Who knew the secret sauce behind a fast-growing UK energy challenger would be a piece of software? Octopus Energy is selling a $1bn stake in its AI-driven platform, Kraken Technologies, valuing the business at $8.65bn and setting the stage for a full demerger and a possible stock-market listing.
A tech arm that outgrew its parent
The bulk of the $1bn round — led by New York-based D1 Capital Partners — will flow into Octopus itself, while Kraken will take a smaller share directly. Existing and new backers including Fidelity International and the Ontario Teachers’ Pension Plan have joined the deal. Origin Energy, which already holds a significant interest in Octopus, is also involved and will invest further as part of the separation process.
Octopus will keep a minority stake in Kraken (about 13.7% according to the company), while Kraken’s management say the spinoff will let the software business behave like a pure tech firm: strike deals with rivals, chase global customers and attract software-focused investors without the awkwardness of being owned by a retail supplier.
Kraken’s pitch is simple: automate billing and customer service, manage when households use power and slot in distributed assets such as batteries and electric vehicle chargers so suppliers can reward customers for shifting demand away from peaks. That capability helped Octopus grow rapidly — it overtook British Gas earlier this year as Britain’s biggest household supplier — and it has turned Kraken into a licensed product used by utilities from EDF and E.ON to international groups.
Money, listing plans and why it matters
Octopus founder Greg Jackson said there is "every chance" Kraken will list "in the medium term," with the location likely to be London or the US depending on investor appetite. Kraken’s CEO Amir Orad has argued the business needs operational independence to secure large contracts with rivals — something that was occasionally tricky while part-owned by a direct competitor.
Operationally and strategically, the separation matters in several ways:
- It gives Kraken the freedom to sell and scale as a global software outfit rather than an in-house platform tethered to a single group.
- It supplies Octopus with a significant capital injection to strengthen its balance sheet at a time when it has invested heavily in expansion.
- It highlights a new model: energy companies building proprietary operational tech and then turning it into stand-alone, investable software businesses.
Octopus reported a pre-tax loss for the year to April — blamed partly on an exceptionally warm spring that cut gas use — but revenue rose. Leaders argue the Kraken deal will "almost double" Octopus Energy Group’s financial headroom and fund future M&A moves.
Not just billing: the AI angle
Kraken’s claim is broader than accounting. Its platform uses AI to automate customer interactions, optimise when devices draw power, and orchestrate whole-home assets so renewable generation and storage can be used more efficiently. That positions Kraken at the intersection of energy and artificial intelligence, a space where incumbents and startups are racing to productise automation across consumer and utility services.
This push sits beside other moves to fold AI into everyday services — from voice assistants to booking agents — and underlines why investors are keen on companies that can operationalise machine learning at scale. For context on where that AI productisation is headed, see how major players are adding agentic features to their services in Google’s AI Mode coverage, and how platform partnerships are shaping voice and assistant strategies in Apple’s plan to use a custom Gemini model.
A wider smart-home and grid story
Kraken’s ability to manage home devices and EV charging fits into a broader smart-home and interoperability push — an arena where standards and device ecosystems matter. Think of recent moves by major retailers and manufacturers to knit together home gadgets; Kraken’s software is the kind of orchestration layer that turns a cluster of devices into a utility-scale asset. That dynamic echoes the industry-wide momentum seen in IKEA’s 21-device Matter push.
Questions and the runway ahead
Challenges remain. Spinning out a business requires governance structures, sales teams, and a shift in investor narrative from energy to software. Kraken will need to persuade buyers and public-market investors that it is a pure, scalable SaaS (software-as-a-service) business rather than a dependent adjunct of a supplier.
Timing is another variable: Octopus executives have flagged a target separation by mid-2026, and an eventual IPO is possible but not guaranteed. For Kraken, the immediate prize is growth — the company says its contracted recurring revenue has accelerated and that landing new large customers would cement its claim to be the sector’s operating system.
There’s a certain symmetry to the story. A retail challenger used software to disrupt a legacy market; now that software is being let loose as its own company. Whether Kraken becomes a London-listed British tech success or heads to US markets will say as much about capital market appetites as it does about the product itself. Either way, investors and rivals will be watching how a piece of energy ops software performs once it has to win business on its own merits.