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Octopus’ plan to supply green energy tech products – including solar panels, home batteries, electric vehicle chargers and heat pumps – is the company’s latest push to extend its extraordinary eight-year growth streak, which shows little sign of slowing. Its meteoric rise is good news for ASX-listed Origin Energy, whose decision to buy a significant stake in the business four years ago has paid off handsomely already.
Since starting in 2016, Octopus’ energy retailing business has gone from zero customers to becoming the United Kingdom’s biggest electricity retailer this year, with 6.8 million accounts, overtaking the incumbent British Gas.
Meanwhile, the backbone of its booming operations, the Kraken platform, through which a single customer service representative can handle the full range of a customer’s queries rather than bouncing a call between departments, is being licensed to utilities across the globe, spanning 52 million accounts and more than a dozen countries.
The business is also investing heavily in wind and solar power generation projects across Europe.
An Octopus Energy heat pump at the company’s research and development centre in Slough.
Origin’s ties to the Octopus success story can be traced to late 2018, when two Origin executives, Jon Briskin and John Bowie, boarded a plane to London with one main goal: Australia was about to introduce caps on standard electricity bills, and they wanted to find out how industry players had responded to the introduction of regulated prices in Britain.
The pair spoke to some of the country’s big six retailers, and some of the up-and-comers. “Octopus would have ranked 10th or so, with 300,000 or 400,000 customers,” says Briskin. But he and Bowie were left so impressed with what they heard that they soon asked Jackson: “Are you looking for investors?”
“Having spent most of the week speaking to other energy companies who were very much against the price cap coming in, to then turn up on Greg [Jackson’s] doorstop, he said it was a great thing because it brings a level playing field and [Octopus] had the lowest cost and the best service,” Bowie recalls. “It’s something we hadn’t seen previously, for a subscale business to have that cost advantage … it really raised the eyebrows that there was something going on here.”
What they saw in Octopus was something unique – a firm founded by technologists with a focus on how to “solve the customer misery that was energy in the UK”, and a fundamentally different operating model, says Briskin. While Origin bought into Octopus in May 2020, Briskin acknowledges, no one had predicted at the time that it would end up “anything like the size and the success it is today”.
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At the latest count this year, the value of Origin’s 23 per cent interest in Octopus is worth more than $2 billion, having soared by 15 per cent – or more than $410 million – in the past six months alone. As well, Origin, which has secured the exclusive licence in the Australian energy sector to use Octopus’ Kraken technology, has also completed migration of its 4 million-plus customers onto the new platform, too, reaping the benefits of efficiency improvements and cost savings.
Increasingly, analysts are viewing Octopus Energy as a key growth driver for Origin as licensing revenue for its Kraken software platform rises and Octopus increases its market position in Europe, Asia and North America. By 2027, Octopus plans to serve 100 million homes across the globe on its Kraken technology platform.
In Australia and overseas, the energy industry is in the midst of an upheaval, with grids shifting from carbon-heavy fuels to cleaner, greener sources, while electricity prices in many regions remain stubbornly high. As the transition gathers speed, Origin believes power utilities’ ability to use technology and data to bring customers on the journey and integrate more cost-effective household renewables, in a way that’s not difficult for them to navigate, will be increasingly important.
“I think what runs through around this place [Octopus] and Origin is a sense of purpose – what are we here to do?” says Bowie.
“That, more than anything, galvanises our people in terms of making a bigger impact, and that’s what excites us as well.”
The reporter travelled to London as a guest of Origin Energy.
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