AGL’s Kaluza challenges Origin’s tech play with Japanese move

The energy group’s new investment Kaluza is expanding into Japan – pitting itself against Origin Energy’s own play, Octopus Energy.

AGL Energy’s new technology investment has moved into Japan as it mounts a challenge to Origin Energy’s UK platform asset that has exploded in popularity.

The company earlier this year agreed to buy a 20 per cent stake in technology platform Kaluza, owned by UK energy business OVO Energy, for $150m – as the near 200-year-old company sought exposure to technology platform industry that has seen soaring growth as utilities seek to reduce costs and manage an increasingly complex set of assets.

Origin has ridden this wave after it acquired a 23 per cent stake in Octopus Energy, which has its own technology platform – Kraken, which has exploded in popularity. Kraken is in hot demand. Kraken has more than 50 million accounts on its Kraken platform after striking deals with the likes of EDF UK and Tokyo Gas.

Octopus chief executive Greg Jackson has set a target of having 100m accounts on Kraken by 2027, a milestone that he said could easily be achieved.

The investment has been extremely lucrative for Origin, and the platform’s rapid growth has seen Octopus now valued at $US9bn ($13.73bn).

In a move that marks Kaluza’s challenge to Octopus, the technology platform said it established a joint venture – Kaluza Japan – with Mitsubishi Corporation, one of Japan’s largest companies. The new joint venture said it will target expanding its presence in Japan’s energy and auto companies.

Masanori Kohama, division chief operating officer at Mitsubishi Corporation, said there are significant growth opportunities in Japan as the take-up of electric cars increases.

“With increasing renewables penetration coinciding with a shift towards EVs and hybrid vehicles, Japan is ready to embrace innovative energy management solutions. We’re proud to be partnering with Kaluza to deliver the solutions that we know energy utilities are looking for,” he said.

“Kaluza’s flexible architecture and global experience makes it extremely adaptable to a complex market like Japan, and we’re excited for what’s in store.”

Kaluza and Kraken are increasingly popular tools for energy companies, which are grappling with a rapid, swift move away from fossil fuels.

The platforms have been billed as allowing users to efficiently manage millions of accounts and orchestrate the vast array of household and business solar and batteries, saving millions of dollars in the process.

The rise in rooftop solar and household batteries has given rise to so-called virtual power plants.

A VPP pools thousands of households or businesses with rooftop solar and batteries. Batteries are used to store excess energy generated through rooftop solar. But 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 helping to ease the squeeze on the grid.

Users typically licence the platforms, bolstering the returns of the owners.

Japanese energy companies face a slightly different task. The uptake of solar is not as high as in Australia, but the uptake of electric cars will transform the grid.

EVs are likely to be used as home batteries, capable of feeding charge back into the grid when owners aren’t planning on using the vehicles. As the uptake of EVs in Japan grows, energy companies will need to be able to orchestrate the capacity from its fleet.