UK clean energy and technology group Octopus Energy Group has announced the demerger of its AI-driven utility software arm, Kraken, alongside a $1 billion standalone funding round that values the newly independent business at more than $8.6 billion. The move marks one of the largest technology spinouts in the global energy sector and signals growing investor confidence in digital infrastructure as a core pillar of the energy transition. The transaction will see Kraken operate as a fully independent technology company serving utilities worldwide, while Octopus Energy sharpens its focus on consumer energy supply, generation, and clean technology solutions. Octopus will retain a 13.7 percent stake in Kraken and remain a strategic customer and innovation partner.

From Internal Platform to Global Utility Operating System

Kraken was originally developed within Octopus Energy to address the operational complexity faced by modern energy utilities. Over time, it evolved into a full-scale AI-powered operating system designed to manage energy networks, improve field operations, support customer engagement, and enable utilities to launch new digital products and services. At the heart of the platform is Kraken’s Virtual Power Plant capability, which coordinates distributed energy resources such as electric vehicles, rooftop solar, home batteries, and heat pumps. By aggregating and intelligently dispatching these assets, the system helps flatten peak demand, reduce system costs, and lower emissions by shifting electricity use to periods when power is cheaper, cleaner, and more abundant. In July, Kraken reported that its Virtual Power Plant had surpassed 500,000 connected devices and reached 2 gigawatts of flexible capacity, underscoring the growing role of software-led demand management in modern power systems.

Rapid Revenue Growth and Expanding Global Reach

Kraken’s financial performance has been a key driver behind the spinout decision. The company disclosed that its contracted annual revenues have increased more than fourfold over the past three years, now exceeding $500 million. Through long-term licensing agreements, the platform is contracted to serve more than 70 million customer accounts globally, working with major utilities across multiple markets. This scale positions Kraken not as a niche energy technology provider, but as a foundational digital layer for utility operations at a time when electrification, decentralised generation, and customer expectations are all accelerating. Amir Orad, Chief Executive Officer of Kraken, said that independence would allow the company to scale more effectively as a neutral technology provider. He noted that separating from Octopus Energy gives Kraken the freedom to deepen partnerships across the sector while continuing to collaborate closely with Octopus as a forward-thinking customer and innovation partner.

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Strategic Rationale Behind the Demerger

For Octopus Energy, the demerger is designed to unlock value on both sides. By spinning out Kraken, the group enables the software platform to attract dedicated growth capital and talent focused solely on utility technology, while Octopus itself concentrates resources on expanding its consumer base, renewable generation, and clean energy offerings. Greg Jackson, Founder of Octopus Energy Group, described Kraken as a category-defining technology with the capability and scale to modernise utility operations worldwide. He said that as an independent company with strong backing and leadership, Kraken is positioned to grow faster and become a globally recognised UK-founded technology success, while Octopus benefits from the innovation capacity it has incubated.

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Investor Confidence in Utility Digitalisation

The $1 billion investment round was led by D1 Capital Partners, with participation from Fidelity International, Durable Capital Partners, and the Ontario Teachers’ Pension Plan Board through its Teachers’ Venture Growth platform. Dan Sundheim, Founder and Chief Investment Officer of D1 Capital Partners, said the firm’s investment reflects Kraken’s ability to deliver tangible value to utilities, citing strong customer satisfaction, retention, and revenue growth. He added that the leadership team’s execution track record reinforced confidence in Kraken’s ability to modernise utility operations at scale.

Software as the Backbone of the Energy Transition

The Kraken spinout highlights a broader shift underway in energy markets. As power systems become more decentralised and data-intensive, software platforms that can orchestrate millions of devices and customer interactions are becoming as critical as physical infrastructure. By separating Kraken into an independent entity, Octopus Energy and its investors are effectively betting that AI-driven utility platforms will be central to how energy systems operate in the decades ahead. The transaction positions Kraken to compete as a global operating system for utilities, while reinforcing the role of technology as a core enabler of the clean energy transition rather than a supporting add-on.

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