Octopus Energy spins off Kraken in $8.65B deal as energy software arm raises $1B

Britain’s clean energy heavyweight Octopus Energy is breaking its most valuable technology asset out into the open.

The company said Monday it will spin off its software arm, Kraken, as a standalone business valued at $8.65 billion, following a major funding round led by D1 Capital Partners. The deal turns Kraken from an internal advantage into an independent platform with global ambitions.

The transaction brings in roughly $1 billion of fresh equity into Kraken. At the same time, investors led by Octopus Capital are investing an additional $320 million in Octopus Energy. The combined investment reshapes the group while keeping close ties between the parent and its former tech arm. Octopus Energy will retain a 13.7% ownership stake upon completion of the separation.

Octopus Energy’s Kraken Breaks Out as Independent Company at $8.65B Valuation

Kraken’s appeal is scale, plain and simple. The platform licenses an AI-powered operating system to utilities worldwide and is already contracted to serve more than 70 million customer accounts. Its client list includes prominent names such as EDF, National Grid U.S., and Tokyo Gas. In September, the company disclosed contracted annual revenue exceeding $500 million, placing it in rare territory for energy infrastructure software.

Greg Jackson, Founder of the Octopus Energy Group, said: “We set out to create Kraken as a global platform to transform utilities and deliver the innovation, service, and value that customers deserve. I am so proud that the business is smashing it – and is now such a huge and successful company in its own right.”

Jackson added, “Under Amir’s leadership and with a remarkably talented team, Kraken is soaring to new heights. I set the embarrassingly low goal of 100,000,000 accounts by 2027. It looks like it’ll beat that and can now aim to serve a billion people over the next decade.”

Amir Orad, CEO of Kraken, said: “Octopus has been a phenomenal founding partner and first client. Kraken is now a globally successful business in its own right, operating independently for some time – completing our journey to full independence is a strategic and inevitable next step.”

“It gives us more freedom to invest, expand, and serve our utility clients equally. We’ll keep pushing innovation in the cloud, advancing our utility-grade AI and harnessing vast amounts of energy and grid data, while ensuring structural clarity for customers, investors, and partners. We are aiming to accelerate the energy transition and positively impact people around the world. This is an exciting next chapter for Kraken.”

New backers in the round include Ontario Teachers’ Pension Plan, Fidelity International, and Durable Capital Partners. Their participation signals growing confidence that utility software, once viewed as slow-moving and defensive, has become a high-growth category tied directly to the economics of the energy transition.

The spin-off also carries strategic consequences beyond Europe. Origin Energy said it will invest about $140 million in Kraken’s raise and hold a 22.7% stake in the platform after the deal closes. Origin agreed to drop its exclusivity arrangement for Kraken’s services in Australia in exchange for an extra 1.5% equity interest. This move clears the way for Kraken to sign additional customers in the region.

Kraken’s rise mirrors Octopus Energy’s own growth story. Since launching in 2015, Octopus has leaned heavily on software to run learner operations and pass savings back to customers. During the energy crisis, that strategy helped more than a million UK households cut costs. Over the past year, Octopus returned nearly £10 million to customers through its Saving Sessions program by shifting usage to periods of cheaper, renewable-heavy power.

The numbers behind Kraken’s expansion tell the same story. The platform supported about 17 million accounts in 2021. By 2023, that figure had climbed to more than 52 million, driven by deals with large retailers such as E.ON, EDF, and Good Energy, as well as utilities and infrastructure operators across Europe, Japan, and Australia, Reuters reported. Kraken is already licensed beyond retail energy, serving water companies, electricity networks, renewable generators, and grid-scale battery operators.

This is not Octopus Energy’s first brush with big capital. TechStartups covered the company in late 2023 after it raised $800 million to accelerate growth, a round that valued the business at $7.8 billion, up roughly 60% from its 2021 valuation. The Kraken spin-off now charges a separate price for the technology that helped drive that rise.

For Octopus, the split sharpens focus on energy supply and customer growth. For Kraken, independence enables it to sell its platform without parent-company constraints. The deal underscores a broader shift in the energy sector: software is no longer a side project for utilities. It is becoming the asset investors are most eager to own.

Octopus Energy