Octopus Energy Has Secured Funding From The Department For Business

The entech business Octopus Energy launched to the public in April 2016, and currently supplies 100% renewable electricity and gas to over 1.6 million UK homes, making it the UK’s seventh largest energy supplier. Founded by e-commerce entrepreneurs, Octopus Energy has a different starting point to other suppliers, aiming to redefine what is possible for consumers and the system by using technology and data to deliver the best products and experiences.

Leading the industry during the pandemic

Throughout 2020 Octopus has been going from strength to strength. While the pandemic hit other industries and affected businesses’ growth plans, Octopus Energy used the unique circumstances to demonstrate its tech and industry leadership.

At the beginning of lockdown the digital-first business immediately transitioned to home working. But while others struggled to keep their services running Octopus Energy’s customer service even managed to outperform its usual metrics.

Due to the pandemic causing unusual demand on the grid and the weather producing excess renewable energy over the summer, the UK was in the unique position where energy supply was far higher than demand. This threatened to overload the grid and cause rolling blackouts across the UK. Octopus Energy’s proprietary technology and smart products allowed it to use this situation to run consumer trials where thousands of customers were paid to use the excess renewable energy over specific  time periods that threatened blackouts, reducing the strain on the grid and saving customers money.

These aren’t the only things the EnTech pioneer was able to achieve in 2020.

Accelerating global expansion through major partnership with Origin Energy

In May 2020, Octopus Energy announced a major strategic partnership with Australia’s leading energy company, Origin Energy.

The agreement saw Origin acquire a 20% stake in the company and license Octopus Energy’s technology platform, Kraken, to accelerate the transformation of its Australian retail business, deliver an improved customer experience, and provide cleaner and smarter energy solutions.

The deal valued Octopus Energy at well over £1bn, bringing it the status of ‘unicorn’, with an efficient energy retail arm in the UK and Germany, and contracted software licensing revenue exceeding £300m over the next three years with further upside potential.

Octopus Energy is deploying the investment to open and expand in more markets, invest in deeper technology development, and establish a Future Energy Research Centre, bringing together academics, policy experts and data scientists to drive research and modelling to make the global renewable energy transition faster and cheaper.

The investment comes on top of Octopus Energy’s technology deal with E.On, announced last in April, which will see npower and E.On’s 6 million UK customers move onto Octopus Energy’s Kraken platform.

Speaking for Origin Energy, CEO Frank Calabria, said “We have been on a path to make energy easier and simpler for customers, to transform our retail business by putting customers at the heart, and to accelerate the rollout of cleaner and smarter energy solutions. By partnering with Octopus and deploying its technology platform, we can fast-track our ambitions and achieve better outcomes for our customers, people and shareholders. We’re also pleased to be investing in a company with an operating model and technology platform that genuinely sets it apart globally, and we see exciting opportunities for our businesses to collaborate, share expertise and continue to grow and prosper in the fast changing world of energy.”

Powering the next generation of on-street EV charging

In July 2020, Octopus Energy also secured funding from the Department for Business, Energy & Industrial Strategy (BEIS) for two new EV charging infrastructure projects.

The first project, Agile Streets, will develop a new business model to encourage EV drivers to switch to a flexible charging schedule while connected to new on-street charge points.

The second project, SmartSteps, will combine smart meter technology with novel charging points developed as part of the Innovate UK STEP project. The charge points are slotted into the pavement and accessed via a lance issued to users.

Agile Streets and SmartSteps are the only projects to be funded under the government’s Beyond Road program. Both projects are investigating how intelligent measurement systems can be used to optimise on-street EV charging with the aim of balancing the grid.

Capturing the UK domestic energy market

How has Octopus managed to be so successful? The UK energy market has traditionally been dominated by large utilities, led by Centrica, this cohort became known as ‘the big six’ and previously captured around 95% of the domestic energy market in the UK. In a dawning of a new era for energy, challengers including Bulb, Ovo and Octopus Energy have started to make headway in taking customer share and giving better customer service, greener energy and for cheaper, more transparent rates. Octopus itself hopes to reach around 5 million homes in the UK by 2027, compared with around 1.6 million that they serve today.

This is made possible by Octopus Energy’s proprietary software platform, Kraken. Described as ‘a big robot’, it automates a considerable amount of the energy management process, and makes it a lot easier for customer service teams to do what they do best, look after customers. Octopus aims to license this platform to energy companies around the world and look after 100 million customer accounts on it by 2027. Up from the 17 million accounts it currently serves via Octopus Energy Group, Origin Energy, E.ON and Good Energy.

Octopus Energy CEO Greg Jackson said recently that the investment from Origin Energy previously this year has allowed Octopus Energy to begin expanding into international markets, including the US, Australia and Germany. That rate will hopefully accelerate as more customers recommend Octopus Energy to friends and family, which is what is driving exponential growth, he said.

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Lindsay has over 8 years of experience in the business and finance industry. She is a MBA and a journalist by education and did her internship at a major local newspaper in Texas slowly climbing the ladder to reach the higher echelons as editor of various online news portals before joining Business Magazine.

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