Schneider Electric & Kraken's Strategy for Grid Flexibility

Back in 2016, Octopus was an up-and-coming energy provider in the UK. A decade on, it is the the country's undisputed energy leader, thanks in no small part to the cutting-edge technology that underpins its services.

Kraken, Octopus' proprietary operating platform, was central to the company's meteoric rise. The technology played a role in all of Octopus' operations, from customer service, to grid balancing, to automatic billing.

Last year, Greg Jackson and co. decided to spin off Kraken, making it a fully independent business. In the 12 months since, Kraken's position and influence in the energy market has grown as large as the stature of its mythical cephalopod namesake.

One of the latest partnerships the firm has struck up is with Schneider Electric, another titan of the global energy sector.

The collaboration between the two organisations will focus on improving the flexibility of power grids – something both firms say is critical to the modern energy landscape, especially given the rise of AI and data centres.

The numbers behind AI illustrate the gravity of the situation. Data centre electricity demand alone reached around 415TWh in 2024 – roughly equivalent to the UK's entire annual power consumption – and is projected to double by 2030.

Clearly, that is a huge amount of energy. The problem is that the organisations responsible for managing grids often lack the oversight needed to respond to shifting demand.

This means that data centres generally rely on very expensive upgrades to infrastructure before they can start running at full capacity.

The joint venture between Schneider and Kraken will look to find a way around that bottleneck by using software and AI to extract more capacity from the grid as it already exists, rather than waiting for grids to be revamped.

What each party brings to the table

This kind of work has the potential to be extremely lucrative. Schneider suggests that the global value of demand-side flexibility across industrial and commercial sectors could be worth up to US$1tn per year.

The companies are banking on their complementary tech stacks to unlock that value.

Schneider Electric's half of the equation includes real-time network monitoring through its One Digital Grid Platform and EcoStruxure suite. These programs are designed to identify issues with the distribution of electricity across grids and manage flexible loads accordingly.

Kraken's contribution is all about AI. The firm's smart platform is capable of coordinating a variety of energy assets, like EVs, batteries and heat pumps, so that they pull power from the grid at the most convenient times so that demand and supply are well balanced.

Together, Schneider and Kraken are piecing together an offering targeted at utilities and grid operators, with the stated aim of giving them greater visibility over low-voltage networks and the tools to manage congestion.

The view from the boardroom

The leadership teams from both Schneider and Kraken are fully aware of the strain being put on power grids nowadays. The hope is that this partnership will ease that burden.

"Utilities and grid operators are under real pressure to maintain reliability, respond to shifting demand and make better decisions with better data, whilst working with aging infrastructure," says Frédéric Godemel, EVP of Energy Management at Schneider.

"Our aim is to create an interoperable energy system that works seamlessly," he adds.

"By combining Schneider Electric's platform approach with specialist partners like Kraken, we can help customers make the most of existing assets, reduce complexity, roll out new capabilities faster, unlock hidden capacity and see value sooner."

On the other side of the deal, Kraken's CEO Amir Orad is equally optimistic, especially when it comes to the broader implications of their joint venture.

"For Kraken, it's clear: speed to flexibility means speed to power. AI is not just a driver of demand – it revolutionises the capacity we can get out of the grid we already have," he says.

"Together with Schneider Electric, we're building a more resilient, more affordable and cleaner energy system – for consumers and for the planet."

The broader significance of the partnership

The partnership reflects a wider shift in how utilities and technology vendors are approaching the capacity problem – one that has gained urgency as electrification of transport, heating and industrial processes accelerates.

Rather than treating grid congestion as an infrastructure challenge requiring more cables and substations, the approach here bets on software-driven demand management as a faster and cheaper alternative.

Whether that proves sufficient to meet the pace of load growth – particularly from data centres – remains to be seen.