The UK power market has been dominated for many years by a handful of huge, incumbent family names, however that hasn’t stopped plenty of challengers from getting into the fray, together with the renewable-focused Octopus Vitality.
The corporate claims to have 1.5 million clients within the UK, a market share of 5%, and in Might 2020 its market valuation hit £1bn, after agreeing to let Australian utility supplier Origin Vitality license the know-how underpinning Octopus’s operations as a part of a multi-year deal.
Billing itself as a tech-focused power provider, all the electrical energy the corporate offers to its clients comes from renewable power sources, however Octopus Vitality’s chief know-how officer, James Eddison, is the primary to confess that when the corporate launched in 2016, its founders didn’t “essentially know the power market properly” however may inform it was a sector ripe for disruption.
“The issues that have been actually clear to us once we began out was that power was a market through which clients have been being underserved, and the market didn’t have the know-how and the methods to have the ability to adapt on the charge that can be essential to deal with local weather change,” he says.
“It’s our view that there shouldn’t be a trade-off between serving clients and doing the fitting factor. They need to be the identical factor.”
With the ability to steadiness these two notions is made attainable at Octopus by the corporate’s cloud-based know-how platform, Kraken.
Hosted throughout the Amazon Net Companies (AWS) cloud, the platform permits the agency’s clients to take proactive steps to assist handle their prices by offering them with personalised recommendation on learn how to curb their power utilization.
Coaching neural networks
The platform additionally offers Octopus with visibility of the power consumption charges throughout its enterprise by coaching neural networks utilizing good meter knowledge that tracks how power utilization charges differ in line with the time of day.
This in flip means the platform could make predictions about how utilization patterns are more likely to change all through the day, and assist the corporate resolve the most effective time to amass power from the wholesale market to maintain its clients’ power prices down.
The latter idea types a part of the corporate’s Agile Octopus power tariff, which offers clients with half-hourly pricing updates in order that they know when essentially the most cost-effective instances of day to ramp up their power utilization.
The insights gleaned from Kraken make this attainable, whereas offering a stage of dynamism, flexibility and option to customers concerning how and after they procure their power in a method that few, if any, incumbent suppliers can match, says Eddison.
“The power trade is predicated on applied sciences and processes that have been most likely designed within the Nineteen Eighties and applied within the Nineties, but it surely feels prefer it’s operating on Seventies know-how,” he says. “That’s why one thing so simple as switching your power provider takes a few weeks.”
But it surely needn’t be that method, says Eddison. “After we have been very new into the market, I keep in mind a time when the power regulator Ofgem have been consulting on whether or not we should always transfer to quicker switching, and a few of the incumbents have been saying there is no such thing as a proof clients need quicker switching.
“We took the view that if there is no such thing as a proof that clients need quicker switching, why not allow us to do it and we’ll see if clients like quicker switching? Create the chance,” he says.
“We’d like to have the ability to have issues the place we will transfer, make adjustments quicker and work together extra flexibly” James Eddison, Octopus Vitality
What the corporate uncovered whereas digging into that is that switching power suppliers is a course of that may very well be carried out in a quicker and much cheaper method if suppliers have been prepared to spend money on their very own know-how stacks, says Eddison.
“The trade strikes on the tempo of the slowest, so what we’re doing with Kraken is we’re saying you shouldn’t must have methods which can be rigid, change processes that take years and are extremely costly,” he says. “We’d like to have the ability to have issues the place we will transfer, make adjustments quicker and work together extra flexibly.”
Which is likely one of the explanation why the corporate has taken to licensing the Kraken platform to different utility suppliers, together with E.On and Good Vitality within the UK, in addition to a number of different abroad suppliers.
“Kraken is way more than only a aggressive benefit for us. It permits us to make adjustments to the way in which the market operates, so we will use knowledge in real-time communications to essentially match consumption to power era, and progress on tackling local weather change, whereas providing fairer pricing and extra transparency [on their usage patterns] to clients.”
Licensing tech for development
In an effort to develop its share of the market additional, the corporate has launched into a collection of Kraken-focused licensing offers that seemingly serve to place its know-how within the arms of its opponents.
Whereas which may seem to be an odd factor to do, it’s a transfer that it hopes will result in additional shopper take-up of inexperienced power tariffs throughout the trade, and – in flip – help society in its combat towards local weather change.
“That wouldn’t work in the event you’ve solely obtained one participant out there with entry to that form of know-how, and in the event you take a look at who we’ve licensed it to within the UK, we’ve obtained Good Vitality – who’re a inexperienced power pioneer, and E.On, which is the one one of many large six providing 100% renewable power,” he says.
“It’s not a query of licensing it to any person with the most important pockets. It’s about licensing it to individuals who we expect have the identical values and aims to then profit from utilizing Kraken.”
He says: “They purchase into precisely the identical mannequin, in order that they get precisely the identical enhancements and developments on the identical time to the identical extent that happens with [the version of Kraken] we now have.”
It’s by these licensing agreements, coupled with direct engagement with clients through the Octopus model, that the corporate is hoping to realize its objective of getting 100 million clients world wide counting on Kraken by the tip of 2030. “It’s a reputable goal, however there’s nonetheless plenty of work to do to ship on that,” says Eddison.
Cloud supplier associate
Hitting its buyer acquisition objective can also be one of many explanation why the corporate has sought to forge even nearer ties with its long-standing know-how associate, AWS, in current months, evidenced by its declaration in August 2020 that Amazon has now develop into its most well-liked cloud supplier associate.
Kraken has been hosted within the AWS cloud since its inception, and the platform itself depends on a number of inter-connecting Amazon cloud providers to run, with its Easy Storage Service (S3) used to retailer buyer knowledge, which is then processed by AWS Glue to arrange it for evaluation by the Amazon Relational Database (RDS) providing.
“In old fashioned tech, you’d have invested in {hardware} in a datacentre, and had it sitting there 24 hours a day, seven days every week, and also you’ve obtained finite [compute] capability accessible to you,” he says.
“The AWS elements are superb to work with… and being able to flex computational energy to satisfy demand is de facto, actually essential and we closely use that. And it means all we now have to fret about is designing the applying, and serving clients.”
Additionally, given the corporate’s need to broaden globally by licensing agreements, having the ability to lean on Amazon’s world fleet of datacentres is one other essential think about its determination to deepen its ties with the agency.
“We now have 5 Krakens reside in manufacturing, spanning three international locations, and people numbers are growing. Each is definitely paired as a result of we run a check surroundings alongside a manufacturing surroundings, and by the tip of the 12 months we’re going to have 9 or 10 in use,” he says.
“We additionally don’t know which international locations we’re going to be working in in a few years time, and we don’t know what [data protection] guidelines are going to be in place inside these international locations both. So having a supplier with a big geographical footprint and presence places us in a robust place from that perspective.”
Moreover, given the time-sensitive nature of power pricing, having the ability to host Kraken as near the customers and suppliers that depend on it is usually extraordinarily essential from a latency standpoint.
And that’s notably essential given the 50-strong group tasked with overseeing the event of Kraken are break up between London and Australia at current.
“I’ve beforehand managed a improvement in Australia, with a know-how group break up between Australia and the UK, by coincidence, and the latency distinction between operating the applying regionally and operating it on one thing from world wide could be very, very noticeable,” says Eddison.
“If you wish to do one thing which is very responsive and performant, it is advisable to transfer it nearer to your level of use. So Amazon’s world footprint is certainly a key issue of the partnership.”
So with its race to achieve 100 million clients by 2030 properly and actually on, a rising precedence for the corporate is to proceed growing its developer headcount to make sure Kraken continues to ship on what it was designed to do.
“There are some exceptionally proficient and devoted individuals within the group, and we’re rising quickly, and on the lookout for individuals who share the identical ardour for taking care of clients,” he says.
“Have the group throughout know-how and the customer-facing ops groups working collectively to attempt to make one another’s lives simpler,” provides Eddison. “And that spirit of collaboration throughout the corporate is de facto valuable to us, and a extremely precious driver in direction of making certain [Kraken] is environment friendly and simple to make use of.”
