AGL’s tech play throws down the gauntlet to Origin-backed rival Octopus Energy
AGL Energy’s new technology business, Kaluza, plans a fivefold expansion of customer accounts to challenge Origin Energy’s own investment – market leader Octopus Energy.
AGL Energy’s new technology business Kaluza plans a fivefold expansion of customer accounts on its platform around the world to challenge Origin Energy’s own investment – market leader Octopus Energy.
The target underscores emerging rivalry between Australia’s largest electricity and gas retailers as they try to dominate the lucrative global energy technology market.
AGL earlier this year purchased a 20 per cent stake in Kaluza from Britain’s OVO Energy for $150m, as revealed exclusively by The Australian.
Speaking with investors from London, Kaluza chief executive Melissa Gander said the business had set a target of 100 million customers on its platform, to match Octopus Energy’s Kraken platform.
Ms Gander did not reveal the current number of accounts, but analysts estimate about 20 million customers are serviced by the technology after AGL’s committed to migrate its four million households and businesses onto the platform.
“We do have an aim to reach 100 million households supported by the Kaluza platform,” Ms Gander said.
“We have ambitious plans to support this through multiple markets. We have seen traction in the United States, we have the joint venture in Japan, and it’s great to see increased interest across Australia. So we are confident that we can fulfil our ambitions over the coming years.”
Setting the target shows AGL and OVO Energy, the majority owner and developer of the Kaluza platform, are ready to compete with Kraken. Should Kaluza deliver that growth, Australia’s largest energy companies would be in a global competition to dominate the technology space, which is increasingly important to utilities amid the renewables transition.
Octopus Energy is now worth $US9bn ($13.6bn), a jump of 15 per cent in six months, after two investors raised their stakes. Origin owns around 20 per cent.
The Kaluza and Kraken platforms play a critical role for energy businesses by allowing users to more efficiently manage their customer billing and synchronise renewable energy generation – increasingly important amid a rise in rooftop solar and household batteries, which will unlock virtual power plants (VPP).
A VPP pools thousands of households or businesses with rooftop solar and batteries. Batteries are used to store excess energy. If a user is deemed to have sufficient energy in their battery, it could be discharged into the wholesale market when prices are high, offering them a financial return and easing pressure on the grid. Platforms are now equipped with cutting edge technology that allows companies like AGL and Australia to use artificial intelligence to automatically adjust generation if weather is unfavourable for renewables or traditional forms of generation are offline.
Kraken has taken a leading role in licensing its platform around the world and now has 50 million accounts from the likes of Origin, Octopus – Britain’s largest electricity retailer – and one of Japan’s largest utilities.
Octopus chief executive Greg Jackson has set a target of having 100 million accounts on Kraken by 2027, a milestone he said could easily be achieved.
Octopus receives payments for each account on its Kraken platform, which allows energy companies to efficiently manage millions of accounts and orchestrate household and business solar and batteries, saving millions of dollars in the process.
Deploying the Kaluza platform is expected to save AGL $70m-$90m each year from 2028, when the migration is complete, as it allows it to service its customers more efficiently.
AGL expects migrating customers to cost $300m, but with the savings the investment will have been recouped by 2028.
AGL rose 0.3 per cent to $11.70. Origin fell 0.4 per cent to $9.87.
