Origin Energy gets tentacles into UK’s Octopus and its Kraken platform
Origin’s 3.8m customers will switch to a new cloud-based billing platform after it paid $507m for a stake in Octopus Energy.
Origin Energy will pay $507m for a 20 per cent stake in UK power operator Octopus Energy, with rights to roll out its Kraken technology platform in Australia delivering cost savings of up to $150m a year from 2024.
The Sydney-based power giant will make an initial payment of $134m once the deal completes and the $373m balance phased over four years, as Kraken is rolled out across Origin’s retail operations.
It hands Origin 20 per cent of one of the UK’s fastest growing power market companies and a perpetual licence to use its Kraken platform in Australia to “boost customer experience” and cut costs.
Octopus on its website calls Kraken “a cloud-based energy platform for interacting with both consumers (via the web, mobile and smart meters) and the industry (eg data flows, consumption forecasting, trading on the wholesale market)”.
Origin is targeting savings of $70-80m initially in the 2022 financial year, rising to $100m-$150m annually from 2024 with the reductions on top of an existing $100m cost out target.
Octopus started up in 2016 and now has 5 per cent of the UK retail market with 1.5 million customers, with growth of 40,000-50,000 accounts a month.
It signed a deal with electricity giant E.ON in March to migrate six million of its UK customers to Kraken over the next two years.
Origin, Australia’s largest electricity retailer, will transfer its 3.8 million power and gas customers to its Kraken platform over the next 24 to 30 months.
Deal and implementation costs of $80m-$100m will be spread over four financial years with an estimated $100m in accelerated depreciation to decommission its existing systems.
Origin will appoint one director and an observer to the Octopus board and a three-year guarantee to support a working capital facility for the UK company of up to £160m in the first two years, reducing to £110m in the third year.
The partnership “will help us transform energy retailing by automating our end to end processes and embedding an operating model designed around, and for, the customer experience,” Origin chief executive Frank Calabria said.
More Coverage
