Octopus Energy’s plan to spin off its AI and software division, Kraken Technologies, signals a structural shift rather than a tactical move toward a future IPO. While headlines focus on valuation and fundraising, the more important development lies in how Kraken is being repositioned: not as an internal energy-tech tool, but as an independent infrastructure software company designed for capital markets.
For YourNewsClub, this reflects a broader recalibration across the energy-tech landscape, where investors are increasingly willing to value operational software on its own merits – provided governance, ownership and revenue streams are clearly disentangled from legacy utility businesses. According to disclosures from Origin Energy, a major shareholder in Octopus, Kraken has secured $1 billion in its first standalone funding round, implying a valuation of roughly $8.65 billion. Origin will contribute an additional $140 million, and the transaction is structured to enable a full demerger by mid-2026. Following the separation, Octopus Energy will retain a 13.7% stake, while Origin’s holding will stand at 22.7%, with both parties emphasizing the absence of operational control.
Kraken supplies energy-management, billing and demand-response software to utilities including EDF and E.ON. Over the past 18 months, its contracted annual revenue has more than doubled, driven by long-term licensing agreements rather than experimental AI monetization. From YourNewsClub’s perspective, this distinction is central: durable contracts, not AI narratives, are anchoring Kraken’s valuation case.
Owen Radner, who focuses on digital infrastructure as energy-information transport systems, argues that Kraken’s strength lies in its control layers rather than its algorithms. Once embedded, utility operating systems become difficult to replace due to regulatory friction, data migration costs and operational risk. “The economic gravity comes from stickiness, not novelty,” he notes.
Timing also matters. Utilities face rising regulatory pressure, volatile energy markets and growing mandates to modernize legacy systems. By separating Kraken, Octopus reduces political and regulatory exposure while allowing the software business to scale across jurisdictions without being tied to retail energy pricing debates. Your News Club views this as a pre-emptive insulation strategy rather than a simple capital markets play.
Jessica Larn, who analyzes technology policy and infrastructure governance, highlights the regulatory upside of the move. A standalone Kraken is easier for regulators to interpret as neutral infrastructure rather than a vertically integrated actor with potential conflicts of interest. As energy platforms scale across national grids, governance clarity becomes a competitive asset. Risks remain. Kraken’s growth depends on complex, multi-year utility migrations where execution failures can quickly erode trust. Public-market investors will also scrutinize margins, support costs and customer concentration as the company approaches IPO readiness.
Looking ahead, YourNewsClub expects Kraken to spend the next 12–18 months reinforcing its identity as a pure enterprise software provider, with greater transparency around backlog, renewal rates and deployment timelines.
The conclusion for YourNewsClub is cautious but clear. Kraken’s spin-off is not about chasing an IPO window – it is about redefining where value is created in the energy transition. Whether markets reward that clarity will depend less on AI branding and more on execution discipline, contract durability and operational resilience.