Origin Energy, through its investment in Octopus Energy, expects to speed up the transformation of its Australian retail business, provide enhanced customer experience, and offer cleaner and smarter energy solutions
Origin Energy has agreed to acquire a stake of 20% in Octopus Energy, a UK-based energy technology group, for AUD507m ($327.61m).
The deal will also see the Australian energy company acquire a licence for using Octopus Energy’s technology platform Kraken in Australia.
The majority stake in the UK firm will be continued to be held by Octopus Group, which is engaged in investing in energy, technology, and growth businesses.
Through the transaction, Origin Energy expects to speed up the transformation of its Australian retail business, provide enhanced customer experience, and offer cleaner and smarter energy solutions.
The Australian firm will also give a three-year company guarantee to support the working capital for Octopus Energy’s UK and global energy business.
In the coming 24-30 months, Origin Energy will transfer its 3.8 million retail electricity and gas customer accounts to the Kraken platform. The Australian utility expects the move to yield a step-change reduction in operating and capital costs, with likely pre-tax cash savings of AUD70-80m ($45-51m) in FY2022, which will increase to AUD100-150m ($64-97m) annually from FY2024.
Origin Energy CEO comments on the company’s investment in Octopus Energy
Origin Energy CEO Frank Calabria said: “The future of energy retailing lies in delivering superior customer experience at lowest cost and seamlessly integrating products and services, enabled by new technologies.
“While we have made good progress towards improving our customers’ experiences and the efficiencies within our retail business, this partnership Octopus will help us transform energy retailing by automating our end-to-end processes and embedding an operating model designed around, and for, the customer experience.”
Octopus Energy plans to use the proceeds from the investment for its global expansion.
The investment from Origin Energy follows Octopus Energy’s technology deal that was signed last month with E.On. Under the deal, the six million UK customers of npower and E.On will move onto Octopus Energy’s Kraken platform.
Besides having existing deals with South Korea-based Hanwha and renewable energy supplier Good Energy, the energy technology group powers Co-op Energy, Affect Energy, M&S Energy, Tesla Power, and London Power in the UK.
Octopus Energy’s Kraken platform is claimed to have been contracted to support more than 17 million energy accounts across all the company’s operations and licenses.
The energy technology group also has its own energy retail business, which supplies electricity and gas to 1.5 million homes across the UK.
Octopus Energy founder and CEO Greg Jackson said: “We’ve known Origin for a long time, and it has the most forward-thinking management of any market-leading energy company we’ve met.
“We’re looking forward to working with Origin to use technology to reduce energy costs, increase renewables and improve customer service in the UK, Australia, Germany and now many more countries too.”
Under the terms of the deal, Origin Energy will pay AUD134m ($86.6m) upfront in addition to AUD373m ($241m) to be paid over four financial years in the form of equity installments and progress payments associated with the rollout of the Kraken platform across Origin Energy’s retail operations.