Octopus Energy to spin out AI unit Kraken Technologies for $8.65B

British renewable energy group Octopus Energy is moving closer to spinning out its artificial intelligence-driven software arm, Kraken Technologies, in a step that underlines how digital infrastructure is becoming central to the UK energy transition.

The proposed separation follows a major funding round that repositions Kraken as a standalone technology business rather than a support function within an energy supplier.

As utilities face growing pressure to modernise systems, manage volatile energy markets, and handle rising customer complexity, Kraken’s evolution reflects a broader shift where AI-powered platforms are reshaping how energy companies operate and scale.

Funding sets direction

The latest move follows a $1 billion first standalone funding round for Octopus, disclosed late Monday by Origin Energy, a major shareholder.

The transaction values the Octopus business at $8.65 billion and is designed to pave the way for Kraken’s separation by mid-2026.

Origin said the funding structure supports the spin-off process, allowing both businesses to pursue their own growth strategies with clearer capital allocation.

The round included participation from Daniel Sundheim’s hedge fund D1 Capital Partners, alongside an unnamed major Kraken customer.

Origin will also invest $140 million as part of the process, reinforcing its strategic interest in the technology platform. The funding is expected to support Kraken’s expansion, product development, and customer onboarding as it prepares to operate independently.

Ownership after separation

Once the spin-off is completed, Octopus Energy will retain a 13.7% stake in Kraken Technologies, while Origin’s ownership will stand at 22.7%.

The revised ownership structure is intended to balance independence with continuity, allowing Kraken to operate as a focused technology provider while maintaining ties to its original backers.

Origin said the transactions are designed to position both Octopus and Kraken for their next growth phase, supported by capital structures aligned to their respective business models.

The separation also reflects how energy groups are increasingly unlocking value by structurally separating technology platforms from supply operations.

For Octopus, this allows sharper focus on retail energy and renewables.

For Kraken, it opens the door to broader commercial partnerships across global utility markets.

Software at the core

Kraken supplies energy management software to utility companies, including EDF and E.ON.

Its platform supports functions such as billing, customer engagement, and operational optimisation.

According to Origin Energy, Kraken’s contracted annual recurring revenue has more than doubled over the past 18 months, signalling accelerating demand from utilities seeking scalable digital solutions.

Customer growth has been a central theme.

Origin chief executive Frank Calabria said the signing of a major new customer has brought Kraken closer to its target of managing 100 million customer accounts, and that progress toward this target is ahead of plan.

This scale positions Kraken among the largest dedicated energy software platforms globally.

Strategic implications

The planned mid-2026 separation places Kraken at the intersection of AI adoption and the UK’s energy transition.

As grids decentralise and customer data volumes expand, software platforms capable of managing complexity are becoming critical infrastructure.

By advancing the spin-off, Octopus is signalling that AI-led energy software is no longer a secondary function but a standalone growth engine with global relevance.

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