Octopus Energy secures major £300m injection from Australia's Origin Energy

Octopus Energy has agreed to sell a 20 per cent equity stake in its business to Australia's Origin Energy, in deal the UK energy supplier claims will unlock "well over" £300m of new funds towards expanding its customer base and investing in green energy technology over the next three years.

The staged deal announced yesterday would see Origin Energy pay (AUS) $134m on completion, and (AUS) $373m over four financial years, which Octopus Energy said would see "well over £300m of new funds injected into the business over the next three years, with most of it in the first year".

Origin Energy is also set to secure the rights to license Octopus Energy's 'Kraken' customer service and technology operations platform in Australia as part of the deal, in a bid to help it cut costs and expand its international growth opportunities.

With one of Australia's top energy companies on board as an investor, Octopus Energy claimed it was now valued at over £1bn, which could make it a major player in an increasingly competitive UK energy market dominated by the 'Big Six', a grouping that includes rival green energy supplier OVO as the parent company of SSE.

A subsidiary of Octopus Group - the UK holding company that also includes renewables investment, venture capital, investment management, financial advice, and real estate arms - Octopus Energy currently supplies gas and renewable energy to 1.5 million domestic customers and 12,000 businesses in the UK.

Octopus CEO Greg Jackson said he was "over the moon" to announce the next stage of the firm's mission "to make the green energy transition cleaner and cheaper", as he outlined the company's ambition for 100 million customers worldwide on its Kraken platform.

Writing in a blogpost yesterday, Jackson said the partnership with Origin would "help power our growth into new markets, build more tech to make energy greener, and increase our investment in service and growth in our existing markets (the UK and Germany)".

He also said the deal would help Octopus Energy to invest "millions of pounds" in creating a new Future Energy Research Centre, bringing together climate experts, data scientists, economists and policy specialists "to devise plans and models to make net zero faster and more affordable".

"Octopus Energy will freely contribute our data and technology expertise to give these experts unique insight into how customers, networks and grids can contribute to a faster, more affordable transition to renewables" wrote Jackson.

As well as investing in renewables and supplying energy, Origin Energy owns a large coal-fired power station in Australia and also exports Liquefied Natural Gas (LNG).

But while Jackson said he was "sure some people will question our choice of a partner with some serious fossil-fuel operations" he countered that during previous talks with various interested parties "almost every potential investor with deep enough pockets had some interest in fossil fuels".

"Origin were not only excited to back our ambitions, but refreshingly upfront that they need to become greener," argued Jackson, who highlighted the Australian firm's investments in solar, commitments to source 25 per cent of its energy capacity from renewables by the end of this year.

Origin Energy has also pledged to close its coal-fired power station in the 2030s "although I hope this could come sooner as our technology makes renewable energy more able to replace fossil fuels", Jackson added.

For its part, over the next 24-30 months, Origin Energy plans to transfer its 3.8 million retail electricity and gas customers in Australia onto the Kraken platform, which it estimated could help cut capital costs and deliver savings of up to (AUS) $70-80m in 2022, rising to (AUS) $100-150m in 2024.

Origin CEO Frank Calabria said the Kraken platform would give its customers a "vastly simpler experience, with the technology capable of integrating multiple services to a single bill, delivering agile tariffs and easy integration of smart meters, solar, storage and electric vehicles, accelerating demand-side management capability".

• Tweet  
• Facebook  
• LinkedIn  
• Send to  

• Topics
• Energy
• Venture Capital
• Origin Energy
• Octopus Group
• Octopus Energy