Octopus Energy

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Octopus Energy
TypePrivate
IndustryElectricity and gas supply
Founded2015
HeadquartersLondon, England, UK
Area served
United Kingdom, Germany, United States
Key people
Greg Jackson (CEO)
ProductsGas
Electricity
Revenue
  • Increase £1.24bn (2020)[1]
  • £459m (2019)
  • £129m (2018)
  • £35m (2017)
ParentOctopus Group
Websiteoctopus.energy

Octopus Energy is a United Kingdom-based retail electricity and gas supplier specialising in sustainable energy. It was established in 2015 as a subsidiary of Octopus Group, a British asset management company. As of August 2021 the company has over 2.4 million domestic and business customers, as well as providing software services to other energy suppliers. Octopus Energy has operations in the UK, Germany, Australia, Japan, New Zealand and the United States.

History[]

Octopus Energy was established in August 2015 as a subsidiary of Octopus Capital Limited.[2] Trading began in December 2015.[3] The company's co-founders were Greg Jackson, Stuart Jackson and James Eddison.[4] Jackson holds the position of chief executive.[5]

By April 2018, the company had 198,000 customers and had made an energy procurement deal with Shell.[6] Later in 2018, Octopus gained the 100,000 customers of Iresa Limited, under Ofgem's "supplier of last resort" process, after Iresa ceased trading.[7] The same year, Octopus replaced SSE as the energy supplier for M&S Energy, a brand of Marks & Spencer,[8] and bought Affect Energy, which had 22,000 customers.[9]

In 2018 Hanwha Energy Retail Australia (Nectr) chose the Kraken platform, developed by Octopus Energy to provide billing, CRM and other technology services to support its launch into the Australian retail energy market.[10][11]

In August 2019, an agreement with Midcounties Co-operative saw Octopus gain more than 300,000 customers, taking its total beyond 1 million. Three Co-op brands were affected: Octopus acquired the customers of the GB Energy and Flow Energy brands, and began to operate the accounts of Co-op Energy customers on a white label basis, while Midcounties retained responsibility for acquiring new Co-op Energy customers.[12][13]

In both 2018 and 2019, Octopus was the only energy supplier to earn "Recommended Provider" status from the Which? consumer organisation.[14] In January 2020, Octopus was ranked first in a Which? survey and was one of three recommended providers.[15] In January 2021, Octopus was ranked second and was one of two recommended providers, becoming the only energy provider in the UK to have been named as a recommended provider four years running.[16][17]

In January 2020, ENGIE UK announced that it was selling its residential energy supply business (comprising around 70,000 UK residential customers) to Octopus Energy.[18] The same month saw the launch of London Power, a partnership with the Mayor of London.[19]

In 2020 Octopus completed two funding rounds totalling $577m, making the company the highest funded UK tech start-up that year.[20]

In November 2020 Octopus acquired Manchester-based smart grid energy software company Upside Energy, which in June 2021 rebranded as KrakenFlex.[21]

The same month saw Octopus launch the Octopus Centre for Net Zero (OCNZ), a research organisation tasked with creating models and policy recommendations for potential paths to a green energy future.[22]

In March 2021 the Financial Times listed Octopus at number 23 on their list of the fastest growing companies in Europe.[23]

In July 2021 Octopus energy rose 12 places on the UK Customer Service Index to 17th, making the company the only energy company in the Top 50.[24]

Octopus is currently building the UK's first R&D and training centre for the decarbonisation of heat. Located in Slough, the centre will be training 1000 heat pump engineers per year and developing new heating solutions.[25]

Overseas expansion[]

In September 2019 Octopus acquired German start-up 4hundred for £15m; the acquisition of 4hundred, which had 11,000 customers, was Octopus' first overseas expansion.[26]

In May 2020, Australian electricity and gas supplier Origin Energy paid A$507 million for a 20% stake in Octopus Energy.[27] This meant Octopus gained "unicorn" status, as a startup company with a value in excess of £1 billion.[28] In September of that year, Octopus acquired Evolve Energy, a US Silicon Valley-based start-up, in a $5m deal. The acquisition was the first step in Octopus' $100m US expansion; at the time of the acquisition, Octopus announced it was aiming to acquire 25 million US customers, and 100 million global customers in total, by 2027.[29]

In December 2020, Tokyo Gas paid about 20 billion yen ($193 million) for a 9.7% stake in Octopus Energy, valuing the company at $2.1bn. Octopus and Tokyo Gas agreed to launch the Octopus brand in Japan via a 30:70 joint venture to provide electricity from renewable sources, amongst other services. Origin invested a further $50m at the same time, to maintain its 20% stake.[30]

Operations[]

Gas and electricity supply[]

As of August 2021, the company has over 2.4 million domestic and business customers.[31]

Besides industry-standard fixed and variable tariffs, the company is known for innovative tariffs which are made possible by the national rollout of smart meters. These include:

  • Octopus Tracker – gas and electricity prices change every day, and are based on wholesale prices for that day, with disclosure of overheads and the company's profit margin.[32]
  • Octopus Agile – electricity prices change every half hour, according to a schedule published the previous day, determined from wholesale prices. The price occasionally goes negative (i.e. customers are paid to use electricity) at times of high generation and low demand.[33]
  • Octopus Go – a tariff with a reduced rate for an overnight period, intended for owners of electric vehicles.[34]

The company claims to treat customers more fairly than the "Big Six" suppliers.[35][36]

In March 2019, Octopus Energy announced it had partnered with Amazon's Alexa virtual assistant, to optimise home energy use through the Agile Octopus time-of-use tariff.[37]

As part of their partnership agreed in August 2019, Midcounties Co-operative and Octopus established a joint venture to develop the UK's community energy market and encourage small-scale electricity generation.[12]

Brands[]

Besides the Octopus Energy brand, as of June 2020 customers are supplied under the Affect Energy, Co-op Energy, M&S Energy and London Power brands.[38]

Electricity generation[]

In its early years the company did not generate gas or electricity, instead making purchases on the wholesale markets. In 2019, Octopus Energy stated that all its electricity came from renewable sources, and began to offer a "green" gas tariff with carbon offsetting.[39] In July 2021, Octopus Energy acquired sister company Octopus Renewables which claims to be the UK's largest investor in solar farms, and also invests in wind power and anaerobic digesters.[40][41] At the time of the acquisition, the generation assets were reported to be worth over £3.4 billion.[42][43]

Electric vehicle charging[]

In 2020, Octopus Energy launched their Electric Juice service, through which users of electric vehicle charge points can have the costs added to their electricity bill. By October, four charge point operating companies had joined the service with around 1,000 points between them.[44]

Software development[]

A significant part of Octopus Energy's profit and revenue[citation needed] comes from licensing their proprietary customer management system called Kraken, which runs on Amazon's cloud computing service.[45] It was first licensed by UK rival Good Energy in late 2019, for an initial three-year term, to manage its 300,000 customers.[46] In March 2020 it was announced that E.ON and its nPower subsidiary had licensed the technology to manage their combined 10 million customers,[47] and the software was also licensed to Australia's Origin Energy as part of their May 2020 agreement.[27] In 2021 the number of accounts supported by Kraken was reported to be 17 million.[1]

Marketing[]

Portraits from the Precipice[]

In 2019 Octopus launched a 'Portraits from the Precipice' campaign, which sought to raise awareness of climate change and encouraged customers to switch to greener energy deals in the run up to COP26.[48] The campaign artwork was exhibited at over 5,000 sites, making it the largest ever digital out-of-home (DOOH) art exhibition.[49]

As a result of the campaign, Octopus registered a 163% increase in sign-ups and gained 37,000 customers. The campaign won the 2020 Marketing Week Masters award for utilities, and the 2020 Energy Institute award for Public Engagement.[50][51]

GB News[]

In June 2021, Octopus Energy suspended their advertising from the newly launched GB News television channel after the channel's first day of broadcasting, with CEO Greg Jackson stating "we are asking networks not to air our ads on new channels until we've seen their output for a period of time". Jackson said that Octopus would be monitoring GB News content to ensure the channel wouldn't be in breach of Octopus' advertising policy.[52]

Responding to Octopus Energy's decision on Twitter, Andrew Neil, founder of GB News, said "Let me know if you want to advertise. And I'll let you know if we want your ads. Or whether we organise a boycott of you". Jackson reaffirmed that Octopus hadn't boycotted the channel.[53]

Octopus Energy was one of a number of brands who ultimately decided to pull their advertising from the channel, with others including IKEA, Vodafone, Nivea, Kopparberg, Grolsch, the Open University, OVO Energy and LV=.[54]

References[]

  1. ^ Jump up to: a b Lempriere, Molly (12 May 2021). "Octopus Energy sees 160% jump in revenue but still records loss due to 'relentless investment'". Current News. Retrieved 7 July 2021.
  2. ^ "Octopus Energy Limited". Companies House. Retrieved 20 April 2019.
  3. ^ "Annual report 2015–2016". Companies House. 30 April 2016. Retrieved 20 April 2019.
  4. ^ "UK entech Octopus Energy's valuation soars above €1.6B after this partnership". Silicon Canals. Retrieved 5 August 2021.
  5. ^ "About Octopus Group". Octopus Group. Retrieved 20 April 2019.
  6. ^ "Annual report 2017–18". Companies House. 30 April 2018. Retrieved 20 April 2019.
  7. ^ Knapman, Helen (1 August 2018). "Octopus Energy to take on 100,000 Iresa customers". Moneywise. Retrieved 20 April 2019.
  8. ^ Key, Alys (18 July 2018). "M&S cuts ties with Big Six as it partners with Octopus for new energy brand". City A.M. Retrieved 20 April 2019.
  9. ^ Bairstow, Jonny (5 September 2018). "Octopus Energy buys Affect Energy". Energy Live News. Retrieved 20 April 2019.
  10. ^ "Hanwha Reveals Plans of Launching "Next Generation" 100% Renewable Energy Retailer in Australia". Phillip Riley AU. 3 May 2019. Retrieved 5 June 2021.
  11. ^ "Hanwha Group chooses Octopus Energy technology platform for Aussie launch". Octopus Group. Retrieved 5 June 2021.
  12. ^ Jump up to: a b Stoker, Liam (29 August 2019). "Octopus Energy and Co-op Energy confirm major 'strategic energy partnership'". Current News. Retrieved 6 September 2019.
  13. ^ "About our partnership with Co-op Energy, including Flow Energy and GB Energy". Octopus Energy. Retrieved 6 September 2019.
  14. ^ Ingrams, Sarah (January 2019). "Energy Companies: Which? Recommended Providers". Which?. Archived from the original on 20 April 2019. Retrieved 20 April 2019.
  15. ^ Ingrams, Sarah (January 2020). "Energy Survey Results". Which?. Retrieved 26 January 2020.
  16. ^ Ingrams, Sarah. "Octopus Energy Review". Which?. Retrieved 28 July 2021.
  17. ^ "Best and worst energy companies for 2021 revealed". Which? News. 25 January 2021. Retrieved 26 January 2021.
  18. ^ "ENGIE UK announces the sale of its residential energy supply business to Octopus Energy". ENGIE UK. 20 January 2020. Retrieved 22 January 2020.
  19. ^ Grundy, Alice (13 January 2020). "Mayor of London and Octopus Energy's London Power goes live". Current News. Retrieved 7 February 2020.
  20. ^ "Ten fast-growing scaleups drove UK tech boom in 2020, Tech Nations' report shows". www.privateequitywire.co.uk. 17 March 2021. Retrieved 28 July 2021.
  21. ^ "Octopus Energy acquires Upside Energy as it moves to open Manchester tech hub". Current. Retrieved 18 August 2021.
  22. ^ McManan-Smith, Tim (11 February 2021). "Octopus to launch Centre for Net Zero". theenergyst.com. Retrieved 18 August 2021.
  23. ^ Kelly, Maxine (2 March 2021). "FT 1000: the fifth annual list of Europe's fastest-growing companies". www.ft.com. Retrieved 28 July 2021.
  24. ^ "UK Customer Satisfaction Index (UKCSI) ⋆ Institute of Customer Service". Institute of Customer Service. Retrieved 28 July 2021.
  25. ^ Gosden, Emily. "Octopus Energy prepares for air-source heat pump revolution". ISSN 0140-0460. Retrieved 18 August 2021.
  26. ^ Millard, Rachel. "Octopus Energy reaches into Germany with £15m capture of 4hundred". ISSN 0140-0460. Retrieved 18 August 2021.
  27. ^ Jump up to: a b "Australia's Origin Energy to buy 20% stake in UK's Octopus Energy". Reuters. 1 May 2020. Retrieved 12 May 2020.
  28. ^ Graham, August (1 May 2020). "Octopus Energy gains unicorn status with £1bn valuation". MSN Money. Retrieved 12 May 2020.
  29. ^ Jones, Jonathan Spencer (6 October 2020). "Octopus Energy launches into US market with startup acquisition". Smart Energy International. Retrieved 18 August 2021.
  30. ^ Martin, Ronan (23 December 2020). "Octopus Eyes Japan's Power Market with Tokyo Gas Joint Venture". Bloomberg.com. Retrieved 24 December 2020.
  31. ^ "Octopus Energy". Octopus Energy. Retrieved 24 August 2021.
  32. ^ Pratt, David (10 May 2017). "Octopus offers transparency with wholesale price tariff". Current News. Retrieved 20 April 2019.
  33. ^ correspondent, Jillian Ambrose Energy (9 December 2019). "Thousands were paid to use extra renewable electricity on windy weekend". The Guardian. ISSN 0261-3077. Retrieved 26 December 2019.
  34. ^ Roberg, Torjus (9 June 2018). "New energy tariff aims to slash charging cost for electric vehicle owners". City A.M. Retrieved 20 April 2019.
  35. ^ Robinson, Michael (9 September 2016). "Energy deal 'tease and squeeze' tactics". BBC News: Business. Retrieved 21 April 2019.
  36. ^ Moulds, Josephine (10 October 2016). "David and Goliath struggle over national transfer of power". The Times. ISSN 0140-0460. Retrieved 21 April 2019.
  37. ^ Bairstow, Jonny (18 March 2019). "Octopus Energy integrates with Amazon Alexa for smart energy use". Energy Live News. Retrieved 23 July 2019.
  38. ^ "Terms & conditions updates". Octopus Energy. Retrieved 16 June 2020.
  39. ^ "About us". Octopus Energy. Retrieved 20 April 2019.
  40. ^ "What We Invest In: Energy". Octopus Investments. Retrieved 20 April 2019.
  41. ^ "Octopus Investments increases solar portfolio financing". Reuters. 7 November 2017. Retrieved 20 April 2019.
  42. ^ Cotton, Barney (5 July 2021). "FCA clears acquisition of Octopus Renewables by Octopus Energy". Business Leader. Retrieved 7 July 2021.
  43. ^ "Octopus Energy takes control of group renewables unit". reNEWS - Renewable Energy News. 26 March 2021. Retrieved 18 August 2021.
  44. ^ Mavrokefalidis, Dimitris (16 October 2020). "Four EV charging firms join Octopus Energy's Electric Juice Network". Energy Live News. Retrieved 16 October 2020.
  45. ^ Lempriere, Molly (10 August 2020). "Octopus Energy choses AWS as its preferred cloud provider for Kraken". Current News. Retrieved 22 September 2020.
  46. ^ Stoker, Liam (9 October 2019). "Good Energy turns to Octopus' Kraken for customer services platform". Current. Retrieved 12 May 2020.
  47. ^ "E.ON allies with Octopus Energy to revamp UK retail business". Reuters. 23 March 2020. Retrieved 12 May 2020.
  48. ^ "We're working with Octopus Energy on a Climate Change Art Prize". Artfinder. Retrieved 5 August 2021.
  49. ^ "Portraits from the Precipice". My Green Pod. 16 October 2019. Retrieved 5 August 2021.
  50. ^ "How Octopus Energy used art to get people to switch to green energy". Marketing Week. 11 January 2021. Retrieved 5 August 2021.
  51. ^ McManan-Smith, Tim (26 November 2020). "EI Awards 2020 recognise energy sector's 'indispensable contribution'". theenergyst.com. Retrieved 5 August 2021.
  52. ^ Greg Jackson [@g__j] (14 June 2021). "Ad slots were not planned by us. We'll monitor any new channels (including this) before running ads and will only advertise if balanced and meets our policies" (Tweet) – via Twitter.
  53. ^ Greg Jackson [@g__j] (16 June 2021). "As per my message, we didn't boycott - I wanted to see the channel and am true to my word" (Tweet) – via Twitter.
  54. ^ Langton, Kaisha (19 June 2021). "GB News hails boycott victory - Full list of advertisers BACKING Andrew Neil's channel". Express.co.uk. Retrieved 13 July 2021.

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