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'We decided to build a better energy retailer'

Octopus Energy’s David Sykes on how the disrupter built a platform to make green energy work for consumers

David Sykes, Octopus Energy

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David Sykes, Octopus Energy

With the “Big Six” energy retailers hemmed in by their own legacy platforms, Octopus Energy aligned its technology with its target operating model. The result has turned green energy choices into the proverbial ‘no brainer’ for millions of households.

Octopus Energy launched in 2016, and as its Head of Data, David Sykes explains, data was central to its mission from the start.

"The first phase of decarbonisation, certainly of the electricity system, was done outside of the eyeline of the consumer," he says.

"It was big wind projects, big solar projects and whilst the consumer helped get that going by means of subsidies, in general nobody had to make changes in their home or change what car they drove."

The next phase of decarbonisation, according to Sykes, is about engaging the consumer.

"You have to change consumer habits and you have to build trust to be able to persuade consumers that then they need to get rid of that gas boiler and put a heat pump in for example. We took a lot of inspiration from the electric vehicle world where you could see that if you build a better product, people will buy it.

"We decided to build a better energy retailer, with a better way to decarbonise for customers."

People certainly have bought it. Octopus Energy currently has approximately 7.7 million customers. Globally 54 million energy and utility accounts are contracted to be served by Kraken - Octopus Energy's proprietary data platform.

Licence the Kraken

The Kraken platform was developed because, as Sykes explains, it was never going to be possible to disrupt and decarbonise the energy market based on traditional technology stacks.

"The original retailers were hemmed in by legacy systems," he says. "The existing stack was lots of disparate systems stitched together by a systems integrator, who then is the only organisation who can understand that stack or make changes, so you lock your operating model in through your technology model.

"We saw that disruptive companies disrupt because they align their technology to their target Operating Model and target product set."

Octopus Energy built Kraken a full stack Energy Retail platform.

"Kraken does everything that an energy retailer needs to serve customers with innovative products and services," says Sykes.

"It's a billing engine, it's a CRM, it does all of the telephony, email comms. It does all of the communication with industry and with metering. It's the smart meter data management service. It does everything."

However, Octopus Energy also realised that if it was really going to drive net zero, it would be ideal if it could leverage their technology into other energy retailers in other parts of the world and Kraken was then spun out and made available to licence for other companies. Kraken Technologies now operates in Japan, US, New Zealand, Australia and most of mainland Europe in addition to the UK. It has been licenced by Origin Energy, E.ON and EDF.

Octopus Energy is now a customer of Kraken, and Sykes leads data across the whole group.

The development of Kraken is a case study in the scalability of open source and cloud.

"The core applications run on top of Postgres database which is on Amazon RDS and then deployed through EC2 so the core of Kraken is run on AWS. We then use Databricks data lake layer for our heavy data workloads.

"Obviously we're cloud first but we will plug third-party providers into Kraken, where we feel that they bring an enabling capability. For example, for telephony we use Twilio, and for outbound emails, we use SendGrid. We're picking best in class tools to plug into Kraken to do some of the grunt work, and Kraken can then automate and integrate all those tools into a coherent customer journey.

"We saw Databricks as the best-in-class big data engine. Where we've got stuff that doesn't naturally fit into a transactional database like Postgres, we will push that into our data lake and load it up into Databricks to then be transformed, processed, analysed, and then pushed back into a transactional database to be used by Kraken."

Empowering customers

The window for Octopus customers into all of this, is their smart meters.

"Every smart meter produces 48 meter readings every day. That adds up across millions of customers and we use the data lake and Spark within Databricks to process that data. We can also do some interesting stuff downstream. If we're looking at like baselining customers to understand how much energy they use versus how much they might have used for a flex service, we use Databricks to do those calculations."

Computing readers, along with hundreds of thousands of others may have benefited from this use case in winter 22/23 and since last November, when Octopus Energy ran Savings Sessions as part of the National Grid Demand Flexibility Service (DFS). Some other energy retailers ran similar schemes.The premise is simple. Instead of paying expensive energy generators to turn up supply (costs that the National Grid will recoup via customers eventually) energy companies pay customers to not use energy at peak times when supply is likely to exceed demand.

"To operationalise that you need to be able to measure the turndown and we had 700,000 customers take part in the first year," Sykes says. "We needed to analyse and measure the turndown of all those customers against the baseline that's calculated per customer. So you can imagine that's a big calculation and we put all the smart meter data into Databricks, calculate the customer baseline, look at what they actually used, and then calculate savings."

This pilot was hugely successful in multiple, positive ways and the scheme is still in place. Data isn't yet available for the current season but according to data provided by Octopus Energy in winter 22/23 1.86 GWh of demand was shifted across 14.5 hours (128MW average per hour). That equates to powering down half of London for one hour. Octopus Energy customers saved 428 tonnes of CO2 and were rewarded with £5.3m in savings.

The scheme has now been extended into the Power-ups scheme which works in reverse - enabling customers to take advantage of free electricity when renewables are generating an excess onto the grid.

"We think this is the start of a truly dynamic, renewable energy system where consumers are flexing their demand to meet the intermittent renewable requirements. We think there's a huge amount of value there."

'We decided to build a better energy retailer'

Octopus Energy’s David Sykes on how the disrupter built a platform to make green energy work for consumers

With the “Big Six” energy retailers hemmed in by their own legacy platforms, Octopus Energy aligned its technology with its target operating model. The result has turned green energy choices into the proverbial ‘no brainer’ for millions of households.

Licence the Kraken

Empowering customers

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