What is London Power?
London Power is a newly announced green energy company, exclusively available to Londoners. The venture is a partnership between Sadiq Khan and Octopus Energy. London Power is promising quite a bit to potential new customers:
- Fair and competitive prices
- 100% renewable electricity
- Automatic rollover on to London Power’s cheapest comparable plan after your contract ends
- Simple, online switching
How realistic are these promises?
100% renewable electricity
This is something we’ve talked about quite a few times before because it’s an important thing to understand when paying for renewable energy. A green energy tariff does not mean that the exact energy you’re using comes from renewable sources, only that the energy company promises to buy the equivalent of your usage from clean energy sources.
To put it another way, imagine that the national grid is a stew. This energy stew has power coming in from all kinds of different ingredients. When you use energy you take away a little bit of the stew. On a standard mixed-fuel source tariff, this means that the pot needs to be topped up, but it doesn’t matter what ingredient is used as long as it’s equal to what you used. On a green/renewable energy tariff, the stew is topped up in the same way but by energy that has to come from a renewable source. This means that you’re helping make the general stew more eco-friendly, but the energy you use is still a mix of whatever energy ingredients you happen to pick up in your spoon in the moment.
Does this mean that renewable energy tariffs are a fraud, since you might be paying a premium for renewable energy but actually powering your home on electricity from a coal plant? Well, yes and no. Yes, in that lots of people may feel fooled that they thought their homes were being run off renewables. But no because, regardless of how it breaks down, you are investing in clean energy, and that is always a good thing.
London Power has been pretty upfront about how the system works, claiming that “all the electricity you use will be matched with power generated from renewable sources like the sun and the wind.” However they are still selling themselves on the platform of 100% renewable electricity, and we think that’s a bit dodgy.
Fair & affordable prices
One of the reasons that London Power has been set up is that Londoners are consistently paying above the odds for their energy bills. Every year they pay an estimated £3.5bn on gas and electricity for household bills, which London Power reckon is due to inflated prices from old-fashioned big energy companies. That’s why they’ve promised to keep prices low.
That said, probably the biggest reason that Londoners are paying more for their bills is that they’re so terrible at switching their tariffs. Tariff switching is very important to make sure you’re getting the best deal, since most companies will otherwise default you onto their “standard tariff”, which is usually significantly more expensive than you need to be paying. Think about it, if your phone contract ended and you got automatically put on to a new one where you pay more and get less for it, wouldn’t you think it was time to switch to a new contract? Maybe a new supplier? We should treat our utilities the same. Unfortunately, Londoners are some of the worst in the country at doing this, so they end up stuck on more expensive tariffs.
One of London Power’s big selling points is that they won’t move you to a pricey standard tariff after your contract elapses, but rather they promise to switch you to “our cheapest similar plan”. Great, right?
Well, it’s good. But the problem is that it’s not as good as fully switching. Yes, you might be getting the best deal that London Power has to offer, but there are dozens of energy companies across the UK, all of them offering competitive rates. The London Power promise could save you money compared to not switching at all, but makes no guarantees that you’ll be getting the best rate available.
Should I switch to London Power?
That’s a difficult question to answer because it will depend on your circumstances and priorities.
We really like what Sadiq Khan is trying to do, and we will always back the goals of lowering people’s bills while supporting renewable energy. Our issue is that there is no guarantee that the London Power tariffs will be the best deal for you.
We wish London Power all the very best, but in our opinion, your best idea is to go to a switching service and filter by renewable tariffs. There are lots of switching sites out there, though auto-switching is definitely the best in our opinion – take a look at Look After My Bills for more info.