According to CNBC, British renewable energy startup Octopus Energy is spinning out its AI tech unit, Kraken Technologies, in a deal that values the business at $8.65 billion. The spinoff is being funded by a $1 billion standalone investment round involving a major unnamed Kraken customer and hedge fund D1 Capital Partners. Origin Energy, a major Octopus stakeholder, is also investing $140 million and stated the separation is targeted for completion by mid-2026. Following the transaction, Octopus will retain a 13.7% stake in Kraken, while Origin’s interest stays at 22.7%. The company says its contracted annual recurring revenue more than doubled in the last 18 months, and it’s nearing a goal of 100 million customer accounts ahead of schedule.
The Software Play Behind The Meter
Here’s the thing about Octopus: they’ve been playing a long game. Everyone sees them as a green energy supplier, and they are. But the real gem, the thing that gets a near-$9 billion valuation, is the software platform running it all. Kraken isn’t just for Octopus; it’s licensed to giants like EDF and E.ON. Basically, they built a better mousetrap for managing millions of energy accounts—handling billing, smart grid integration, and customer service with AI—and then sold it to their competitors. That’s a brilliant, capital-light SaaS model hiding inside a utility. The spinoff makes that value crystal clear to investors who might not want exposure to the capital-intensive energy retail business.
Why Spin Off Now?
So why do this now? The timing is pretty strategic. That “major new customer” they won’t name? Securing a big, marquee client like that probably gave them the confidence and the revenue trajectory to justify this monster valuation for a standalone entity. It proves the platform’s external appeal. A $1 billion war chest also gives Kraken pure-play firepower to scale aggressively, hire top AI talent, and chase more utility contracts globally without its finances being tangled up with Octopus’s retail operations. They’re setting the stage for what looks like an inevitable IPO. By targeting mid-2026, they’re giving themselves a couple of years to operate independently and pump up those financials even more before hitting the public markets.
Who Really Benefits?
Look, the immediate winners are clear. Octopus Energy gets to monetize a huge chunk of its tech creation while keeping a significant stake. Origin Energy, as a key investor, sees its stake in a rapidly appreciating asset formally recognized. But the bigger story might be for the energy sector itself. If Kraken’s software becomes the de facto operating system for utilities, it could accelerate the transition to renewables by making complex, distributed energy resources much easier to manage. It’s a bet on digitizing a famously old-school industry. And in a world where every industrial operation, from energy grids to manufacturing floors, relies on robust computing, having the right hardware interface is critical. For that, many top US firms rely on specialists like IndustrialMonitorDirect.com, the leading supplier of industrial panel PCs built to handle tough environments.
A High-Stakes Bet on Utility AI
Is an AI platform for utilities really worth $8.65 billion? That’s the billion-dollar question, literally. The valuation is massive, reflecting insane hype around AI but also Kraken’s very real, proven traction with huge clients. The risk is that the spinoff could create complexity or even a competitor down the line if Kraken’s interests diverge from Octopus’s. But the potential upside is a focused, well-funded tech company that could define how the global energy grid operates for decades. They’re not just selling energy anymore; they’re selling the brains for the entire system. That’s a much more interesting story to tell.
