In a striking development that underscores the surging global interest in renewable energy, the most substantial public pension scheme in the United States has entrusted its assets to Octopus Energy, a rapidly expanding player in the UK’s energy sector. This move, characterized by its ambition to harness climate-related investments, comes from Calpers, which manages an astonishing $500 billion dedicated to the pensions of California’s public servants.
Calpers confirmed this bold investment, made in May, in response to inquiries posed by the Financial Times. In a strategic partnership, they joined forces with Australia’s Aware Super, collectively pouring a staggering $370 million into the venture through Generation Investment Management—an investment firm co-founded by none other than Al Gore.
But the intrigue doesn’t end there; concurrent with Calpers’ investment, the Canada Pension Plan Investment Board bolstered its own stake in Octopus, driving the company’s valuation to a remarkable $9 billion. Among a constellation of significant investors, Tokyo Gas stands out as a notable player in this burgeoning enterprise.
What distinguishes Octopus Energy in the eyes of global financiers? The answer lies primarily in its innovative Kraken software—an ingenious platform engineered for customer billing and the meticulous calibration of electricity demand, deftly aligning it with the variable outputs of renewable sources like wind and solar. This software is not merely an internal tool; it is licensed to various energy providers, amplifying Octopus’s influence across the market.
Adding to this momentum, two additional investment groups—San Francisco’s Galvanize Climate Solutions and the UK-based Lightrock—acquired shares in Octopus this past June, though the specifics of their investments remain closely guarded.
Louise Cashion, a spokesperson for Calpers, articulated the organization’s commitment to sustainable investment, emphasizing a dual focus on renewable infrastructure and real estate, alongside exploring private equity ventures that champion the transition to clean energy, particularly those wielding specialized technological prowess.
Octopus Energy, founded in 2015 to disrupt the then-dominant “Big Six” energy suppliers in the UK—British Gas, EDF, Eon, Npower, Scottish Power, and SSE—has charted a remarkable course towards growth. Through a blend of strategic acquisitions and organic expansion, it has now secured its position as the second-largest household energy provider in the UK, boasting an impressive clientele of around 7 million customers. The company has also set its sights beyond British shores, with forays into the US, Japan, Spain, and New Zealand.
In its quest for sustainability, Octopus not only caters to households but is also amassing a diverse portfolio of wind, solar, and other renewable assets. A particularly ambitious initiative is underway to import electricity from Morocco directly to the UK.
Remarkably, Octopus has turned a profit, reporting a pre-tax figure of £283 million for the fiscal year concluding on April 30, 2023—a turnaround from the previous year’s staggering loss of £165.7 million. In a recent interview, CEO Greg Jackson, who holds nearly 5% of the company’s shares, indicated that while the company’s future looks bright, there are no near-term intentions to pursue a public offering. Octopus has chosen to remain cryptic on future strategies, preferring to let its actions speak louder than words.