Origin Energy seals $500m deal to 'transform' retail business

Power giant Origin Energy will invest $500 million to acquire a 20 per cent stake in UK retailer Octopus Energy and will migrate its 3.8 million electricity and gas customers onto a technology platform.

In a move aimed at reversing its declining customer accounts and achieving major savings, Origin on Friday said the partnership with Octopus Energy and use of its fast-growing Kraken platform would transform its retail operations by delivering a radical improvement in customer service, reducing costs and opening up major new growth opportunities.

Shifting Origin's electricity and gas customers onto the Kraken platform over the next two to two-and-a-half years would lead to savings of up to $80 million in the 2021-22 financial year, and up to $150 million from 2023-24, Origin said.

Chief executive Frank Calabria said the new platform would provide power customers with a "vastly simpler experience" than traditional systems, streamlining and automating processes that usually require multiple different departments and interactions. Mr Calabria said Octopus had proven the success of the technology by rapidly growing to more than 1.5 million customers since its founding in 2016, and continue to grow at a rate of 40,000 to 50,000 customer per month

"What's at the heart of it is that it's been built around the customer, whereas the traditional system was built around the metre," Mr Calabria said.

"While we have made good progress towards improving our customers’ experiences and the efficiencies within our retail business, this partnership with Octopus will help us transform energy retailing by automating our end-to-end processes and embedding an operating model designed around, and for, the customer experience. This will make every transaction simpler for our customers."

The London-based Octopus Energy struck a deal with German power giant E.ON earlier this year to migrate approximately 6 million UK customers to Kraken over the next two years. When the E.ON and Origin rollouts are complete, more than 17 million customer accounts will have migrated to the platform in the UK and Australia.

Around the country, energy companies have been seeking to lower costs amid pressure from the introduction of state and federal government fixed basic energy prices known as default market offers. The industry has also been suffering a slump in demand inflicted by lockdowns and travel restrictions aimed at arresting the advance of the coronavirus pandemic.