Octopus Energy is cutting out Kraken, the software skeleton that underpins its billing, customer operations and artificial intelligence for grid flexibility. The spin-off cements Kraken’s status as a disinterested provider of technology to utilities, with more than $500 million in committed annual revenue from outside energy suppliers and an anticipated valuation reported at $15 billion by The Wall Street Journal.
Octopus built Kraken as its main product, with the retail energy business added as a showcase client. That “demo” now delivers power to more than 7.7 million households in the U.K., and about 2.8 million elsewhere around the world. Splitting off the platform also provides Kraken with more distinct governance and commercial independence as it inks deals with utilities that compete against Octopus’s retail arm.
Why Octopus Is Ring-Fencing Kraken for Utility Deals
Energy retailers and network operators increasingly are seeking a vendor-agnostic platform for systems of record, such as billing, meter data management and distributed energy resource management. Spinning off Kraken, Octopus gets perceived conflicts of interest out of the way and creates a cleaner path for utilities (which are often shackled by procurement rules and data-sharing policies) to adopt the software at larger scale.
The action also formalizes data governance. Utilities have to feel confident their customer and operational data is sitting behind strict firewalls when the platform provider also has a competing retail business. A stand-alone entity can codify ring-fencing, board oversight and service-level agreements that are similar to conventional enterprise software arrangements.
What Kraken Actually Does Across Utility Operations
Kraken is a full-stack utility OS covering customer information systems, billing, meter and tariff management, collections and omnichannel client support. And above that, an AI layer forecasts demand, optimizes pricing and dispatch, and coordinates devices at the grid edge — from EV chargers and smart thermostats to rooftop solar and home batteries.
Octopus has also used the platform to experiment with new offers that fundamentally alter consumption. Its Agile tariff encourages households to move their use of power into times when there is lots of renewable generation, sometimes even making off-peak laundry more or less free. The Zero Bills premise, meanwhile, involves efficient all-electric homes and suitable tariffs to aim for 10 years of no energy bills. The other analytics from these programs help train Kraken models to respond more rapidly to renewables volatility and match consumer behavior with grid requirements.
For utilities, it is about all the assets they have on a single platform, integrating customer operations with real-time flexibility. Installing that kind of code into legacy billing, CRM and/or a separate demand response vendor is practically impossible, so what Kraken proposes is one stack that pushes pricing, device control, and customer engagement using the same data engine and decisioning process.
Revenue Signals and IPO Ambitions for Kraken
The fact that Kraken already has $500 million in annual committed revenue from third parties represents a flippening in energy IT buying: utilities aren’t going to buy another monolithic, on-premises system — they’re moving to the cloud-native systems that can actually monetize flexibility.
Arguably, the proposed $15 billion IPO would rely on a software multiple and not a commodity energy margin, with an ambitious bet that an increasing portion of utility profit will derive from managing electrification — EVs, heat pumps, storage — vs. just selling kilowatt-hours.
Octopus’s own growth lends credibility. Within a decade, the firm overtook decades-old incumbents to become the U.K.’s largest energy supplier, in large part thanks to Kraken’s automation and self-serve tools that clobber cost-to-serve. As a separate company, Kraken can tap into the capital markets on software terms, acquire other properties and expand globally without its prospects being tied to one retail brand.
Competitive and Regulatory Context for Utility Software
Utilities have historically utilized retrograde customer information systems provided by big enterprise vendors. But the rise of distributed energy resources, as well as time-based pricing, is starting to push at the edges of platforms designed for monthly billing and static tariffs. Regulators, Ofgem, U.K. market operators, and authorities across Europe are all rolling out half-hourly settlement, flexibility markets, and consumer data portability, inexorably building demand for agile software architectures.
It’s not that Kraken does one thing other apps can’t do so much as everything from end to end. By keeping device orchestration, tariff design and customer messaging in lockstep, it can enable utilities to flatten peaks, lower wholesale costs and improve service metrics. Reports from groups like the International Energy Agency have again and again hammered home the system value of demand flexibility as renewables penetration mounts, giving platforms that can deliver it consistently a solid landing strip.
What It Means for Utilities and Customers
It’s a more spun-out Kraken, and utilities have a clearer path to procurement if they want to contemporize their billing systems with AI-infused flexibility without building it all from scratch. For consumers, the result should be more dynamic rates, easier billing processes, more quickly resolved support queries and rewards for when electricity is cleanest and cheapest to charge electric vehicles or run appliances.
The hard part will be the execution at scale: the onboarding of millions of accounts, and integrating with meters and market systems, and protecting data. If Kraken can pass those tests, the spin-off could establish a template for how energy retailers commercialize their homegrown software — and for how utilities purchase the digital resources they need to support an electrified, renewable-heavy grid.