How Octopus Energy built a $20B business by digitising the grid

Executive overview

Energy companies have run on decades-old software, treating customers as captive rather than served. Greg Jackson founded Octopus Energy to fix both at once: build a customer-obsessed digital energy company, then sell the same platform to the rest of the industry.

The result is two interlocked businesses — Octopus (retail energy, 7.1M UK customers, ~$20B revenue) and Kraken (enterprise software now serving over 50% of the UK market). The core bet: prove a digital energy company can outcompete incumbents, then license the engine to those same incumbents.

The core insight: renewable energy is already cheaper than fossil fuels — the missing piece is smart software to shift demand to when the sun shines and the wind blows.

Why energy, and why now

• As a consumer, Jackson saw energy companies providing poor service on ancient technology
• As a businessperson, he identified a $2 trillion global sector still on 30–40-year-old platforms
• Joining Greenpeace at 15 gave him an early conviction: pollution creates injustice — those who don't cause it are most exposed to it
• The opportunity: digitise energy the way Shopify digitised retail — standardise operations, unify data, enable real innovation

Building Kraken and Octopus as yin and yang

• Incumbents wanted someone to go first before adopting new software; the solution was to become that someone
• Kraken creates a single data set for an entire energy operation — "Shopify for utilities"
• Octopus was built as the live proof-of-concept for Kraken; it grew into a major business in its own right
• First external Kraken customer was a small company (Good Energy), chosen deliberately to keep risk manageable
• Kraken now serves more than 50% of the UK energy market, up from 0% eight years ago

Street-fighting to the first million customers

• Initial plan was digital-only with no customer service; first investor pushed back, insisting on best-in-market service
• Acquired first million customers through door-knocking, tele-sales, and relentless delivery on service promise
• Referral programme amplified word-of-mouth: customers who experienced the difference told others
• Today: 7.1M UK customers, nearly 2M in other countries, ~$20B revenue

What Octopus actually does differently

• Dynamic pricing: on windy or sunny days, customers get cheaper or free electricity — grid cost is lower, savings passed on
• Smart EV charging: Kraken analyses 5 billion data points per day to schedule each car's charge at the cheapest grid moment — seven times cheaper than petrol
• Zero-bill homes: in partnership with house builders, Octopus guarantees no energy bills for 10 years via solar, heat pump, battery, and smart hot water — all optimised by Kraken
• The guarantee logic: sell stored energy to the grid at peak prices; buy cheap overnight power; heat homes during off-peak windows and coast through expensive ones

Licensing Kraken to competitors

• The board asked: why give away your secret sauce? CEOs asked: why hand our customers to your platform?
• Jackson's answer: once a technology is proven, others will replicate it — better to be the platform they replicate on
• Kraken functions like an operating system; clients run different apps on top, so their businesses diverge from Octopus
• If a Kraken client out-competes Octopus, that validates the platform — Jackson calls this a win

The US market: opportunity and obstacles

• US utilities operate in regulated markets where the effective customer is the regulator, not the end consumer — this shapes incentives against rapid experimentation
• Cost-plus revenue models reduce the incentive to be efficient
• Old technology forces multi-year product cycles: idea → PowerPoint → programme management → market test, spanning three years
• Kraken compresses that to: idea Monday → live with customers Friday → iterate the following week — roughly 50–100x faster
• Two changes needed: modern systems first, then a regulatory framework that explicitly permits low-risk, high-frequency experimentation

The macro energy picture

• Solar costs fell 50% in the last 18 months; battery costs are down 93% over a decade, falling at 13% per year
• Smart software can extract an extra 40% peak load from existing transmission lines — no new infrastructure required
• Octopus UK has created 1.3 gigawatts of smart EV charging capacity (roughly one nuclear reactor) that can be shifted around the grid on demand

Optimism and pessimism on the energy transition

• Optimistic: clean energy components — solar, wind, batteries, EVs, heat pumps — are getting cheaper every year; fossil fuels are not
• The 2021–22 European gas crisis (prices at 15 times normal) illustrates the cost of fossil fuel dependence
• Pessimistic: vested interests are playing the same delay playbook as the tobacco industry — deny, then offer inadequate half-measures
• The tobacco analogy cuts both ways: once the industry accepted the harm, it enjoyed 35 years of superior market returns in managed decline; fossil fuels could follow the same path, faster
• China case study: Shenzhen and Beijing have eliminated visible air pollution; 54% of cars sold in China are now electric; policy alignment accelerated what market forces alone could not