Clean energy journalism for a cooler tomorrow

UK’s Octopus Energy raises $800M to expand global clean energy push

The clean power provider is now worth nearly $8 billion and has plans to ramp up heat-pump manufacturing and move into overseas markets.
By Julian Spector

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Two men in safety vests work on a heat pump in an indoor training center under a sign that says Octopus Energy
Workers install a heat pump at the Octopus Energy training facility in Slough, England. (Leon Neal/Getty Images)

Octopus Energy, the many-tentacled British clean energy juggernaut, just raised an additional $800 million to fund its next phase of expansion.

Octopus started as a retailer in the U.K.’s competitive power markets, but it promised to source clean energy for its customers. It also built a modern software stack to run customer service and flexed its marketing savvy by choosing a plush pink octopus as its mascot.

Since launching in 2016, the startup has taken over the British retail market by growing quickly and acquiring competitors. Earlier this month, it began the process of absorbing Shell Energy’s retail electricity customers in the U.K. and Germany; the two companies’ market shares combined make Octopus the largest electric retailer in the U.K., per recent data from energy regulator Ofgem.

Octopus also has a significant enterprise business; it began selling its back-end software, Kraken, to legacy utilities and now operates 52 million customer accounts worldwide, including for many of its U.K. utility competitors.

The latest investment puts Octopus’ valuation at $7.8 billion, a hefty number for a privately held climatetech startup, and a 60% increase since it last raised funding in December 2021. The money comes from a group of heavy hitters that had already invested in the company: major Australian utility Origin Energy, Tokyo Gas, the Canada Pension Plan Investment Board, and former Vice President Al Gore’s sustainable investing firm, Generation Investment Management.

That’s a lot of cash for a software startup, a category that is famously not very capital-intensive. But although its digital infrastructure has propelled its rapid growth, Octopus isn’t purely a software startup.

Watch my one-on-one chat with Octopus CEO Greg Jackson at SXSW 2023.

For instance, climate advocates have long argued for accelerated adoption of heat pumps, which heat and cool homes efficiently using electricity. This mission took on new immediacy for the U.K. after Russia invaded Ukraine and kicked off a regional energy crisis; heat pumps reduce dependence on fossil gas. Octopus built an R&D center for heat pumps in 2021. A couple of years later, the company has claimed the title of most prolific heat-pump installer in the United Kingdom and has 50,000 customers on its waitlist, a spokesperson told Canary Media. It also manufactures heat pumps: the Octopus Cosy 6 model, unveiled at a Wired tech summit in September, hits the market in early 2024.

The company’s other activities include building and managing a renewable power plant portfolio worth $7.6 billion, conducting smart electric-vehicle charging to save money for Octopus and its customers, and building support for onshore wind through its Fan Club discount program.

The new $800 million in financing will help Octopus expand our renewable manufacturing capabilities and spur growth in all of our sectors,” the spokesperson said. That means more global expansion in particular — Octopus just commenced operations in its eighteenth country, by developing a wind and solar farm in Sierra Leone with actor Idris Elba.

Four people sit at a table draped in a bright pink tablecloth smiling and preparing to sign documents
From left: Siaka Stevens, co-founder of Sherbro Alliance Partners; Idris Elba, actor and co-founder of Sherbro Alliance Partners; Zoisa North-Bond, CEO of Octopus Energy Generation; and Greg Jackson, founder and CEO of Octopus Energy (Octopus Energy)

If this all seems like a lot to fit in one org chart, that’s because it is. Octopus faces a very real risk of overextending as its arms reach in so many different directions. But the thing connecting all of these seemingly disparate efforts — the proverbial mantle of this many-armed cephalopod — is the insight that encouraging consumers to shift their electricity use to times when surplus renewable power is available reduces costs for everyone.

What we’re really trying to build is a world where we have the right amount of generation at any moment in time, for all of our customers, from green sources,” said founder and CEO Greg Jackson, in a previous Canary Media interview. Then we flex the demand from our customers — we help our customers use it at the time that’s greenest.”

Octopus’ push to equip its customers with smart electric car chargers and controllable home appliances is an attempt to nudge consumption toward the cleanest hours of production and share the savings with households. Millions of families have said yes to that offer so far.

For more on how Octopus Energy both disrupts and services the utility industry, see Canary Media’s interview with CEO and founder Greg Jackson from earlier this year.

Julian Spector is a senior reporter at Canary Media. He reports on batteries, long-duration energy storage, low-carbon hydrogen and clean energy breakthroughs around the world.