Octopus Energy: What It Is, How Kraken Works, and Real Customer Reviews

An announcement from Octopus Energy Group this week confirmed the long-speculated plan: its technology platform, Kraken, will be spun off into a separate entity. The official rationale is centered on managing conflicts of interest, a standard piece of corporate messaging designed for easy digestion. As Kraken licenses its sophisticated platform to other utilities—many of whom directly compete with Octopus Energy UK—an independent structure is presented as a necessity for market neutrality.

This is a clean, logical narrative. It is also a significant understatement of the strategic calculus at play.

To understand what is actually happening, one must first deconstruct the company’s own origin story. Greg Jackson, the Octopus Energy CEO, has frequently stated that Kraken was the original product. The utility, Octopus Energy, was built to be its first, and best, "demo client." It’s a compelling line, suggesting a tech-first mindset from day one. But let's look at the data. This "demo" grew from its founding in 2015 to become the UK's largest energy provider, overtaking British Gas in less than a decade. It currently provides power to over 7.7 million households in the UK and another 2.8 million internationally. The total customer base is around 10.5 million—to be more exact, it's just over that mark when you factor in their operations in places like Texas and Japan.

Calling a national market leader a "demo client" is like calling a carrier strike group a "boat." The scale of the operation is the story. Octopus didn't just prove Kraken worked; it used Kraken to execute a remarkably aggressive customer acquisition strategy, fueled by innovations like the Agile tariff and the "Zero Bills" program for electrified homes. The result is a massive, vertically integrated operation. And within it sits a technology asset whose value is obscured.

The Real Reason for the Split: A Pure-Play Valuation

The Financial Separation Event

The spinoff is not primarily about conflicts of interest. It is an exercise in value realization. Corporate structures of this nature, where a high-growth tech platform is embedded within a lower-margin, capital-intensive utility, create a valuation drag. The market struggles to price the combined entity correctly. By separating the two, you allow the technology to be valued as technology.

The numbers driving this decision are clear. The announcement was precipitated by Kraken securing $500 million in committed annual revenue from its licensing deals. This is the material threshold. It provides a stable, predictable revenue stream that can be used to anchor a standalone valuation. And that valuation is the entire point. The figures being floated for a potential Initial Public Offering, which could occur within the year, are in the neighborhood of $15 billion.

I've looked at dozens of spinoffs in the tech and industrial sectors, and this particular move has all the classic hallmarks of a pre-IPO maneuver. The "conflict of interest" narrative is the key that unlocks the door for Kraken to sign more deals with competitors (it already serves major players like E.ON and EDF in the UK), which in turn inflates its revenue base and justifies that target valuation. The logic is circular and financially elegant.

Adding another layer to this strategic positioning is the recent appointment of Greg Jackson to the Cabinet Office Board as a Non-Executive Member. His three-year term begins July 21, 2025. The stated goal is to bring renewable energy insight into government policy. This is, of course, true. But the timing is notable. Placing the CEO of what is essentially a critical national infrastructure company, and the architect of its underlying technology, inside the government apparatus just as that technology is being prepared for a public listing is a powerful signal. It suggests a future where the Kraken model—using AI to manage grids saturated with renewables, EV chargers, and home batteries—is not just a commercial product but a quasi-official framework for the energy transition.

We must, of course, pause and apply a methodological critique to the $15 billion valuation figure. Without a formal S-1 filing, this number is speculative, likely originating from controlled leaks to investment banks or major news outlets to gauge market appetite. It is a piece of signaling, not a hard asset value. We also have a complete absence of data on public or customer reaction. This is normal for a corporate structuring announcement; the market that matters right now is the institutional one. The sentiment of retail investors and Octopus Energy customers will be measured later, once the IPO roadshow begins.

Still, the trajectory is clear. The story of what is Octopus Energy is being deliberately bifurcated. One entity remains a utility, competing on price and service. The other, Kraken, is being positioned as the essential operating system for the future of energy. The parent is being de-emphasized so the child can command the valuation it could not achieve while tethered to the balance sheet of a traditional power supplier.

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An Exercise in Price Discovery

The narrative that Octopus Energy was built as a "demo" for Kraken has always felt like a clever piece of revisionist history. My analysis suggests the opposite is more accurate. The utility wasn't the demo; it was the mechanism. It was the most ambitious, capital-intensive, and successful customer acquisition strategy ever deployed to build a technology platform. Octopus Energy acquired millions of customers, not just to sell them electricity, but to generate the data and operational proof points necessary to turn Kraken into a multi-billion-dollar asset. The spinoff isn't the end of the story; it's the moment the asset is finally brought to market.

Reference article source：

• Client Challenge
• Octopus Energy spins off its Kraken utility billing and AI platform
• What Will Greg Jackson Bring to the Cabinet Office Board?