Dec 24, 2020

Octopus Energy enters Asia with Tokyo Gas partnership

OctopusEnergy
TokyoGas
Japan
Dominic Ellis
2 min
The $2 billion-plus deal comprises a 30:70 Joint Venture and sees technology platform ‘Kraken’ licensed to deliver "an improved customer experience"
The $2 billion-plus deal comprises a 30:70 Joint Venture and sees technology platform ‘Kraken’ licensed to deliver "an improved customer experience...

Octopus Energy Group has agreed a major strategic partnership with Tokyo Gas, one of Japan’s leading utilities, in a deal that values the UK entech pioneer in excess of $2 billion (£1.45 billion).

The agreement will see Octopus Energy and Tokyo Gas launch the Octopus Energy brand in Japan, operated by TG Octopus Energy, a 30:70 joint venture backed by working capital and growth funding provided by Tokyo Gas. International tech haven Tokyo will function as a launchpad for Octopus's expansion into the Asian market.

Octopus Energy in Japan will provide 100 percent renewable electricity amongst other services, helping to drive green energy in the world’s biggest competitive energy market. Japanese renewables lag the UK by 50 percent (renewables in Japan in 2019 accounted for 18.9 percent of electricity, compared with 37.9 percent in the UK) but the potential is huge and Prime Minister Yoshihide Suga has set of target of reaching net zero by 2050.

Octopus’s technology platform ‘Kraken’ will be licensed by the joint venture to deliver an improved customer experience and cleaner and smarter energy solutions to Japanese households. Today, Kraken is already contracted to serve 17 million energy accounts worldwide through Octopus’s own retail businesses, plus agreements with Good Energy, Hanwha Corporation, Origin Energy, nPower and E.ON.

The deal also sees Tokyo Gas take a 9.7 percent equity stake for consideration of $200m, alongside an approximate further $50m equity investment from Origin Energy, to continue its global expansion and technology development. This will see Octopus enhancing its smart grid capability and commitment to driving the green energy revolution around the world.

Since Origin’s initial investment in April, the fast-growth disruptor has launched in the USA and Germany. In the UK it has launched Electric Juice, the country’s first electric vehicle roaming network, and partnered with Tesla to launch Tesla Power. In November 2020, Octopus Energy was named “Technology Company Of The Year” at the National Technology Awards.

Octopus Energy, Founder and CEO, Greg Jackson said: “We are delighted to announce our agreement with Tokyo Gas, one of the most respected and successful Japanese utilities, to launch “Octopus Energy” in Japan. This Joint Venture will bring our exciting approach to renewable energy and technology to the world’s largest competitive energy market, and the investment will turbocharge our mission to revolutionise energy globally.

Octopus Energy Group bought Upside Energy, a leading energy software company based in Manchester, in November, with the aim of establishing the new energy technology (EnTech) hub as the 'Silicon Valley of Energy' (click here). 

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

Ofwat
Utilities
water
prices
Dominic Ellis
3 min
Ofwat confirms levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue

Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.

The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.

Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.  

In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue. 

Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”  

There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:   

  1. Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps. 
  2. Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold. 
  3. Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice. 

Further consultation on the proposed adjustments to REC price caps can be expected by December.

Anita Dougall, CEO and Founding Partner at Sagacity, said Ofwat’s decision comes hot on the heels of Ofgem’s price cap rise in April.

"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.

"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."

United Utilities picks up pipeline award

A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.

The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.

“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.

Camus Energy secures $16m funding

Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent VenturesWave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.

As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.

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