Ten years ago, Octopus Energy was a London start-up nobody had heard of. Today it's UK’'s largest household energy supplier, and its technology runs the back office for utilities on four continents.
So how does Octopus Energy make money?
Through three distinct streams retail supply margins, software licensing, and B2B services that together turned a challenger brand into a genuine energy-tech platform.
What Is Octopus Energy?
Octopus Energy is a British energy retailer and technology company founded in London in 2015, built on the idea that software, not just cheaper tariffs, could fix a broken industry. Greg Jackson founded the company and remains its chief executive, alongside co-founder and CFO Stuart Jackson, who previously spent six years at Barclays running a £5 billion credit card business.
The scale is now hard to ignore. In its financial year to April 2025, Octopus became the UK's largest household energy supplier, serving 7.6 million homes, while nearly doubling its non-UK customer base to 2.4 million. Group revenue reached £13.7 billion for the year a business that started out reselling gas and electricity now spans supply, generation, and software, employing over 8,500 people.
That range is exactly why understanding Octopus Energy revenue streams matters: this isn't a single-product utility. It's three businesses wearing one octopus logo.
Direct Supply Margins Explained
Octopus Energy's core revenue still comes from selling gas and electricity directly to households and businesses, though the margin on that supply is notoriously thin. As Octopus itself has explained, wholesale energy costs make up a little under half of a typical bill; the rest is transmission and distribution charges, environmental obligations, and VAT, leaving suppliers fighting over a narrow slice at the top.
That thinness shows up in the numbers. In FY25, the group posted underlying EBITDA of £90 million overall, with the UK energy business contributing £347 million in underlying EBITDA on its own solid, but nowhere near the margins software businesses enjoy. A year earlier, in FY24, Octopus reported a profit margin of just 0.7% on £12.4 billion of revenue.
This is the uncomfortable truth behind how Octopus Energy makes money at the supply level: retail energy is a volume game with wafer-thin margins, which is precisely why the company built something else to sell alongside it.
What Is Kraken Technology? Licensing the Platform to Other Energy Companies
Kraken is the cloud-based operating system Octopus built to run its own customer billing, tariffs, and grid balancing and then started licensing to rival energy companies around the world. It's arguably the real answer to how does Octopus Energy make money, because Kraken carries far higher margins than supplying gas and electricity ever could.
The scale is striking. By FY25, 73 million accounts were contracted to run on Kraken, and only 19 million of those belonged to Octopus's own retail arms; the rest were third-party licensees. Named clients include EDF, E.ON Next, Tokyo Gas, and, right at the end of FY25, National Grid in the United States, Kraken's first major North American utility client. Contracted annual recurring revenue from licensing doubled in 2025 to £422 million.
Here's the twist worth flagging for anyone researching this Founder Story further: in September 2025, Octopus announced plans to spin Kraken off as an independent company, later valued at $8.65 billion after a funding round led by D1 Capital Partners. The platform that started as an internal cost-saving tool is becoming a standalone business in its own right.
B2B Services as a Third Revenue Stream
Beyond supply and software, Octopus earns a growing share of revenue by installing the physical kit that decarbonisation actually requires: smart meters, heat pumps, solar panels, EV chargers, and batteries. This third arm of Octopus Energy revenue streams has grown fastest of all three in percentage terms, even if it's still the smallest in absolute size.
The FY25 numbers tell the story of that acceleration. Metering services brought in £164 million, up 98% year-on-year, while other B2B services revenue hit £222 million, up 211% on FY24. On the ground, that meant roughly 903,000 meters installed across the UK and Europe, plus 65,000 heat pumps, EV chargers, solar panels and batteries fitted in customers' homes more than double the previous year's installation volume.
It hasn't all been profitable growth. Octopus Energy Services, the installation-focused subsidiary, posted a pre-tax loss even as revenue climbed, a reminder that building out physical infrastructure at speed costs real money before it pays back.
The Platform Play Behind the Supplier
Octopus makes money as an energy retailer, but it behaves like a platform company and that distinction explains almost everything about its strategy. Retail supply generates the customer base and the operational proving ground; Kraken then sells the software that proving ground to competitors, some of whom Octopus is simultaneously trying to beat in the market.
It's an unusual position: Octopus profits whether it wins a customer directly or a rival wins them using Kraken underneath. That dual exposure is what funded years of aggressive UK price competition, and it's why the spin-off matters so much Kraken can now raise its own capital, chase its own international deals, and grow faster without being tied to the economics of Octopus's own retail book.
The Bottom Line
Octopus Energy makes money through three streams working together rather than any single one carrying the business: thin-margin retail supply funds the customer base, high-margin Kraken licensing funds the technology, and fast-growing B2B services fund the physical rollout of heat pumps, solar and EVs. None of the three alone would justify Octopus's scale together; they explain how a 2015 start-up became a £13.7 billion group in a decade.
What happens next is genuinely open. With Kraken spinning out as its own $8.65 billion company, the platform that built Octopus Energy is about to be tested as a business entirely on its own.
FAQs
1. How does Octopus Energy make money?
Octopus Energy makes money through three streams: retail supply margins on gas and electricity sold to 7.6 million UK homes and 2.4 million customers abroad, licensing fees from its Kraken software platform, and B2B services like metering and heat pump installation. Group revenue reached £13.7 billion in FY2025.
2. What is Kraken technology?
Kraken is Octopus Energy's proprietary cloud software platform, originally built to run its own customer billing and grid balancing, then licensed to rival utilities including EDF and E.ON Next. By FY2025 it ran 73 million contracted accounts and generated £422 million in annual recurring revenue, and is now being spun off as an independent $8.65 billion company.
3. How many countries does Octopus Energy operate in?
Octopus Energy directly supplies gas and electricity in the UK and six other countries, seven in total, as of its FY2025 results. Its Kraken software platform has a much wider footprint, licensed to 40 utilities across 27 countries worldwide.
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Sources: Figures drawn from Octopus Energy Group's FY2024 and FY2025 Annual Reports and results announcements, Reuters, Sifted, and Wikipedia's entries on Octopus Energy and Kraken Technologies. Figures reflect the most recent available data at the time of writing.
The EP+ Editorial Desk covers UK startups, founder stories, and venture capital. All editorial content is independently produced and human-reviewed before publication.
