Octopus Energy's $800Mn Fundraising Round Signals Booming Clean Energy Industry Growth

January 10, 2024 - Reading time: 3 minutes

UK-based energy retail, generation and software company Octopus Energy has raised $800 million from investors in a fundraising round that has boosted its valuation to almost $8 billion.

The Canada Pension Plan Investment Board is putting in $326 million — the largest amount — to raise its stake from 6% to 11%, while Origin Energy is investing $305 million to increase its stake from 20% to 23%. Octopus was founded in 2015 by chief executive Greg Jackson and has grown rapidly to become the UK's second-largest household energy supplier after it bought Shell's UK household supply division this year.

As well as its retail arm, it has a growing portfolio of renewable energy projects, which it said was worth £6 billion, and licenses its Kraken software which helps energy retailers manage their accounts. Overall, it now has a presence in 18 countries including Spain and the US.

"We will invest to accelerate our growth and create a truly global clean energy giant," said Jackson about the fundraising round's impact on Octopus Energy's future.

Frank Calabria, chief executive of Origin Energy, said the company’s success since it first invested in May 2020 had “exceeded all expectations.”

Bill Rogers, global head of sustainable energies at CPP Investments, said it was "delighted to further our investment in Octopus and enable the expansion of their future energy solutions."

Octopus's International Expansion Amidst a Tough Environment for UK Retail Energy Market

In November, Octopus launched a new fund to invest £3 billion in offshore wind by the end of the decade, with a £190 million cornerstone investment from Tokyo Gas, the Japanese utility that owns almost 10% of Octopus.

Octopus's international expansion comes amidst a tough environment in the UK retail energy market. Last week, Ofgem, Britain’s energy regulator, opened a consultation on allowing suppliers to raise bills to help them cope with record levels of customer debt. While wholesale prices have come down since record highs last winter, bills are still higher than before the start of the energy crisis in late 2021, while blanket government support for consumers has ended.

Accelerating Clean Energy Solutions with a Focus on Heat Pumps

Octopus Energy's CEO, Greg Jackson, has expressed plans to invest the funds raised in accelerating the rollout of heat pumps. These lower carbon alternatives to heating systems offer an essential solution for reducing greenhouse gas emissions and tackling climate change.

As energy costs continue to rise and global awareness of environmental issues increases, clean energy solutions such as heat pumps are becoming increasingly important. This focus on sustainable technology by Octopus Energy could lead the way for other companies in the industry to follow suit, driving a broader shift towards renewable energy sources.

Challenges and Opportunities in the UK Retail Energy Market

While Octopus Energy's success is undeniable, it comes amidst a challenging environment for suppliers in the UK retail energy market. Ofgem, Britain’s energy regulator, has opened consultations on allowing suppliers to raise bills to cope with customer debt and record wholesale prices.

Despite these challenges, Octopus Energy's fundraising round indicates a promising future for clean energy companies that can navigate the complexities of this market. As the company expands its presence globally, it could inspire other players in the industry to focus on sustainable solutions and contribute to a greener future.

DW Staff

David Lintott is the Editor-in-Chief, leading our team of talented freelance journalists. He specializes in covering culture, sport, and society. Originally from the decaying seaside town of Eastbourne, he attributes his insightful world-weariness to his roots in this unique setting.