UK-based clean energy tech company Octopus Energy Group announced that it will spin out its AI-powered utility technology business Kraken, alongside a $1 billion standalone investment round into Kraken, valuing the company at over $8.6 billion.

Launched within Octopus Energy, Kraken provides an AI-powered operating system platform for energy utilities aimed at helping them manage networks, improve field operations, support customers and build new products and services.

The company’s solutions include a Virtual Power Plant (VPP), which orchestrates power from sources including EV’s, solar panels, home batteries and heat pumps to generate energy savings and emissions reduction by flattening peak electricity demand and enable energy to be used when it is more abundant, cheaper, and greener. Kraken announced in July that its VPP surpassed 500,000 connected devices and 2 GW of power.

Kraken recently revealed that its contracted annual revenues have grown more than 4 times in 3 years to reach more than $500 million, and the company’s platform is now contracted to serve over 70 million accounts worldwide through licensing agreements with major utilities.

Amir Orad, CEO of Kraken, said:

“Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities, with Octopus Energy remaining a key innovation partner and forward-thinking global customer.”

According to the companies, the de-merger will enables Kraken to operate as a fully independent technology platform for utilities worldwide, accelerating global adoption and deepening partnerships, while also allowing Octopus Energy to focus on scaling its consumer, generation, and clean technology businesses. Octopus will retain a 13.7% stake in Kraken.

Greg Jackson, Founder of Octopus Energy Group, said:

“Kraken is in a class of its own, in terms of technology, capability, and scale. As an independent company with world-class backers and outstanding leadership, it will be free to grow even faster and is set to be a true UK-founded success story. Having incubated Kraken, Octopus is a powerhouse of innovation and technology, and will now have even more horsepower to deliver the transformation of energy globally.”

The $1 billion investment round was led by global investment firm D1 Capital Partners, with other participating investors including Fidelity International, Durable Capital Partners and Ontario Teachers’ Pension Plan Board, via its late stage growth business Teachers’ Venture Growth.

Dan Sundheim, Founder and CIO of D1 Capital Partners, said:

“We believe Kraken is adding significant value to utilities, as reflected in its customer satisfaction, stickiness, and growth. The strength of its leadership team gives us confidence in its ability to continue executing on the large opportunity to modernise utility operations. We are excited to partner as Kraken begins a new chapter as an independent company.”