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Al Gore’s Generation Investment Management takes 13% stake in Octopus Energy

Octopus Energy was set up five years ago, and has since grown to have over 3 million customers. Image: Octopus Energy.

Octopus Energy was set up five years ago, and has since grown to have over 3 million customers. Image: Octopus Energy.

Generation Investment Management has taken a stake in Octopus Energy Group as part of a $600 million (£438 million) deal to accelerate global green energy efforts.

The deal, which valued the entech group at $4 billion (£2.9 billion) pre-deal, and up to $4.6 billion (£3.6 billion) post-deal, will see Generation take up to approximately 13%.

Octopus will use the proceeds from this, along with approximately $55 million (£40 million) in equity investment from Origin Energy, to continue its global and technological expansion.

Over the past 18 months alone, the five year old energy company has expanded to operate across four continents. In August, it entered the Spanish market with the acquisition of green energy startup Umeme, it expanded into Germany in November 2020, the US in September 2020 and Australia in May 2020 – this final expansion including a 20% acquisition from integrated energy company Origin Energy, which turned Octopus Energy into a 'unicorn' startup.

It now has 3.1 million customers, with 600,000 added on 25 September 2021 when it became the supplier of last resort for shuttered Avro Energy.

The company’s technology platform Kraken is now also being used by 17 million energy accounts globally. As well as being used in its own supplier operations, it is also has licence agreements with Good Energy, Hanwha Corporation, Origin Energy, nPower and E.ON. It is targeting 100 million energy accounts on Kraken by 2027.

To drive renewable technology innovation, Octopus established the London-based research facility Centre for Net Zero, and invested £10 million in the UK’s first R&D and Training Centre for Decarbonisation of Heat.

Elsewhere the company launched six new product solutions during the 2019/2020 year, including the world’s first electricity tariff for vertical indoor farms. It acquired British smart home energy management company nCube to help enable continued growth, and entered into strategic partnerships with the Mayor of London and the Midcounties Co-operative for Co-op Energy– which has been relaunched as community energy joint venture Younity.

This period of continued expansion has led to the Octopus Energy Group’s revenue growing by +160% in the fiscal year 2019/2020, jumping from £477 million to £1.24 billion.

The current “tough state” of the energy market in the UK – with six small suppliers failing over the last month as wholesale power prices jumped to record high due to a global gas shortage amongst other factors – has highlighted the need for investment in renewables said Octopus Energy founder and CEO, Greg Jackson.

“3 years ago, the management team of Octopus Energy met to discuss growth plans for our fledgling company,” he continued. “We watched An Inconvenient Sequel and were inspired to accelerate and expand our mission to make energy greener faster, cheaper, across the globe. Being backed by Generation, co-founded and chaired by Al Gore, enables us to make that dream come true.”

Generation Investment Management was launched back in 2004 with the goal of driving sustainability and fighting climate change. The $36 billion (£26 billion) fund management business will provide $300 million (£219 million) immediate investment and a further $300 million by June 2022 subject to certain further funding conditions.

“Octopus Energy has an extraordinarily good fit with Generation’s mission of investing over the long term to support system and climate-positive companies,” said Tom Hodges, partner in the long-term equity strategy at the company.

“The world is at the early stages of an unprecedented energy transition which is essential to reach the goals of the Paris Agreement. This can be done in a way that is better for the environment and consumers. Octopus and its software platform Kraken are at the forefront of innovation and helping to create the dynamic and flexible renewable energy system needed. Generation is pleased to partner with Octopus Energy to help build that future.”

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