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JOURNEY · DETAIL
Octopus Energy: Rewriting the Century-Old Power Retail Playbook with Kraken Software
Founded: Greg Jackson · Octopus Energy Group Limited
JOURNEY
Key Fields
FIELD STAMPSIndustryEnergy
RegionEurope
ScaleGiant
ChannelOther
Origin
Greg Jackson did not originate from the energy sector; earlier in his career, he founded and successfully exited several software companies. Around 2016, he observed that the UK retail electricity market was dominated by the 'Big Six' legacy utilities, featuring outdated billing and customer service systems, extremely high consumer complaints, and a dynamic where rapidly falling wind and solar costs were not being passed down to retail prices. He reasoned that there was an arbitrage opportunity in rebuilding an electricity retail company using modern software architecture. Thus, he founded Octopus Energy in 2016, using a consumer-facing brand to validate his operating system before licensing that system to industry peers for a fee.
Milestones
2016
Startup Inception Turning Point
In 2016, Greg Jackson founded Octopus Energy in the UK, positioned as a new green electricity retailer powered by its proprietary software, Kraken. At the time, the UK electricity market was monopolized by the Big Six, characterized by low customer churn and poor service experiences. New entrants were widely viewed as incapable of shaking up licensing and supply chain barriers, so Octopus Energy started with tens of thousands of households, growing primarily through word-of-mouth.
2018
Product Market Fit PMF
Supported by the Kraken system, Octopus Energy launched smart products billed at half-hourly electricity prices, transmitting wholesale price volatility to consumers and incentivizing off-peak usage. Its customer service satisfaction ratings consistently ranked first among UK energy suppliers, and its user base surpassed the one-million milestone, proving that a software-driven retail model could succeed on the consumer side.
2021
Capital Validation Growth
Octopus Energy completed multiple rounds of financing, bringing in strategic investors such as Australia's Origin Energy. The company's valuation reached roughly $4.6 billion in 2021, and Origin simultaneously became a licensed customer of the Kraken software. Its customer base climbed into the top tier of UK energy suppliers, transforming it from a challenger into a mainstream player capable of going head-to-head with the Big Six.
2021
Industry Crisis Turning Point
Wholesale natural gas prices in the UK surged dramatically. Between 2021 and 2022, dozens of energy retailers that relied on speculative low-tariff pricing went bankrupt one after another. Octopus Energy survived due to early hedging and rigorous risk management, absorbing the customer assets of several collapsed firms. This counter-cyclical surge in its user base became a crucial turning point for overtaking competitors.
2024
Becoming Number One Growth
Octopus Energy surpassed traditional rivals like British Gas to become the UK's largest household energy supplier, serving a scale of approximately 12.9 to 13 million customer accounts. External licensing of the Kraken software continued to expand, serving multiple global utility companies and covering roughly 54 to 70 million accounts, establishing a dual engine of software and retail businesses.
2026
Platform Spin-off Turning Point
Octopus Energy spun off its Kraken software platform into an independent entity. Following a standalone funding round of approximately $1 billion, Kraken achieved a valuation of about $8.65 billion as an independent company. Simultaneously, the group advanced its international expansion into China. In February 2026, founder Jackson visited China to propose collaboration goals with local partners, targeting a green electricity market of about 140 billion kWh.
Turning Points
- During the 2021 energy price crisis, Octopus Energy survived through rigorous hedging and absorbed bankrupt competitors' customers, achieving a massive scale leap in a single stroke.
- Upgraded the self-developed Kraken system from an internal tool into an independently licensed software platform, transforming a cost center into a second growth curve.
- Between 2025 and 2026, spun off Kraken into an independent company valued at approximately $8.65 billion, completely separating the retail brand and tech platform organizationally.
Failures & Pitfalls
- In its early startup days, the venture was written off by mainstream consensus. The new company was far weaker than the Big Six in licenses, wholesale price hedging capital, and customer acquisition funds, requiring funding injections almost every year in its initial phase.
- Various aggressive pricing experiments encountered consumer cognitive barriers in the early stages; hourly floating tariffs required substantial customer education costs, and some pilot conversion rates fell short of expectations.
- International expansion was not entirely smooth; differences in local regulations and pricing mechanisms when entering markets like the US and Japan forced the company to repeatedly adjust its product forms.
关键成功要素
- Rebuilt the full-stack system of electricity retail billing, risk control, and customer management using modern software architecture.
- Treating crises as assets; strict hedging allowed the company to survive the 2021 price storm and acquire competitor assets.
- Using the retail brand to validate platform capabilities, and then selling the exact same system to industry peers via a software licensing model.
- Replacing traditional cash-burning advertising with word-of-mouth and customer service experience for customer acquisition, maintaining top-tier satisfaction ratings.
- Proactively spinning off the software business after reaching peak scale to unlock Kraken's independent valuation and financing capabilities.
Lessons
- The greatest digital dividends in traditional industries are often hidden in the most unpopular touchpoints, such as billing and customer service.
- The moat for asset-heavy or commoditized industries can come from data-driven pricing models and user behavior scheduling capabilities.
- Navigating cycles relies on risk-management discipline; speculative growth will be liquidated during energy crises.
- A system extensively validated by one's own business operations has lower marginal expansion costs when licensed to peers than building proprietary channels from scratch.
- The optimal timing for spinning off a platform is when the parent company still has a growth story, rather than after growth has stalled.
Core Data
- kraken独立估值：Approximately $8.65 billion (based on public disclosures; independent verification unverified)
- kraken独立融资额：Approximately $1 billion (based on public disclosures; independent verification unverified)
- 英国家庭用户规模：Approximately 12.9 to 13 million households (based on public disclosures; independent verification unverified)
- kraken授权覆盖账户：Approximately 54 to 70 million accounts (based on public disclosures; independent verification unverified)
- 2021年集团估值：Approximately $4.6 billion (based on public disclosures; independent verification unverified)
- 入华绿电合作目标：Approximately 140 billion kWh (based on public disclosures; independent verification unverified)
Competitors / Peers
On the retail side, Octopus Energy competes head-to-head with the UK's traditional Big Six and their successors, such as British Gas's parent company, OVO Energy, EDF Energy Retail, and local brands under the EDF system. On the software licensing side, it contends for clients with SAP Utilities, Oracle Utilities, and various legacy supplier billing system vendors. Compared to Oracle (which sells software) and OVO (which sells electricity), Octopus Energy's uniqueness lies in simultaneously operating as the UK's largest household retail brand while licensing Kraken to international peers like E.ON, forming a dual-layer hedge of software revenue and retail revenue—a combination that peers find extremely difficult to replicate as both a player and a referee.