Octopus Energy

Octopus Energy is a UK-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 May 2020 the company had over 1.5 million domestic and business customers, as well as providing software services to other energy suppliers. Octopus Energy has operations in the UK, Germany, and the USA.

Octopus Energy
TypePrivate
IndustryElectricity and gas supply
Founded2015
HeadquartersLondon, UK
Area served
United Kingdom, Germany, United States
Key people
Greg Jackson (CEO)
ProductsGas
Electricity
Revenue
  • £2bn (2020)
  • £459m (2019)
  • £129m (2018)
  • £35m (2017)
ParentOctopus Group
Websiteoctopus.energy

History

Octopus Energy was established in August 2015 as a subsidiary of Octopus Capital Limited.[1] Trading began in December 2015.[2] The company's co-founders were Greg Jackson and Pete Miller,[3] and Jackson holds the position of chief executive.[4]

By April 2018, the company had 198,000 customers and had made an energy procurement deal with Shell.[5] Later in 2018, Octopus gained the 100,000 customers of Iresa Limited, under Ofgem's "supplier of last resort" process, after Iresa ceased trading.[6] The same year, Octopus replaced SSE as the energy supplier for M&S Energy, a brand of Marks & Spencer,[7] and bought Affect Energy, which had 22,000 customers.[8]

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.[9][10]

In both 2018 and 2019, Octopus was the only energy supplier to earn "Recommended Provider" status from the Which? consumer organisation.[11] In January 2020, Octopus was ranked first in a Which? survey and was one of three recommended providers.[12] In January 2021, Octopus was ranked second and was one of two recommended providers.[13]

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.[14] The same month saw the launch of London Power, a partnership with the Mayor of London.[15] In November, Octopus acquired Upside Energy, a smart grid software company based in Manchester.[16]

Overseas expansion

In September 2019, Octopus acquired German energy provider 4hundred, in the first international expansion for the company.[17]

In May 2020, Australian electricity and gas supplier Origin Energy paid A$507 million for a 20% stake in Octopus Energy.[18] This meant Octopus gained "unicorn" status, as a startup company with a value in excess of £1 billion.[19] In September of that year, Octopus Energy announced that it had acquired Silicon Valley startup Evolve Energy for an undisclosed sum in order to expand into the US market.[20]

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.[21]

Operations

Gas and electricity supply

As of May 2020, the company had over 1.5 million domestic and business customers.[18]

The company does not generate gas or electricity, instead making purchases on the wholesale market, although sister company Octopus Renewables claims to be the UK's largest investor in solar farms, and also invests in wind power and anaerobic digesters.[22][23] As of 2019, Octopus Energy stated that all its electricity came from renewable sources, and it offered a "green" gas tariff with carbon offsetting.[24]

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.[25]
  • 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.[26]
  • Octopus Go – a tariff with a reduced rate for an overnight period, intended for owners of electric vehicles.[27]

The company claims to treat customers more fairly than the "Big Six" suppliers.[28][29]

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.[30]

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.[9]

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.[31]

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.[32]

Software development

A significant part of Octopus Energy's profit and revenue comes from licensing their proprietary customer management system called Kraken, which runs on Amazon's cloud computing service.[33] It was first licensed by UK rival Good Energy in late 2019, for an initial three-year term, to manage its 300,000 customers.[34] In March 2020 it was announced that E.ON and its nPower subsidiary had licensed the technology to manage their combined 10 million customers.[35] The software would also be licensed to Australia's Origin Energy as part of their May 2020 agreement.[18]

References
  1. "Octopus Energy Limited". Companies House. Retrieved 20 April 2019.
  2. "Annual report 2015–2016". Companies House. 30 April 2016. Retrieved 20 April 2019.
  3. Cuff, Madeleine (7 May 2020). "Octopus Energy customers told to 'use more electricity' ahead of bank holiday". inews.co.uk. Retrieved 26 December 2020.
  4. "About Octopus Group". Octopus Group. Retrieved 20 April 2019.
  5. "Annual report 2017–18". Companies House. 30 April 2018. Retrieved 20 April 2019.
  6. Knapman, Helen (1 August 2018). "Octopus Energy to take on 100,000 Iresa customers". Moneywise. Retrieved 20 April 2019.
  7. 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.
  8. Bairstow, Jonny (5 September 2018). "Octopus Energy buys Affect Energy". Energy Live News. Retrieved 20 April 2019.
  9. Stoker, Liam (29 August 2019). "Octopus Energy and Co-op Energy confirm major 'strategic energy partnership'". Current News. Retrieved 6 September 2019.
  10. "About our partnership with Co-op Energy, including Flow Energy and GB Energy". Octopus Energy. Retrieved 6 September 2019.
  11. Ingrams, Sarah (January 2019). "Energy Companies: Which? Recommended Providers". Which?. Archived from the original on 20 April 2019. Retrieved 20 April 2019.
  12. Ingrams, Sarah (January 2020). "Energy Survey Results". Which?. Retrieved 26 January 2020.
  13. "Best and worst energy companies for 2021 revealed". Which? News. 25 January 2021. Retrieved 26 January 2021.
  14. "ENGIE UK announces the sale of its residential energy supply business to Octopus Energy". ENGIE UK. 20 January 2020. Retrieved 22 January 2020.
  15. Grundy, Alice (13 January 2020). "Mayor of London and Octopus Energy's London Power goes live". Current News. Retrieved 7 February 2020.
  16. Lempriere, Molly (3 November 2020). "Octopus Energy acquires Upside Energy as it moves to open Manchester tech hub". Current News. Retrieved 24 December 2020.
  17. "Octopus Energy in 'Expansion Phase' as it Acquires German Supplier". Simply Switch. 10 September 2019. Retrieved 26 December 2019.
  18. "Australia's Origin Energy to buy 20% stake in UK's Octopus Energy". Reuters. 1 May 2020. Retrieved 12 May 2020.
  19. Graham, August (1 May 2020). "Octopus Energy gains unicorn status with £1bn valuation". MSN Money. Retrieved 12 May 2020.
  20. Clowes, Ed (29 September 2020). "Octopus Energy spreads its tentacles to US". The Telegraph. Retrieved 29 September 2020.
  21. Martin, Ronan (23 December 2020). "Octopus Eyes Japan's Power Market with Tokyo Gas Joint Venture". Bloomberg.com. Retrieved 24 December 2020.
  22. "What We Invest In: Energy". Octopus Investments. Retrieved 20 April 2019.
  23. "Octopus Investments increases solar portfolio financing". Reuters. 7 November 2017. Retrieved 20 April 2019.
  24. "About us". Octopus Energy. Retrieved 20 April 2019.
  25. Pratt, David (10 May 2017). "Octopus offers transparency with wholesale price tariff". Current News. Retrieved 20 April 2019.
  26. 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.
  27. Roberg, Torjus (9 June 2018). "New energy tariff aims to slash charging cost for electric vehicle owners". City A.M. Retrieved 20 April 2019.
  28. Robinson, Michael (9 September 2016). "Energy deal 'tease and squeeze' tactics". BBC News: Business. Retrieved 21 April 2019.
  29. Moulds, Josephine (10 October 2016). "David and Goliath struggle over national transfer of power". The Times. ISSN 0140-0460. Retrieved 21 April 2019.
  30. Bairstow, Jonny (18 March 2019). "Octopus Energy integrates with Amazon Alexa for smart energy use". Energy Live News. Retrieved 23 July 2019.
  31. "Terms & conditions updates". Octopus Energy. Retrieved 16 June 2020.
  32. Mavrokefalidis, Dimitris (16 October 2020). "Four EV charging firms join Octopus Energy's Electric Juice Network". Energy Live News. Retrieved 16 October 2020.
  33. Lempriere, Molly (10 August 2020). "Octopus Energy choses AWS as its preferred cloud provider for Kraken". Current News. Retrieved 22 September 2020.
  34. Stoker, Liam (9 October 2019). "Good Energy turns to Octopus' Kraken for customer services platform". Current. Retrieved 12 May 2020.
  35. "E.ON allies with Octopus Energy to revamp UK retail business". Reuters. 23 March 2020. Retrieved 12 May 2020.
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