Oz Origin to Buy Stake in UK Retailer

Australian power and gas retailer Origin Energy has decided to acquire a 20% interest in Octopus Energy, a UK energy retailer, for A$507mn ($327mn), it said on May 1 in a statement. Origin will have the license to use Octopus’ Kraken platform in Australia.

“The strategic partnership will see Origin work with Octopus to adopt Octopus’ leading operating model and technology platform delivering significant benefits for Origin customers, employees and shareholders,” the company said.

Over the next 24 to 30 months, Origin will transfer its 3.8mn retail electricity and gas customer accounts to the Kraken platform. The move is expected to result in a reduction in operating and capital costs, with expected pre-tax cash savings of A$70-80mn in FY2022 increasing to A$100-150mn annually from FY2024, it said.

“Octopus is genuinely unique in the global energy market, having purpose-built its low-cost operating model and technology platform around the needs of customers. Adopting its approach will allow Origin to create a genuine competitive advantage,” Origin CEO Calabria said.

Origin said it would pay Octopus A$134mn up front and A$373mn spread over four financial years, comprising equity installments and progress payments related to the rollout of Kraken across Origin’s retail operations. The platform switch will cost around A$90mn, Origin said.

Octopus Energy CEO Greg Jackson said the company admires Origin’s commitment to accelerate renewable energy adoption and deliver better service to Australian customers. “We’re looking forward to helping them on that journey by using our technology to reduce energy costs, improve customer service and provide cleaner and smarter energy solutions,” Jackson said.

In March 2020, Octopus announced a partnership with E.ON to migrate approximately 6mn UK customers to Kraken over the next two years. When the E.ON and Origin rollouts are complete, more than 17mn customer accounts will have migrated to the platform in the UK and Australia.