Paying people to use less electricity is a sticking plaster solution

Farewell summer, or is that good riddance to a forgettably damp August? Autumn is officially here, which means some of us already have a finger hovering over the thermostat.

In the Marlow household, all it took was a couple of chillier nights for us to panic and swap the paper-thin summer duvets for something more robust, a move I instantly regretted after seeing the weather forecast for the next five days.

If your thoughts hadn’t yet turned to the prospect of donning the thermals once again, then they probably will after the National Grid announced plans to pay families to cut their electricity usage again this winter.

As a way of ensuring the lights stay on, it certainly beats firing up the country’s old coal power stations – the tactic so often previously employed. There’s a certain creativity to it too – not something you’d expected from an organisation that Octopus Energy boss Greg Jackson has accused of “a phenomenal failure to innovate”.

But more broadly, it’s another sticking plaster solution to the energy crisis, and a pretty primitive one at that.

There are several far more grown-up solutions National Grid and the Government could employ. But don’t hold your breath – if there’s one thing that the great energy crisis unleashed by Vladimir Putin has taught us, it’s that neither our political masters nor the regulator have the answers.

Bills are still obscenely high and we need to wean ourselves off oil and gas. Yet it’s becoming increasingly clear that the costs of reaching net zero risks being prohibitively high, and No 10 continues to rely on a price cap that is acting as much as a floor on household bills as it is a ceiling.

Meanwhile, Ofgem seems to think that what the world really needs right now is for the big energy suppliers to be making more money, not less.

The promotion of the hapless Grant Shapps to the person tasked with protecting us from the world’s despots and tyrants is a terrifying one but if there’s a silver-lining it’s that he’s no longer overseeing energy policy.

If Claire Coutinho wants to be taken more seriously in the post than her predecessor, then she should start by trying to drag the Grid into the 21st century so that electricity supply can keep up with ballooning demand.

Lobbyists boast that the UK has one of the most resilient grids on the planet but if that’s the case, then why the need for such convoluted measures to reduce the threat of blackouts – measures that critics have dismissed as “a gimmick” and customers have complained has only saved them pennies?

Isn’t the very threat of the lights going out in an advanced economy pretty firm evidence that the Grid is “not fit for purpose”, as Octopus’s Jackson has also claimed?

If you’re still not convinced, then perhaps it’s worth remembering that it takes seven years on average to connect a wind farm to the grid, while there are parts of London where it is impossible to build more homes because there isn’t capacity to support them.

In 2022, National Grid committed to a £40bn spending program on critical infrastructure over the next four years. Heaven knows it’s needed. Britain is moving to a modern digital economy in which electricity demand is expected to soar threefold by the middle of the century.

Yet, parts of the system were built in the aftermath of the Second World War. We need new connections and more modern transmission infrastructure, such as pylons and underground copper cables, otherwise hopes for 50 gigawatts (GW) of new wind and 70GW of additional solar power by 2030 will remain nothing more than that.

The Government has to find a way to impose genuine competition on one of the last giant monopolies. There are growing calls from energy bosses for the electricity network to be opened up to competition from private companies to speed up connections for new projects.

Jackson suggests following the example of other countries such as India and Brazil with “contestable grids” where connections are overseen by competing contractors.

Coutinho would also do well to listen to the advice of MP’s on the Environmental Audit Committee who believe a national “war effort” on energy efficiency is needed. Upgrading our leaky homes “to high energy performance standards” would enhance energy security, reduce bills and cut emissions, it claims.

British houses lose heat three times more quickly than those elsewhere on the Continent, studies have found, partly because they are so old – a fifth were built before 1919 – but also because so many are badly insulated. More than half are rated D or lower.

The bill for a nationwide retrofit of millions of homes would obviously be substantial but the Institute for Fiscal Studies estimates that a major programme to reduce energy use could cut aggregate household energy costs by £27bn in the first year.

Put another way: the cost of doing nothing is almost certainly far greater.