Former vice president Al Gore has invested $ 600 million in equity in UK energy start-up Octopus energy group via his Generation investment management vehicle, taking an approximate 13% stake in the company. The investment means Octopus has reached a valuation of around $ 4.6 billion.
Octopus has made a name for itself in energy circles largely thanks to its ‘Kraken’ technology platform, which it says is capable of rerouting energy from renewable sources around a grid much more efficiently than its competitors. Octopus thus manages 17 million energy accounts in 12 countries.
Generation is a $ 36 billion fund management firm with a specific mission to support sustainable businesses. Octopus will use the proceeds of Generation’s strategic investment to further gain a foothold in the US market, where it already has a hold in Texas.
The investment in Generation follows an earlier stake in Origin Energy, Tokyo Gas, and the acquisition of Upside Energy, a specialist in smart grid technology. Octopus’ retail operations are now in UK, US, Germany, Spain and New Zealand, and it has entered into licensing agreements with Good Energy, Hanwha Corporation, Origin Energy, Power and E.ON.
Octopus also earlier launched Electric Juice, an electric vehicle “roaming network” of 100,000 charging points across Europe that allows users to top up their personal Octopus Energy account when charging their electric vehicles. It also partnered with Tesla to launch Tesla Power in the UK and Germany.
Speaking on behalf of Octopus Energy, Founder and CEO, Greg Jackson said: “While the UK energy market is currently in a difficult situation, he stressed the need to invest in renewables and technologies to end our dependence on fossil fuels. We are therefore delighted to announce our agreement with Generation Investment Management, created to support sustainable businesses that are changing the world for the better. “
“We do 300 stress tests, twice a week. For us, as a tech company, it’s just algorithmic. For rival companies, they do it… on spreadsheets.
Speaking on behalf of Generation Investment Management, Tom Hodges, Long Term Equity Strategy Partner, said: “Octopus Energy is extremely well suited to Generation’s mission of investing long term to support the system and climate-positive businesses. The world is in the early stages of an unprecedented energy transition that is essential to achieve the goals of the Paris Agreement. It can be done in a way that is better for the environment and for consumers.
In an interview via Zoom, Jackson told me that there are two sides to the current global energy crisis: “One is the wholesale energy price crisis. Global gas prices have tripled or quadrupled in the past year. This not only makes gas expensive, but because so much of the electricity comes from gas, it drives up electricity prices. I think this really reveals how long companies have been selling and buying short. So the companies that are currently folding are larger companies that had sold a one-year contract but only bought six months of energy and were keeping their fingers crossed for the rest. “
He said that Octopus has “always been 100% covered. For us, energy retailing is just one of our businesses. And we have 13 companies in the group. What we’ve always strived to do is deliver exceptional service and a really, really risk-managed back end. We perform 300 stress tests twice a week on our hedging position. For us, as a tech company, it’s just algorithmic. For rival companies, either they don’t or they do it on spreadsheets and it just doesn’t work.
“The reality is that this crisis is entirely a fossil fuel crisis. And if we had used renewable energies as the main source, then gas as a back-up source, we would not be in this situation, ”he added.
He said Octopus is an owner-operator of wind, solar and biomass renewable energy sources, with £ 3.5bn in generating assets and plans to increase that figure tenfold over the next 10 years.
The production agreement consists of an immediate investment of $ 300 million, followed by $ 300 million by June 2022, subject to certain additional financing conditions.
Octopus also established the Center for net zero, an independent London-based research center that takes the fight against climate change to government level, and has also invested £ 10million in an R&D and training center for decarbonization of heat.