Octopus Energy Plans to Spin Off Technology Arm Kraken

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Octopus energy group planning to spin off it's Cracking Technology software platform unit. If you're not familiar, well, energy companies definitely are. Cracking is a software platform, as we mentioned a company, it helps utilities manage the transition to cleaner energy. And we've got a great guest to explain what it's all about. What's going on.

I'm heir Arit is here CEO of Cracking Technologies, as the company bio notes, he's a multi time CEO, entrepreneur and an AI analytics, cyber and fintech veteran. He's here in the studio with us. Welcome, How are you very good?

Thank you.

Look, as Carol mentioned, energy companies are very familiar with what you do. But if people think about utilities and the transition to renewables, how does your company help them do that?

So every utility on the planet is evolving these days because the technology behind the energy is evolving. You have from electricity at every home Smiths Homes evs although it's renewable solar and the like vainly to modernize their entire infrastructure, from billing to communication, from hard price to modern technology. We help him do that.

Hold on, I thought the president is canceling wind projects and he's talking about drill drilling more in the US and building nuclear. Look, nuclear takes a really long time. We've spent a lot of time talking about that. Are utilities pulling back on renewables?

The state with the most investment in renewable right now is Texas. It's cheaper, Solar is cheaper, more accessible, more affordable. Un can bite faster than building a new nuclear power plants, more solar investments than any other energy form.

It's a political Can it be done even with tariffs on hardware that comes from China?

Obviously it's more expensive that way, But in general, solar became so cheap and it's getting cheaper every day that everyone are moving to that. But it's a mix. It's never just all wind or nuclear. It's always a mix.

Well, so I'm still trying to understand what you guys do your platform, So what are you helping energy companies do?

I'll give you an example. If you have you're cooling your home during the summer, or you have an electric vehicle you charge at seven pm when you get home. That creates a massive spike on the grid. And the issue is the grid is actually built for the maximum point in time, so every spike is really expensive for us as consumers. What we do is help manage that spike. Spread it a bit. Maybe we charge your call a bit later at night, as long as you wake up

Is your software necessary because the grids in many parts of the United States are not sufficient.

For two decades we did not have any increase in load and demand in.

The US, And now we found AI.

Not just SAYI with more manufacturing, more evs, we move from gas to electricity and so on.

What was moving from gas to electricity the right move in hindsight.

Yes, houses burn less if you use electricity. It's a fundamental it's a safety thing. It's easier, easier to transport. There's a lot of advantages, but we do need to update our agreed.

But does it financially make sense?

It's consumers gas perces go up and down. An electricity form solar is actually really cheap when the sun is up. If you put the buttery, you store it for night. You can actually reduce electricity prices using these technologies.

You know what's interesting is I mean Octopus has said that you guys help lower bills when renewable surge, but energy prices are still high for many households. Just talk to my husband's like, why is it so high? Why should consumers believe that this software or benefits them and not just your bottom line?

Because unrelated to cracking, the entire industry now need to invest in infrastructure, adding more capacity and improve the grid. That is going to cost a lot of money. Any usage of technology to optimize that will reduce that investment because we reduce the peaks and part of that saving can go to every household.

Is there a point though where the grids are built? I mean, we've been talking about this and how much they're maxed out, and now we've got all of the AI demand kind of starting to be factored in. But is there a point where the grid is built out and we don't need a software platform because we don't have peaks or we have enough.

Even when the grid is perfect, we still need to choose which energy source do we use. The sun happens to be free, but it's not always there. If we can shift the usage and pick the right moments, we can reduce costs.

You've talked a lot about solar, but wind is also of interest to us, not just because of what's happening offshore of the United States or what's not happening sure of the United States right now? Is this administration making a mistake canceling wind power projects?

Look, some countries believe it's a really good investment for the future. The truth is you need to mix, You need variety. The ideal mix is a bit of everything, versus choosing one over the other.

So you think the US should have wind power.

I think we need to have a mix of everything versus just pick one or favorite and price goes into account. Investing in you gaz for example, there's a five yew weight. There's a line to get a new generator, a new turbine, So we have to have a mix.

We are talking with a mirror.

Aort.

He is chief executive officer of krack and Technology is joining us here in studio. There. Let's talk about the spin off and why it's happening. Critics are saying that spinning this off is less about strategy and more about extracting value for investors. So how do you respond to this view a mirror that this is a financial engineering play rather than an innovation story.

Yeah, Kracken was born inside an energy company. Very few successful tech companies were born inside an energy company. It's such actually quite rare. It made us who we are, improved our technology and knowledge of the space tremendously. But we would like to work with other energy companies who may compete with our parent company. We'd like to invest in other markets that our parent company may not play in.

So you're saying that by going out on your own, you're able to access a lot more companies. What does that mean dynamically in terms of how big your company could be? I mean, Sky News reported that you guys could be worth as much as fourteen billion. We have heard ten billion.

I've heard the rumors. I have no clue what's the number.

But you understand the business and you understand that by spinning off what you might be able to access. So what does it mean in terms of valuation or is this all hype in terms of do those numbers make you nervous?

First of all, expectations should make you nervous. Our job is to be with a great business and hopefully meet each and every expectation down the road. But by splitting the two companies, we can attract capital in investors that are experts in software, not just in energy experts at lad stage software companies. Five hundred million dos ERL is not your typical startup. This is scale, so it would definitely allow us to attruct the right capital structure and the right investors over time.

Some of the mag seven are actually eyeing energy, Amazon, Google, Microsoft looking at the energy space, especially AI driven grid management. Why should utilities bet on you rather than going with a larger player.

So kracking is unique in that it does only one thing. We only do the platform four utilities for energy companies, and it's a very wide system end to end the problem is the alternative you can go with ORACID and SAP and other companies. You will need to buy a dozen to three, four or five all the way to fifty systems in order to service for technology stock. It's expensive, it's slow, it's not fit for purpose, it's not designed for the needs of an energy company. And that's where we're coming.

So when does this all happen?

So we've been running independently operationally for the last eighteen months two years. We're now splitting physically the two structures the cup table, and that is going to end by mid.

Next year, by mid next year, and are you going to be a publicly held.

Entity or will stay private at that point in time. Obviously it opens options down the road, but right now, the first step is split the two.

What's a risk to the business. What's the thing that kind of worries you usually look at the outlook? What is it that's the thing that I hate to say keeps you up at night because everybody throws that out there.

I have three teenagers.

Okay, there's more than one.

But the number one thing is the demand right now to modernize our energy infrastructure in every country is spiking in each and every country. And our job is how do we service as many utilities as we can and make sure each and every project is a success. To date, all of our migrations we serve you seventy million households, all of them have been successful. Want to keep that truck recorded while handling more and more demand, just.

Real quickly twenty seconds. Is most of your business in the US or is it.

Global globally all over Europe? Half of the UK is running on Krakcke in Australia, Japan and Germany Front and the US National GRIE just announced we picked Krakcken to run ver Technology.

We'll stay in touch, love to hear more as you guys, and when you are officially I guess I mer ord. He's THEEO of Krakin Technology is joining us in studio