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Octopus Energy worth more than British Gas owner after $600m investment by Al Gore fund

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Octopus chief executive Greg Jackson
Octopus chief executive Greg Jackson

Octopus Energy has been valued at more than the owner of British Gas after the challenger supplier won a $600m investment from a fund run by Al Gore, the former US vice-president.

Generation Investment Management, the clean energy fund he set up in 2004 and still chairs, is taking a 13pc stake in Octopus to help it develop and supply more renewable power and expand its technology.

The investment means the private company is now valued at £3.3bn - £300m more than Centrica. The latter's stock market value has declined by almost three quarters in the six years since Octopus was founded by Greg Jackson, who remains chief executive.

Octopus is at the forefront of a band of challengers who have taken about a quarter of the energy market from suppliers such as Centrica and EDF. Its Kraken software platform has also been licensed to growing numbers of rivals.

Octopus consolidated its position over the weekend when it picked up 580,000 customers from failed supplier Avro Energy - one of several smaller challengers struggling to survive due to soaring wholesale prices linked to a global crunch in supplies of natural gas.

Mr Jackson said the difficult state of the UK energy market highlighted the need for investment in renewable energy sources.

“Three years ago, the management team of Octopus Energy met to discuss growth plans for our fledgling company. We watched An Inconvenient Sequel [Gore’s documentary on climate change] and were inspired to accelerate and expand our mission to make energy greener faster, cheaper, across the globe," he said.

“Being backed by Generation, co-founded and chaired by Al Gore, enables us to make that dream come true.”

Al Gore
Al Gore

With Avro’s customers, Octopus now has about 3.1m UK customers to make it the fifth-largest supplier.

It has been expanding internationally with retail operations and licensing agreements in the US, Germany, Spain, New Zealand, Japan and Australia. Kraken is used by 17m energy accounts globally, and Octopus is aiming for it to be used by 100m energy accounts by 2027.

The company, part of the Octopus Group, was valued at $2bn in December 2020 after investment from Tokyo Gas and Origin Energy. Origin is now investing a further $55m.

In March it bought sister company Octopus Renewables, bringing in a major portfolio of wind and solar farms able to generate power for around 1.2m homes.

Octopus is developing technology so that drivers can sell power from their electric car batteries back to the grid when prices are high. This practice is expected to play a key role in encouraging drivers to buy EVs as well as helping balance power supply and demand.

It has also set up a £10m research centre in Slough to develop heat pumps that can replace gas-fired boilers and help reduce carbon emissions from homes.

Like many other challengers it remains in the red, with a loss of £47m in the year to April 2020 on sales of £1.2bn. That was worse than the £30m loss for the year to April 2019 on sales of £460m.

Tom Hodges, partner at Generation Investment Management, said: “Octopus Energy has an extraordinarily good fit with Generation’s mission of investing over the long term to support system and climate-positive companies.

“Octopus and its software platform Kraken are at the forefront of innovation and helping to create the dynamic and flexible renewable energy system needed.”

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