Octopus Energy Group has agreed to sell $1 billion in equity of its software arm, Kraken Technologies, valuing the business at $8.65 billion. The transaction, led by U.S.-based D1 Capital Partners and backed by institutional investors including Fidelity International, Durable Capital Partners, and Ontario Teachers’ Pension Plan initiates the first step toward a full spinoff of Kraken as an independent company by mid-2026.
Kraken, developed internally by Octopus Energy, began as the operational backbone of the UK-based retailer. Today, it serves as an end-to-end utility operating system handling billing, customer engagement, and, critically, the dynamic coordination of flexible demand from devices such as electric vehicles (EVs), home batteries, and heat pumps.
Originally built to support Octopus’s rapid customer growth from 45,000 accounts in 2016 to over 9 million today it has evolved into a globally licensed platform serving more than 70 million customer accounts across five continents.
The software’s commercial appeal lies in its demonstrable impact: utilities using Kraken report up to 40% lower customer acquisition and service costs, consistently high customer satisfaction scores over eight years, and accelerated product innovation cycles.
Its client roster includes major utilities beyond Octopus’s direct competitors, such as EDF Energy and E.ON in Europe, Tokyo Gas in Japan, Origin Energy in Australia, and National Grid in the United States.
Until now, Kraken’s dual identity as both a proprietary asset of a major retailer and a third-party software provider posed a strategic dilemma. Some utilities hesitated to adopt a mission-critical platform owned by a market rival. The spinoff resolves this tension by establishing Kraken as a utility-agnostic infrastructure provider with independent governance.
Octopus will retain a 13.7% equity stake, ensuring continued alignment while reducing perceived conflicts of interest. That balance appears to have already eased market concerns: Origin Energy, Kraken’s first external licensee in 2019, is investing $140 million in the current round and will hold a 22.7% economic interest post-spinoff. Crucially, Origin has also waived its exclusivity rights in Australia, opening the door for Kraken to expand across the region.
Surging demand from EVs, data centers, and electrified heating is straining distribution systems designed for more predictable, centralized generation. Left unmanaged, distributed energy resources can overload local transformers and necessitate costly grid reinforcements, projects that often take years to permit and build.
Kraken’s value proposition is that software can mitigate these pressures. By integrating real-time grid data with consumer behavior models, the platform can forecast congestion, adjust pricing dynamically, and incentivize load shifting, effectively turning end-use devices into grid-balancing assets.
A recent pilot in Scotland illustrates this in practice. Partnering with Scottish and Southern Electricity Networks (SSEN), Kraken implemented dynamic pricing around four substations near Dundee.
When grid stress was anticipated, prices rose in advance, prompting flexible consumers to delay EV charging or shift heating loads. Early results showed measurable reductions in peak demand without service disruption, offering a scalable alternative to traditional infrastructure upgrades.
Regulators are taking note. The UK’s energy regulator, Ofgem, has endorsed “smart flexibility” as a core component of its £20 billion grid investment strategy through 2030. Similar trials are underway in California, Ontario, and Germany, driven by the need to integrate renewables while avoiding blackouts.
Kraken enters a competitive landscape dominated by legacy enterprise vendors like Siemens, Oracle, and SAP, whose systems manage core utility operations but were not designed for real-time, distributed energy coordination.
