that would all be better off
by having a larger electricity market and system and more
diversity within that market. What about the.
Speaker 1 (28:35):
Risks there's always risks with investment, I mean, particularly in
the energy sector.
Speaker 3 (28:40):
I think the risks in the electricity sector at the
moment the biggest risk we have is continued de industrialization.
That's not good for anyone, and that's the current trajectory
we're on. So I look at the opportunity for change,
as you know, fundamentally it should add to the possibilities
(29:01):
for growth in the sector if we get the settings right.
Speaker 1 (29:07):
What would be getting the settings right for Octopus to
thrive and be a larger player, if you like, almost
significant player in New Zealand.
Speaker 3 (29:18):
Yeah. So in terms of what I think the New
Zealand needs to focus on, it's one we need a strategy,
you know, we should unlike many countries in the world,
the economics of electrication should work for end consumers. So
we don't have cheap fossil fuel here. We import huge
amounts of fuel and the more quickly we can displace that,
(29:42):
the more money we have in our wallets, and the
more competitive we should be. So we should be really
focused on making that change happen quickly. I think what
we've seen over the past, well over this decade, is
that you know, investors in large infrastructure and naturally conservative
(30:04):
because they've got large assets, you know, and that is legitimate.
How do we motivate them and incentivize them to invest
ahead of demand, and we've seen other countries have put
in place mechanisms to encourage that demand to come, that
supply to come ahead of demand. So I think long
(30:27):
term contracting arrangements, all of these types of things should
be considered for New Zealand. I think then there's a
question around how that market is working, and I think
some of what the Electricity Authority is working on at
the moment should hopefully address that. And then we do
(30:49):
need just better governance of the sector and coordination, especially
at the moment because we've got a really complicated situation
of fast declining gas and need to help those industries
exposed switch quickly into electricity, and the need to immediately
(31:11):
scale electricity. So I think, you know, there's only so
much different actors in the market can do to resolve that,
but it actually requires a bit of facilitation from government.
You know, if we were head confidence about the market
settings and the ability to grow with be more of
(31:31):
a mass market player. And we've got some great products
that we no have appeal with the general customer. We've
seen the success of them in other markets and are
excited about the potential to offer better choice to New
(31:52):
Zealand consumers.
Speaker 1 (31:53):
What's an example of one of those innovative products.
Speaker 3 (31:56):
Yeah, so we've got we've got one of these news
land as well, so a zero bell home. So we
are working with property developers in the UK. Basically the
cheapest time to put much of this technology into homes
is when they're getting built. But you get this incentive issue,
(32:16):
like if a property developers building homes, they're really cost conscious,
and how do we incentivize those builders to build homes
that are more energy smart? And so what we've done
is we've provided a five year guarantee that if a
new home is built and it meets a bunch of
(32:38):
criteria so it's got solar and battery and heat pumps,
that we can give a guarantee that we would there
will be no bill for that house for five years.
Obviously assumes normal consumption, but no bitcoin miners in these properties.
But you know, that is a really compelling proposition and
(33:03):
it's a fantastic one for social housing developers and things.
So we've been doing lots of these in the UK.
We're working with a bunch of property developers here around
the concept. It always takes quite long, yeah, you know,
go from concept of building properties. But that's an example
where we think, you know, a simple solution that delivers
(33:25):
great outcomes for the consumer. Another one is where we
have a product called Intelligent Octopus. We have actually about
ten percent of the UK's EV fleet and managed using
this product, and basically it helps if you on your
(33:45):
app use sele I need my car by X time
in the morning, and then we will determine when that
car is charged based on what's happening in the market
and deliver you a much lower price and return for
having control over charging it. And really excitingly, we're starting
(34:08):
to see vehicle to grid capable cars come into the
market at quite accessible price point. So then you imagine
that functionality with the ability to export into the grid,
the energy market starts looking quite different. It would only
take tens of thousands of these vehicles to totally nail
(34:30):
the peak problem that we have. So I think there's
these really exciting opportunities to use technology more smartly and
that will hopefully lower the cost of supply for all
of us.
Speaker 1 (34:44):
Well, great chat, Margaret. We could go for hours, but
we'll leave it there. Thank you for coming in. Thanks
so much for having me. Really enjoyed talking to you
and thanks everyone for tuning in. You can watch shed
Lunch on YouTube or follow us on your favorite podcast app,
leave us a race sting, or tell us what you'd
like to hear next. Matowa mm hmm
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My Favorite Murder with Karen Kilgariff and Georgia Hardstark
My Favorite Murder is a true crime comedy podcast hosted by Karen Kilgariff and Georgia Hardstark. Each week, Karen and Georgia share compelling true crimes and hometown stories from friends and listeners. Since MFM launched in January of 2016, Karen and Georgia have shared their lifelong interest in true crime and have covered stories of infamous serial killers like the Night Stalker, mysterious cold cases, captivating cults, incredible survivor stories and important events from history like the Tulsa race massacre of 1921. My Favorite Murder is part of the Exactly Right podcast network that provides a platform for bold, creative voices to bring to life provocative, entertaining and relatable stories for audiences everywhere. The Exactly Right roster of podcasts covers a variety of topics including historic true crime, comedic interviews and news, science, pop culture and more. Podcasts on the network include Buried Bones with Kate Winkler Dawson and Paul Holes, That's Messed Up: An SVU Podcast, This Podcast Will Kill You, Bananas and more.