Octopus Energy Prepares to Demerage Technology Unit Kraken

Octopus Energy, the United Kingdom's largest household energy supplier, is preparing to demerge its technology division, Kraken Technologies, into a separate entity valued at up to $10 billion. The demerger is expected to occur within the next 12 months, with investment banks such as Citi, Goldman Sachs, JP Morgan, and Morgan Stanley invited to oversee the process. This strategic move aims to enhance Kraken's independence and attract further investment, reflecting the growing importance of technology platforms in the evolving energy sector.

Founded in 2015 by Greg Jackson, Octopus Energy has rapidly expanded, surpassing British Gas in January 2025 to become the UK's largest household energy supplier with a 24% market share. The company serves approximately 7.5 million retail customers in the UK and an additional 2.5 million internationally. A significant driver of this success is its proprietary technology platform, Kraken Technologies. Developed in-house, Kraken is a cloud-based system that manages energy billing, integrates renewable technologies, and optimizes energy distribution. The platform is utilized not only by Octopus but also by other major utilities, including E.ON, EDF Energy, and Tokyo Gas. As of July 2025, Kraken manages over 70 million customer accounts globally, with a target of reaching 100 million by 2027.

The demerger involves selling up to a 20% minority stake in Kraken to external investors to validate its valuation, anticipated to be around £10 billion ($13.7 billion). This implies an overall valuation of over £15 billion for the combined group, including both Kraken and Octopus's retail energy supply business. Current Octopus shareholders will own the new entity, with potential for minority investors to join.

To enhance Kraken's independence and operational focus, Octopus has appointed Amir Orad as CEO and Gavin Patterson as chair. Amir Orad, a former CEO of NICE Actimize, brings extensive experience in enterprise software and financial technology. Gavin Patterson, the former CEO of BT Group, offers a wealth of knowledge in telecommunications and corporate leadership.

The demerger underscores the increasing significance of technology platforms in the energy sector's evolution. By separating Kraken Technologies, Octopus aims to eliminate perceived conflicts of interest, potentially attracting more utility companies to license the platform. This strategic move positions Kraken to expand beyond energy into sectors like water and telecommunications, leveraging its AI-driven capabilities to manage complex infrastructures.

Octopus Energy has attracted substantial investment, reflecting confidence in its business model and technological innovations. In December 2023, the company secured an $800 million investment from existing shareholders, valuing the company at $7.8 billion. Notably, the California Public Employees' Retirement System (CalPERS) invested in Octopus, highlighting international interest in the company's growth and sustainability initiatives.

The demerger and subsequent expansion of Kraken Technologies have several societal implications:

• Job Creation: The investment is expected to create 3,000 green jobs in the UK alone in 2024, contributing to economic growth and the green energy transition.

• Advancement of Renewable Energy: Kraken's technology facilitates the integration of renewable energy sources, electric vehicles, and smart grids, promoting a more sustainable and efficient energy system.

• Global Energy Transition: By licensing its platform to international utilities, Kraken plays a pivotal role in the global shift towards cleaner energy solutions, aligning with international climate goals.

Octopus Energy's decision to demerge Kraken Technologies marks a significant milestone in the energy sector, highlighting the growing importance of technology platforms in managing and optimizing energy distribution. This strategic move not only positions Kraken for further growth and expansion but also reflects the broader trend of integrating advanced technologies to drive the global energy transition.