Octopus Energy Spins Off AI Arm Kraken at $8.65 Billion Valuation

Jan 1, 2026, 2:41 AM

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Octopus Energy has officially announced the spin-off of its technology arm, Kraken, as an independent company valued at $8.65 billion. This decision follows a substantial funding round led by D1 Capital Partners, which raised approximately $1 billion for Kraken's operations.

Kraken, which provides AI-powered software solutions to utilities worldwide, has established itself as a significant player in the energy sector. The platform currently serves over 70 million customer accounts, including major clients such as EDF, National Grid US, and Tokyo Gas. The funding will facilitate Kraken's transition to full independence, allowing it to operate with its own governance and capital structure while Octopus Energy retains a 13.7% minority stake in the new entity.

The investment round also includes participation from notable investors such as Fidelity International and the Ontario Teachers' Pension Plan, indicating a growing confidence in the utility software market, which is increasingly seen as a high-growth sector tied to the energy transition. Alongside the Kraken investment, Octopus Energy will receive an additional $320 million to support its expansion in retail, generation, and clean technology operations.

Kraken's technology automates customer service and billing processes for energy companies, optimizing energy usage and rewarding customers for reducing consumption during peak times. This innovative approach has positioned Kraken as a neutral, AI-driven operating system for energy companies, which is crucial as utilities face pressure to modernize their IT systems and improve customer engagement.

Greg Jackson, founder and CEO of Octopus Energy, expressed pride in Kraken's growth and its potential to transform the utilities sector. He noted that the spin-off would provide Kraken with the "focus and freedom" necessary to expand its operations and serve a broader range of clients without the constraints of being part of a larger energy supplier.

Amir Orad, CEO of Kraken, emphasized that the separation would allow the company to invest more aggressively in innovation and to better serve its utility clients. He stated that Kraken aims to accelerate the energy transition and positively impact global energy management through advanced data and AI technologies.

The demerger also reflects a broader trend in the energy sector, where digital platforms are increasingly valued independently from traditional supply and generation operations. As utilities ramp up spending on digitization to meet decarbonization targets and regulatory demands, the valuation of Kraken places it among the most highly valued energy-focused software companies globally.

In addition to the funding from D1 Capital Partners, Origin Energy has committed approximately $140 million to Kraken, securing a 22.7% stake in the platform. This investment allows Kraken to expand its services in Australia, as Origin has agreed to waive its exclusivity arrangement for Kraken's services in the region.

The spin-off of Kraken is expected to pave the way for a potential initial public offering (IPO) within the next two years, with discussions about the listing location still ongoing. Jackson mentioned that the decision would depend on where Kraken could garner the most investor support, with both London and the US being considered as potential venues for the IPO.

Overall, the separation of Kraken from Octopus Energy marks a significant milestone in the evolution of energy technology, highlighting the increasing importance of software solutions in the energy sector. As Kraken embarks on its journey as an independent entity, it aims to leverage its innovative capabilities to drive further growth and contribute to the global energy transition.

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