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Octopus Energy reports close to breakeven financial results but predicts it will take a £100m hit from energy crisis

Greg Jackson, Octopus Energy Group CEO, said "2022 will be tough in energy." Image: Octopus Energy.

Greg Jackson, Octopus Energy Group CEO, said "2022 will be tough in energy." Image: Octopus Energy.

Octopus Energy Group is expecting to take a £100 million hit from the energy crisis, the company announced alongside its FY20/21 results.

It has set aside £2.5 million in additional funding to help customers ahead of prices jumping substantially when the price cap is reset.

High wholesale prices driven by a gas shortage in Europe has already led to 28 suppliers folding in 2021, and is expected to lead to customer bills increasing by nearly 50% when the price cap is reset in April. Ofgem is expected to announce the level of the new price cap next Monday (7 February).

“2022 will be tough in energy, but we will fight for customer interests and work with government and industry to find solutions which may mitigate the issues for customers whilst doubling down on the investments in technology, growth and renewables which will help avoid such crises in future”, said Greg Jackson, CEO and founder of Octopus Energy Group.

Jackson is a proponent of creating a £20 billon commercial loan scheme, which suppliers could use to protect customers from soaring bills.

Others are calling for a cut to VAT on energy bills in the short term, changes to green levies or a windfall tax of north sea oil and gas companies – who have seen their profits jump as the gas price increased by around 500% in 2021.

Kraken sees growth of 584% amid strong financial results

During the financial year 2020 to 2021, which ended on 30 April 2021, the Octopus Energy Group’s revenue increased by 62%. It grew from £1.24 billion to £2.01 billion, and is expected to continue along the same trajectory during the FY21/22 period to reach nearly £4 billion despite challenging conditions in the retail market.

This was particularly bolstered by the continued growth of the company’s Kraken Technologies arm, with the software licensing business growing by 584% over the year. As such, its revenue increased from £10.2 million to £69.4 million, making an operating profit of £46 million or £60 million EBITDA excluding tech amortisation charges.

Octopus Energy Group made substantial investments into technology during the period, including acquiring Configurable, Upside Energy (now KrakenFlex) and Smart Pear. In total, the company invested £231 million into new business arms and technology during the year ending April 2021.

Through licensing agreements with the likes of Good Energy, E.ON and EDF, Kraken now serves nearly 25 million energy accounts globally. In the UK, around 45% of the population is expected to be on the software platform once customer migrations have all been completed.

Meanwhile KrakenFlex – which is used to manage real-time energy demand – now controls over 1.2GW of energy assets, with plans for an additional 2GWs of renewable energy to come online in early 2022.

During FY20/21, the Octopus Energy Group – which now has nine businesses across renewable generation, energy retail, energy services, electric vehicles, hydrogen and smart grid technology – expanded its renewable energy asset portfolio with the acquisition of Octopus Renewables in March 2021.

This added £3.4 billion of assets, made up of 300 projects across seven countries, to the Group’s generation arm. The company is planning an investment of £25 billion by 2030 into new solar and wind farms both in the UK and around the world, to continue to support the provision of green energy to its retail customers.

Octopus Energy Limited’s revenue increased by 57%, growing from £1.2 billion to £1.9 billion. The Group’s retail arm saw a £84.7 million operating loss during the year ending April 2021. It however noted that this was due to investment in growth and customer support. Without customer acquisition costs and exceptional accounting charges, the company’s operating loss sat at £1 million on a revenue of £1.9 billion, which reflects a -0.05% margin.

“Our technology is now delivering strong financial returns, attracting huge investment which allows us to maintain the pace of growth across the energy value chain, globally,” Jackson said.

Getting its tentacles into France: Octopus acquires Plüm énergie

Along with the financial results for FY20/21, Octopus Energy Group has announced the its first move into the French supply market with the acquisition of entech startup Plüm énergie. The company currently has around 100,000 retail, large company and local authority – such as Ville de Paris – energy accounts.

Jackson said Plüm énergie “delivers outstanding service and has a real strength in technology. The move will help bolster our global buying power and enhance our tech, improving our ability to look after customers in the current market and beyond.”

It will become Octopus Energy France, the eighth international retail operation in the Group. During FY20/21, the company’s retail arm expanded into Texas, US, with the acquisition of Silicon Valley-based startup Evolve Energy in September 2020 and into Japan through a joint venture with Tokyo Gas in December 2020.

In May 2020, it expanded into Australia, in November 2020 into Germany and in August 2021 into the Spanish market with the acquisition of green energy start-up Umeme. If its operations in different parts of the energy sector are included, the Octopus Energy Group is active in 12 countries.

During the FY20/21 period, Octopus Energy’s retail activity in the UK surged with its household customers growing from 1.4 million to 2.1 million by April 2021. This growth has continued over the last year, with the company now supplying 3.1 million customers

The company is now the fifth biggest supplier in the UK’s retail market, bolstered in part by taking on customers of failed suppliers through the supplier of last resort mechanism, such as Avro Energy’s 580,000 domestic customers.

“Octopus continues to put customers first,” said Jackson.

“Our UK energy business charged loyal and new customers well below the price cap, whilst delivering close to breakeven operations and undented service throughout the pandemic.”


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