Octopus Energy is set to spin out its technology platform Kraken as a standalone company valued at $8.65 billion, following a $1 billion funding round that draws in major institutional investors and signals the growing global appetite for AI-driven energy technology.
The UK-based energy group confirmed that the deal — led by D1 Capital Partners alongside Ontario Teachers’ Pension Plan, Fidelity International, and Durable Capital Partners — will see Kraken operate independently by mid-2026. The transaction, which values Kraken at nearly £6.8 billion, is expected to pave the way for an initial public offering within two years.
Octopus will retain a 13.7 per cent stake in Kraken, while long-term partner Origin Energy of Australia will invest around $140 million to secure a 22.7 per cent holding, waiving its exclusivity rights in Australia to allow broader licensing of the platform.
Kraken, originally developed as Octopus Energy’s in-house operating system, now manages customer operations for more than 70 million accounts globally. Its software is used by energy suppliers including EDF, Tokyo Gas, and National Grid U.S., and is projected to generate annual contracted revenues above $500 million.
“The spin-out of Kraken reflects the extraordinary potential of energy technology to transform global utilities,” said a spokesperson for Octopus Energy. “This investment will accelerate innovation and bring Kraken’s platform to more partners and sectors worldwide.”
For Octopus Energy, the separation serves multiple strategic aims: it unlocks shareholder value in its technology arm, removes potential conflicts of interest for competitors licensing the software, and delivers new capital to reinvest in its retail and renewable businesses. The company’s holding entity, Octopus Capital, will also inject a further $320 million into the group’s energy operations.
Kraken’s independence positions it to pursue broader cross-sector applications beyond energy, with future licensing opportunities in water, telecoms, and public infrastructure under consideration. The company’s AI-driven tools enable utilities to optimise load balancing, integrate renewables, and automate customer service — capabilities increasingly seen as foundational to the energy transition.
The deal also underscores the rapid convergence of technology and infrastructure. As grids digitise and renewable penetration rises, software platforms like Kraken are emerging as strategic infrastructure assets in their own right. The valuation places Kraken among the most valuable energy-tech companies globally, rivalling the software divisions of major U.S. utilities.
Founded in 2016, Octopus Energy has grown to become the UK’s largest household electricity supplier. The spin-out of Kraken marks the next stage in its evolution — from challenger energy provider to technology exporter — and signals a maturing phase for the UK’s clean-tech ecosystem.
