Octopus on menu for Origin
Origin Energy will pay $500m for a stake in UK electricity disrupter Octopus as it seeks to add automation and cut costs.
Origin Energy will pay $500m for a stake in UK electricity disrupter Octopus, a fast-growing tech start-up with ambitions to become “the Amazon of energy”, while also rolling out its retail platform in Australia as it seeks to add automation and cut costs.
The Sydney-based power giant will pay $507m in total for a 20 per cent holding in Octopus.
An initial payment of $134m will be made once the deal completes with the $373m balance phased over four years as Octopus’s Kraken tech platform is gradually adopted across Origin’s retail operations.
Octopus began operations in 2016 after three Cambridge University-educated entrepreneurs sought to challenge the “Big Six” power utilities that dominate retail electricity in the UK.
At the heart of the company is Kraken, an IT platform described as a “big fricking robot” by Octopus founder and chief executive Greg Jackson. It uses a blend of algorithms, big data and machine learning that cuts out back office logistics and smooths billing, transactions and daytime tariffs as renewables and virtual power plants become a bigger part of customer power use.
Origin chief executive Frank Calabria said the deal had been in the works for over a year and was structured to meet both companies’ growth ambitions.
Origin is targeting savings of $70m-80m initially in the 2022 financial year, rising to $100m-$150m annually from 2024 with the reductions on top of an existing $100m cost cutting target.
Origin shares fell 5.2 per cent to $5.27.