Octopus Energy Fan Club Tariff
Octopus Energy have been an innovator in the energy industry and have managed to maintain a consistently good level of positive customer feedback. They are one of the best UK energy suppliers having been recognised by Which, Uswitch and the REA as well as consistently performing well in Trustpilot reviews.
In January 2021 they launched their 'Fan Club' tariff which reduces the unit cost of your electricity based on how much energy their wind turbines generate. So it is similar to their Agile Octopus tariff that tracks wholesale energy prices half hourly but instead tracks the renewable energy generated from their own brand wind turbines.
How the Octopus Fan Club tariff works
Firstly this is only currently available to you if you live in the YO43, CF81 and NP24 postcode areas which are close to their Market Weighton and Caerphilly wind turbines. They are likely to invest in more wind turbines as they expand to cover more postcode areas as they have been very aggressive in attracting funding as well as powering other small suppliers such as M & S Energy, London Power and Affect Energy.
Like their Agile Octopus tariff your electricity costs will reduce the more their turbines produce.
A 20% discount when the turbines are working which they state is 98% of the time. The turbines can work at speeds between 2.5m/s and 25m/s.
A 50% discount on your electricity when the turbines reach a certain speed. For the Market Weighton turbine the speed threshold is 8m/s and for the Caerphilly it is 10.8m/s for the half price discount to kick in.
How do I sign up to the Octopus Fan Club?
As their turbines can only generate enough electricity for a certain number of local households they are limiting the number of customers to 400 in the Yorkshire YO43 postcode area and 400 in the CF81 and NP24 postcode areas.
You will also need a Smart meter that can take half hourly readings which means a SMETS 2 or Secure branded SMETS 1 smart meter although they can install a Smart meter free of charge. Not everyone wants a smart meter and you should be aware of the downside of smart meters.
If you are interested you need to get your name down on the list for the Octopus Fan Club.
How does Octopus reduce my energy bills?
The idea behind the Fan Club tariff is that you are being encouraged to use electricity when there is greater availability. The windier it is, the more electricity wind turbines produce which can at times mean that there is more electricity than is needed so they may need to be temporarily shut down.
The peak electricity demand in the UK is the 4pm to 7pm peak period where more households switch on the electric ovens to cook dinner, watch TV, switch the lights on, boil the kettle, wash clothes, run tumble dryers and dishwashers.
By encouraging households to use more electric when it is cheaper (50% cheaper at windy times) there is less need to have wind turbines sitting idle.
For the average household currently on an Octopus tariff you would spend about £500 a year on electricity. With a 20% discount most of the time that would save you about £100 a year. It is unknown how often the 50% discount would kick in as it would require the wind to be blowing at about 8 to 10m/s which is classified as a fresh breeze where the wind would be strong enough to see small trees sway.
So the typical household could expect to save £100 to £250 a year compared to their Octopus Direct or Flexible Octopus tariffs.
You do however have to take into account that they charge a £1 a week membership for the tariff which is in addition to the usual kWh rate and daily standing charge. The standing charge for electricity is about £80 a year and about £65 a year for gas so the £52 a year membership fee will be added to this..
Even taking into account the membership charge you are still likely to save around £50 a year.
Why should I switch to the Fan Club tariff?
At the moment the tariff tied to wind energy generation is restricted to homes located close to their wind turbine installations. As their installations grow so will the opportunities for others to take advantage of this discounted electricity rate.
If you are likely to be at home to be able to use home electrical appliances when the 50% rate is active then you could save more. Appliances that use lots of energy such as tumble dryers, dishwashers and washing machines could be used at times where the 50% discount kicks in to reduce your energy bill further.
Innovative tariffs such as 'Fan Club' that reward customers with discounts for using energy when there is excess being generated will save customers money and help stabalise the grid. However it will require a change in energy usage habits from customers to help shift the UK into a low carbon economy.
If you are unlikely or unable to monitor when the higher discount rate kicks in you will still save around £50 a year compared to the cheapest Octopus tariff but you could save more with other energy suppliers.
I had a swift reply from Dominic at Octopus Energy who confirmed their new tariff pricing will be based on their Octopus 12 month fix so the total cost will be the usual charges for their 12 month fix plus a £52 a year membership fee.
Until the Fans tariff is rolled out fully your bill gets credited retrospectively based on the wind speed data from their wind turbines. Octopus also confirmed that once out of their testing phase customers will be notified in advance via SMS, email and via billing notifications that the cheaper 50% discount rate is in effect i.e. when it gets windy.
The Octopus 12 month fixed tariff cost the average household £973 a year so a £50 average saving from being on the Fan Club tariff would bring the average yearly bill from Octopus down to £923 a year.
One of the cheapest equivalent 100% renewable energy deals that is fixed for 12 months is from Utility Point costing £895 which is about £28 cheaper per year.
Although Utility Point is slightly cheaper this supplier does not have great customer feedback with a 3.7 out of 5 Trustpilot rating and 18% of reviews reported the supplier as being bad. Octopus in contrast has a 4.8 out of 5 rating and only 3% of customers rate them as bad.
Another comparison is with energy supplier Green who as the name suggests are a 100% renewable energy supplier. The equivalent Fourier tariff from Green would cost £888 a year which is £35 cheaper than the Fan Club tariff. Green also has a slightly better feedback rating than Octopus with 4.8 out of 5 but a lower 2% of customers rating the company as bad.