In a startling assessment that should send shivers down the spine of every UK business and homeowner, Greg Jackson, the outspoken CEO and Co-founder of Octopus Energy, has declared the nation’s energy system to be “screwed.”
Speaking at the GITEX Global exhibition, Jackson detailed a system that was already struggling under the weight of outdated infrastructure and regulation, but which is now utterly unprepared for the exponential energy demands of the global Artificial Intelligence (AI) race.
For readers of referrallink.uk, this isn’t just a story about data centers and deep learning; it’s a critical look at why our energy bills remain high, why our infrastructure is creaking, and how a failure to reform is holding back the entire country.
The UK Grid: Broken Before the AI Boom
Jackson was blunt: the UK’s energy infrastructure was insufficient even before the demands of large language models like ChatGPT emerged.
“We didn’t have the infrastructure even before AI,” Jackson stated, pointing out that in parts of the UK, developers cannot even build new housing because there is no reliable power available. This stagnation highlights a deep-seated planning crisis that long predates the current technological revolution.
Now, with AI requiring colossal amounts of power, the scale of the problem has reached a critical point. While markets are designed to respond quickly to need and change, regulated grids are not. Jackson warns that without urgent change, the UK and large parts of Europe face the prospect of either soaring energy rates to fund slow infrastructure upgrades or, worse, being left behind in the global technology race because their energy is too expensive or scarce.
The Scandal of Wasted Green Power
Perhaps the most astonishing indictment of the current system is the revelation of massive, unnecessary waste. Jackson highlights a core regulatory and geographical failure:
“If you look at Scotland in the UK, the UK has spent a billion pounds so far this year, just turning off wind farms in Scotland and paying for gas to replace it.”
How is this possible? The current system operators (in various European countries, including the UK) run an auction, pay a wind farm to generate electricity, but then realize there is grid congestion. The electricity cannot physically travel from the source (the north of Scotland) to the demand centres (the south of England). Consequently, the wind farm is paid not to generate—a massive squandering of taxpayer money and clean energy—while expensive, carbon-emitting gas is brought in elsewhere to fill the shortfall.
This cost is projected to balloon to a staggering $8 billion a year by 2030. Jackson’s solution is simple: create the economic incentives to build massive energy consumers—like data centres—where the energy is currently being wasted. If the industrial demand was moved closer to the abundant supply of Scottish wind power, Scotland would instantly go from having some of the most expensive electricity in Europe to the cheapest.
Building Landlines in the Age of Smartphones
The second major flaw Jackson identifies is the grid’s reliance on wildly outdated technology and cost projections, which he likens to “building landlines after the invention of the smartphone.”
Jackson notes that the price of grid-scale batteries has collapsed, falling from $1,000 per kilowatt-hour a decade ago to around $52 today, with projections for even lower costs. Yet, the UK regulator’s planning for 2030 assumes a cost of $300 per kilowatt-hour—a 2019 price for a technology that is experiencing a deflationary explosion.
By using these inflated, obsolete figures, the regulatory body avoids embracing the very solutions—like solar and battery storage—that could be rapidly deployed (Jackson says a wind or solar farm can be built in three months) to solve the crisis. Instead, the focus remains on slow, multi-year projects like new nuclear plants that cannot meet the immediate demand.
The Gosplan Problem: How Central Planning Fails
At the heart of the crisis is central planning. Jackson draws a powerful parallel to the Soviet Union’s collapse, partly attributed to its central planning body, Gosplan.
“One of the reasons the Soviet Union collapsed was central planning couldn’t cope… And in the same way now, the central planning of our grids can’t keep up.”
The rigid, slow, centrally planned structure cannot keep pace with exponential technological change.
The Fix? Loosen the Grip.
Jackson argues that the solution is to introduce market mechanisms:
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Price Signals: Prices for electricity need to vary by location and time. This allows entrepreneurs, businesses, and hyperscalers to decide where to build their operations to access the cheapest and most abundant power.
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Unleash Private Capital: Create an environment where the phenomenal amount of private capital available today can be deployed quickly to build generation infrastructure outside of the slow, regulated utility systems.
This shift would not only help secure power for the AI industry but would also bring down costs and increase supply for everyone else—from housebuilders to manufacturers. It’s a call for the government to “loosen its grip” and let innovation lead.
Is Your Energy Company Part of the Problem or the Solution?
The UK’s energy crisis is a powerful reminder that not all utility companies are created equal. While the national system is constrained by outdated regulation, modern companies like Octopus Energy are championing the very technologies and market reforms Greg Jackson is advocating for. They focus on smart tariffs, smart meters, and using technology to drive down costs and inefficiency.
If you are looking to move to a supplier that is actively pushing for a future-proof, cost-effective, and green energy system, you can make the switch today.
Change to a modern energy supplier and get a bonus credit!
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