AWS helps power UK green electricity pioneer Octopus Energy

Profile picture for user gflood By Gary Flood January 27, 2021
Summary:
Unicorn “tech” energy Octopus says cloud key to its rapid success, allowing it to be agile and gain competitive operational efficiency

Image of the Octopus Energy mascot holding a phone
(Image sourced via Octopus Energy )

Octopus Energy claims to be all about disrupting the UK energy market status quo with energy that's good for the planet, wallet, and consumer soul by only offering 100% green electricity tariffs and no contracts.

That's a proposition that seems to be resonating with at least some customers, as since it opened for business in 2016 it has been signing up an average of 50,000 customers per month on average. It now supplies energy to 1.8 million UK homes (and counting), and is the only supplier to be recommended by consumer champion Which? for four successive years.

Now the fifth biggest power supplier in the UK, at the heart of all this success is a proprietary technology platform, Kraken, says its Chief Technology Officer, James Eddison. Kraken connects and, where possible, automates the different steps of the energy retail business, from energy procurement to billing. Designed to be a management system able to give customers a seamless experience, and the give the company's operations team a far more efficient process to solve problems, Kraken is also now licensed to serve over 17 million customers across the globe. It is now also licensed to E.ON, npower and Australia's Origin Energy.

The guiding principles for Kraken was to move on from "decades-old systems", and a key design decision was to base all operations from the start in the cloud, specifically Amazon Web Services (AWS). Eddison says Kraken was architected to match the real tasks and needs of the people that had to work with it everyday, so efficiency and full visibility of customers history were key considerations from the start (what he calls seeing the Kraken user as important a stakeholder as the end-customer).

This rejection of legacy thinking may make you think this sounds like technology start-up philosophy, and it turns out the company was indeed highly focused on IT from its foundation, as its founders are from the tech industry and Octopus sees itself as a "digital first company".

That heritage meant, Eddison told us, choosing AWS was a "no brainer". He said: 

Kraken had to be able to process and analyse millions of rows of customer data. Given our rapid growth, only cloud computing would allow us to do all this, so AWS was the right fit for us thanks to the range of innovative products Amazon could offer us.

But cloud isn't useful to Octopus just in terms of infrastructure benefits, it turns out. Eddison says AWS also allows Octopus to become "a lot" more efficient than its competitors. For example, core specialist energy sector processes such as prediction, hedging and procurement that would usually get done by teams of 30-plus personnel in a more traditional utility company can get done on the Octopus cloud platform by just two procurement specialists. In addition, a team of ten customer service operatives can look after over 65,000 customers, a level of operational efficiency he claims were just never seen in the UK energy industry before.

‘None of these products would be possible without cloud'

So cloud and Kraken's features increase operational efficiency, but Octopus also wants to be seen as a leader in product innovation. Eddison states that using cloud means when an opportunity to help customers is identified, the company can react swiftly. The kinds of innovation he's talking about here include a suite of smart energy products that can link up with residential smart meters to unlock savings and benefits for customers who are willing to change their energy usage outside of typical peak hours. 

A service called Agile Octopus mirrors the wholesale costs of energy, so when green energy is abundant and the wholesale cost of energy drops, savings are passed onto customers immediately. There have also been occasions when there is so much green energy on the grid that wholesale prices go negative, which in energy-speak are known as "price plunges," and during such plunges the company says it is happy to pay customers to use its energy.

Other distinctive aspects of the Octopus value proposition include a product all about incentivising electric vehicle owners to charge their cars overnight with cheaper charging costs between 12.30am-4.30am, when energy is traditionally more green and the grid is experiencing much less demand. In addition Octopus is claiming to be the UK's first ever smart export tariff, giving customers with solar panels one of the best prices for the energy they exported back to the grid. 

There's also something called Octopus Fan Club, which he says was the world's first local smart wind power tariff, giving customers close to the firm's wind turbines 20% off their energy when the turbines are spinning, and 50% off when they're spinning fast. What links all of these initiatives, Eddison told us: his chosen back-end and associated services. He said: 

None of these products, which take away those barriers to innovation and allow our teams to offer the products that customers want and the planet needs, would be possible without Kraken and cloud.

COVID-19 flexibility

Despite all the challenges global faced last year with COVID, Octopus says it still had a very strong 2020, marked by expansion into four new countries, a further $577 million in investment (which he believes to be the most investment gained by any UK "tech" firm in 2020). This means Octopus is a unicorn, as it's classed as a startup company with a value in excess of £1 billion. In September it acquired Silicon Valley startup Evolve Energy for an undisclosed sum in order to expand into the US market: a lot of activity during Lockdown, for sure. He said: 

We were lucky enough not to have to furlough anybody, and had processes in place to ensure our team were happy, healthy and safe to work from home or the office should they need to. As I said, we are a digital-first company, so for us the transition wasn't a problem: on the Friday we asked our team to take their laptops home, and on Monday everybody was working from home. 

The transition was seamless, there were no interruptions in service-in fact, our customer service ratings from customers actually improved over the various lockdown periods, something we are particularly proud of.

The firm has big plans for the future: a target of 100 million energy accounts on Kraken globally by 2027, which means just under 7 years it will have to license Kraken to many more companies, expand to even more countries under the Octopus Energy brand, and grow its international presence in the US, Japan, Germany, Australia and New Zealand.