Octopus enters USA with $5m Evolve Energy buy
- October 14, 2020
- Steve Rogerson
UK energy provider Octopus Energy has acquired Silicon Valley start-up Evolve Energy in a $5m deal in a move seen as pivotal in Octopus’ $100m investment in the US market. It follows moves into Australia and Germany last year.
Starting in Texas, Octopus Energy US, as the new business will be known, is targeting 25 million US energy accounts on its technology platform by 2027. They will make up a quarter of the business’s global target of 100 million energy accounts in the same time frame.
The renewable energy supplier is the UK’s fastest growing private company, having gained 1.7 million customers since launching four years ago. In April 2020, Octopus became the country’s latest tech unicorn, valued at close to $2bn after Australia’s energy company Origin Energy acquired a 20 per cent stake for nearly $400m.
At the heart of Octopus’s success is Kraken, its proprietary cloud-based energy technology platform. The scalable platform provides industry operational efficiency and service quality. It is designed to drive the smart grid, giving its customers access to cheaper electricity when renewable energy is abundant. The partnership with Evolve Energy will enable the company to bring this innovation to the USA, speeding up the country’s transition to a cheaper, greener energy system.
Kraken is already licensed as a SaaS software and operating model provider to other energy companies, allowing them to offer greener, cheaper energy to their customers and help the world transition to clean energy.
Across all its operations and licences, Kraken is now contracted to serve 17 million energy accounts worldwide, including customers of E.On in the UK, Origin Energy in Australia and now Evolve Energy in the USA.
Evolve Energy is a Houston and Silicon Valley-based energy start-up that uses AI and machine learning to optimise energy usage, providing low energy prices for renewable power. Launched in 2018 by tech entrepreneur Michael Lee to challenge the country’s legacy suppliers, it has been backed by Matt Rogers, the cofounder of Nest, through his Incite fund.
“Octopus Energy is inspirational in growing a customer base of over one million households in just four years,” said Lee. “It has done so while also achieving customer satisfaction scores similar to Netflix and Amazon. It matches our aspiration for innovation and we’re thrilled to be part of the Octopus family. The US energy market is rapidly moving towards ultra-low cost renewable energy and is prime for a true digital transformation.”
Mini-backed start-up accelerator Urban-X selected Evolve Energy for its 20-week programme last year and Texas-based Capital Factory was an investor through Evolve’s first-place finish in the 2019 Earth X start-up competition.
Octopus Energy CEO and founder Greg Jackson has been hugely impressed by Evolve’s team, its commitment to sustainability and its forward-thinking approach.
“We knew that Evolve was a leading innovative energy firm that was doing great things with real-time energy, connected home devices and renewables,” said Jackson. “We’re excited to be working with Michael and the Evolve team to bring futuristic technology, green energy and excellent customer service to Texas. In just four years, we have attracted 1.7 million customers to our business with a total of 17 million accounts contracted to our platform between ourselves and our licence partners. Our ambitions for the USA are high, but we haven’t missed a target yet.”
Octopus Energy is adding 1000 jobs in the UK and a technology, data science and AI centre in Manchester. It plans to double its existing workforce by the end of 2021. The new jobs will be spread across its sites in London, Brighton, Warwick and Leicester and will primarily go to graduates, with many opportunities for those from stem backgrounds, to work in operations and green energy tech.
The Manchester centre will develop the smart grid technologies required for a renewable system and the electrification of transport and heating. Collaboration across London, Manchester and Silicon Valley could help deliver systems that automatically warm homes when the grid is greenest.
“When Apple created the App Store, nobody knew that it would change the way we order food or transport forever,” said Jackson. “Through Kraken, our cloud-based energy platform, we’re revolutionising the energy industry in the same way, creating jobs not just through increased demand for affordable renewables, but by facilitating the development of new and emerging industries like electric vehicles, electric heating and vertical farming. Our technology is making the UK the Silicon Valley of energy and, along with a flourishing market, can help make Britain the best place to invest in creating new clean electricity generation.”
UK prime minister Boris Johnson said: “These 1000 jobs will provide exciting opportunities across the country for those who want to be at the cutting edge of the global green revolution.”
Octopus Energy was launched in 2016 with a vision of using technology to make the green energy revolution affordable while transforming customer experiences. Its domestic energy arm already serves 1.7 million customers with cheaper greener power. Octopus Energy for Business manages over 20,000 customers with proprietary energy offerings. Octopus Electric Vehicles is helping make clean transport cheaper and easier, and Octopus Energy Services is bringing smart products to thousands of homes.