Rethinking energy retail in the US with Nick Chaset (Octopus Energy US)

Hello, and welcome back to transmission. Today, Q sits down with Nick Chasseld, EVP for North America and CEO of Octopus Energy US. In this conversation, you'll hear how Octopus is cracking the US market with a dual strategy, traditional retail in Texas and a clever b to b to c model in regulated states like California. Nick explains how their Kraken technology platform now powers over fifty percent of UK energy consumers and is being deployed by major US utilities like National Grid. He shares why the industry needs to stop talking about the energy transition and start focusing on the electro tech transition, framing electrification around abundance and better products, not sacrifice. Want the latest news, analysis, and price indices from power markets around the globe delivered to your inbox every week? Subscribe to the weekly dispatch, Moto Energy's email newsletter.

Now, let's jump in.

Hello, Nick. Welcome to the podcast.

Good to be here.

So I've got here I've got EVP North America and CEO of Octopus Energy US.

So which one is it?

It's both. When I started, I joined Octopus Energy Group, which is the holding company for our retail businesses, our Kraken technology platform, and the various other tentacle activities.

And so I joined initially to think about all of those business go to market in North America and areas for increased collaboration amongst them.

And then in December, I took over the day to day responsibility of our retail business, which is Oxbridge Energy US, and have since sought to merge more of those activities into a more coherent plan.

Behind the scenes, how much tentacle chat is there, Octopus?

Only when we're talking with folks externally. We don't really talk about the tentacles.

I I think, though Kraken has at their events these large tentacles Oh, so good.

Yeah. In their their booths. So that that's probably the most tentacle action that we see.

The Kraken booths are pretty rad.

So we're gonna cover a lot today here. So Octopus Energy needs no introduction really. We've got these guys behind us who I do believe have a name.

Constantine.

Constantine. Tell us about that. By the way, I'm pointing if you're listening to this, you would have seen these things. Like they're like stuffed toy, incredible branding that locked Octopi, and we got a couple with us right now.

So early days of Octopus, they had this playful pink design. And early website, early billboards, early customer comms.

And so one day, somebody called and asked one of our first employees who now runs our Electroverse platform, a guy named Matt Davies.

They said, hey. What's the name of the octopus? And Matt turns around and says, what's the name? And no one in the office knew. So he just said, Constantine?

It's stuck.

And now we've got Constantine.

And now we have Constantine.

We have a million Constantines out there.

And thank you very much for bringing one for my daughters. They they are gonna fight over it later. It's gonna be awesome. So let's talk about the American energy market. We're here to talk about energy stuff.

Tell us about the opportunity for Octopus in the US, and and what excites you about that?

So the US looks pretty different Then Europe where octopus has grown so much over the last decade, largely because most of the US is not liberalized for retail choice.

Texas, yes, consumers can pick their supplier and there's robust competition. Twelve other US states have a form of retail competition, but with some pretty significant limits around things like who sends the bill. So in Pennsylvania, yes, I can pick my supplier, But the distribution utility still sends the bill, so the experience for the consumer is still very much vertically integrated traditional utility, not something transformational like Octopus can provide. So As a result, we are pursuing our retail business, the one that we've grown to great scale in Europe, the UK, Japan, in Texas. So we're going direct to consumer, giving them that customer love, amazing experience, a hundred percent renewables, all of that good stuff.

And they get a bill with it with it that says Octopus on it.

And then they get the app that's They get the app.

They get the bill. They get the the full experience of being an Octopus customer. That that that customer love is the way we think about the way we describe it.

Which is a special thing about Octopus. Mean, that that is what makes Octopus well, there's obviously there's many things that make Octopus special. I don't wanna underplay it. But, I mean, in the UK retail market, my home market, the thing that Octopus did so well was focusing on the customer and getting close to the customer and bringing SaaS best print principles from other software, you know, verticals straight to this this archaic, glorified billing function of a market. Right?

So I'd say Octopus, in a lot of ways, is not an energy company. We are Octopus Energy, but we're not an energy con we're a consumer company that happens to be in the energy business. And we're in the energy business because it's one of the most important things to transform and prepare for the energy transition. It's a massive share of consumer wallet.

And so it just matters, but we really are a consumer company at our core. So in Texas, that is what we're doing. But outside of Texas, we are thinking about things a bit differently. So in California, for instance, you can't go direct to consumer.

But utilities like Southern California Edison with whom we're a partner are very keen to give their customers the octopus like experience because they are seeing load growth. They're seeing stress. They're seeing rising rates.

And customer load flexibility is a way to address that growing concern. So we have developed a business to business to consumer model where we partner with the utility and we roll out our customer app.

And we help to onboard those customers into an Octopus experience to manage the flexibility of an EV or a battery. And then the third go to market here in the US is Kraken. And Kraken is very actively working with some of the largest utilities in the country to change their technology.

Just to jump in before, because I wanna talk about Kraken in great detail because there's so much to talk about there.

But, yeah, coming back to California, so that model where you have partners and you and they get the Octopus experience for their customers, they white label that, or does it say I mean, do do they get Constantine, basically, as my question?

Constantine. I think it's quite a discussion that we've had internally. Do you white label? Do you or do you maintain the brand? And I think our view is it's really important to establish A unique customer centric brand for great energy experiences. And that's not necessarily something that traditional vertically integrated utilities are used to doing.

And so when they try to transform themselves to do that, goes a little bit counter to their DNA.

And so, you know, we're happy to be their partner in doing that. If you think about finance and banking. You have a bank with JPMorgan, but you still use Venmo to do sort of the more day to day transfers. It's the more sort of advanced the more consumer friendly solution.

You still might just log into your account. But Venmo is the thing you use all the time. And so we kind of want Octopus and the Octopus app to be that consumer tool that they engage with all the time to save energy and to be more comfortable. Very neat.

Very neat. I'm really glad about that because there are so many, in quotes, normal people who have have now moved to being active participants in energy markets through Octopus.

I mean, it's just yeah. I think that's an incredibly impactful thing that Octopus achieved. And so that's part of the brand. It's it's great to see that being applied elsewhere.

The way we really think about it is energy consumers don't wanna think about energy most of the time. They wanna think about their home being comfortable, they wanna or they don't. They just want their home to be comfortable. They want their car to be charged, and they want bills that they can afford.

And if we then can facilitate that by orchestrating their devices in the background in a way that's easy and delightful.

That also saves them seventy five percent off the cost of charging their electric vehicle, then everybody wins.

So the octopus play here is actually just get out of the way and do it in the background.

That's right. Make it incredibly easy to enroll your device, Communicate very clearly what the benefits of participating your EV in an Octopus program are. You're gonna save twenty five, fifty, seventy five dollars a month.

And then don't ask the customer to do anything else.

Alright. Now let's talk about Kraken, which is a hell of a business.

Could you just give us a background for our audience about so a lot of our listeners will be in the battery storage world. They'll get to know Kraken for various different reasons. But can you just talk about the genesis of Kraken? Where does it come from? And then all the tentacles of Kraken, where it's where it's going?

Ten years ago, when our founders James, Greg, and Stuart founded Octopus. They actually initially were founding a tech company. They came from enterprise software, and they saw that The major hindrance or one of the major hindrances to the energy transition was all of the old tech and the complex integration that was needed with that tech be able to operate a utility. Said we want to build a single platform that's cloud based, that's elegant, that's going to just work better.

But they also knew that selling to enterprises, especially big enterprises like utilities, is no easy feat.

And so they decided we're gonna start our own energy company to be the first customer of Kraken.

As it happened, that energy company grew massively over the course of a short period of time.

And ten short years later, it's the largest supplier in the UK. About five years ago or so, some of the Incumbent utilities in the UK started saying, well, we need what Octopus has. How do we start to operate at that cadence with that customer centricity? Could we license Kraken from you?

And the decision was, yes, let's start licensing Kraken. And so now I think while Octopus serves roughly twenty five percent of UK energy consumers, more than fifty percent of UK energy consumers are served on Kraken because lots of large suppliers are also using the platform, and that's also the case across continental Europe too.

Wow. And is is that white labeled? I mean, do people know that they're using an Octopus service?

That that is white labeled. It's they're using Kraken. So Kraken is enterprise software that's in the background. So when National Grid, who is deploying Kraken here in New York and in Massachusetts does so.

Everything that is customer facing is going to be branded National Grid, and they're just gonna be operating in the Kraken environment for billing system and customer service.

Okay. Because the customer service one, I was gonna ask you about that. I know we're jumping around here, but going back to your the the the Octopus discussion and a partner in California, you know, one of the special things, and I I know I used to work at Centrica. We, of course, are British Gas in the UK.

And one of the things that Octopus did really well in the UK was the the customer support and the turnaround. The response times were just so rapid compared to anything the world has seen before. And so If Octopus is gonna use its brand on things in California, how do you maintain the same customer quality? There there is a in implied quality in service that comes with the Octopus brand.

How do you main how do you make sure that that California utility is gonna is gonna honor that standard.

So when we provide flexibility as a service to a utility like Southern California Edison, we staff it with our energy specialists who also serve our retail customers.

Ah, okay.

And that is a bit of the approach that we plan to scale up is that we want the same people who are answering the phone for our Customers in Texas to also be answering the phone for our new customers in California.

The reason we're able to do it so quickly is because of Kraken, and Kraken was built with to be AI native. So one of the magic elements of Kraken is a thing we call magic ink. So what magic ink does, it ingests phone transcripts, every email. And so it kind of knows at any given time what the types of questions a customer will have asked. And so when they call in, or really when they email, it will generate a proposed response that a service agent can look at, modify, and send back quickly. So instead of a customer perhaps waiting a day, five days, a week for an email response, they're gonna get a response in a matter of hours.

And that then gives them the sense of, like, okay. They're on top of it. They're thinking about the issues that I may have and resolving them as quickly as I possibly can.

Quick plug. You can hear Nick speak in Houston in December at the Reuters Energy Live twenty twenty five, and the Moto Energy Transmission team will also be there recording new conversations on-site with the folks actually shaping what comes next. So if you're thinking of attending that, you can use the code halloween four hundred for four hundred dollars off your pass before November third.

Then think about your role on the US business.

How would you how do you think about consumers in America taking an active role in power markets? So thermostats, electric vehicles, you know, the Octopus has got an incredible, you know, car plus tariff proposition in the UK. I don't know how it's well well, it's gone with BYOD. I assume it's it's sold loads. Right? Is there an equivalent one of those that's coming in in America? And and how do you think about the home, the Joe Bloggs in the suburbs somewhere moving to the Octopus way of doing things?

I think the core point We focus on is consumers don't wanna think about energy markets. They wanna think about comfort. They wanna think about affordability.

And in some cases, they wanna think about being more tech forward or they wanna think about green. And And so we want to enable that. So when we think about a person's interaction with Octopus, particularly if they're also the customer of a utility like Southern California Edison, what we've done is developed a easy to use consumer app.

Where you download the app and you say, do I have an EV? Do I have a thermostat? Do I have a battery? I have two of those. Click, click.

Pick the type of EV. I have a Tesla, and I have an N phase battery. Click, click.

Those devices automatically sync on the back end to our Kraken flexibility software.

And this is in California right now? Is in California right now.

And then that customer doesn't have to think. They set their consumer preference. That's really important. They say, I need my car charged by eight o'clock in the morning.

Seventy five percent, eighty percent, ninety percent. They set that preference. For battery, it might be, I never want it to discharge more than twenty five percent.

And then That's all. They don't have to think about it. They just get four hundred dollars in the case of, our Southern California Edison project. In other cases, it might be a monthly bill credit. Over time, the evolution of that solution is going to be something where a consumer says, I want to save money on my energy bill. They download the Octopus app.

We will help them pick the right rate to be on. And then we will optimize those devices against the rate. So they save a little bit every month because they're they have a time of use rate. Their EV is optimized for the time of use rate. Or perhaps they're doing a little bit of precooling of their home to benefit from the time of use rate. That device will then be connected to our system so that if a utility wants to offer more dynamic programs, the customer can just say, yeah, sure. I'll take twenty five dollars a month.

Yes, I'll do that. And maybe I have to change my consumer preference to get that twenty five dollars but it's very easy. One click, two click, and then everything happens in the background.

And and that's really where we want to get. We want you know, allow automation to handle the the the heavy lifting, and we want consumers just to get the benefits of savings.

And how do you I've got to ask this question. How does a business like Octopus and Kraken as part of it do billing in so many jurisdictions. Billing is such a hard thing. It's just it's I've said it many times on this podcast before.

It's just one of those things that you think you can talk about it in the bar and you think, oh, it's just adding up. Right? It's just might, you know, summing up them. And it is just so hard.

So but then doing that in one region is hard enough, let alone what you guys are taking on as a challenge, which do it in tons of regions.

Absolutely right. And it is actually, I think, one of the superpowers of Kraken.

Is its ability to very efficiently be set up for new billing environments. One of the things that we observe in the status quo billing system, which is the systems they've had for a long time. These are big horizontal tech companies who may do billing, but they do other sorts of database. You might have Salesforce. Well, you can build a billing system in Salesforce, but it's not built for billing.

Yeah.

Yeah. It's built to do lots of things, and so it requires lots of customization.

And lots of money spent on consultants to do the customization. Kraken was designed to be an elegant billing system for utilities. The result is it doesn't need customization to be a billing system. It needs customization for the local market rules, which are gonna be different in Massachusetts and Texas and Tokyo.

But also because we were the first customers to move from the UK to countries in Europe Two.

Japan, Texas. We had to build a solution that worked for our use case, which was going to be operating in multiple jurisdictions. And that allowed us to have user and technologist partnered together to do the development of that solution. And then only once we felt like this solution was something that really could scale and move beyond the home market did we really think about licensing it to third parties?

And then so to come back to Cracker, I mean, this is the problem with Octopus. It does so many different things. You do jump around. So one thing you haven't talked about yet, which for our listeners, they will probably care a lot about, and some of them will be Cracking customers, is the derms control and battery grid scale battery control systems that you do and all of the adjacent value that that provides, whether that's in scheduling or optimization or whatever. So how does that part of Kraken fit in, and how do you see that long term?

So Kraken Flex, which has SmartFlex, which is our resi oriented tool, or GenFlex, which is our tool for managing utility scale assets, can operate both as a standalone solution or be integrated into the broader Kraken deployment and Kraken ecosystem.

The benefit of that integration is if I am, say, trying to flex lots of EVs, being able to reflect the benefit of that flex easily on the bill.

And make it visible to your energy specialist so that if a customer calls in and says, hey. I signed up for your Intelligent Octopus Go EV tariff.

I don't know that I understand how it's working. Can you explain to me? But because it's inner one integrated system that does everything from dispatch of your EV to, the visualization that the agent has. It's all there, and it's, you know, just easier to implement, and it's seamless both as a user of Kraken for us.

It's seamless for Octopus to roll these things out quickly. It's also seamless for the consumer experience. And similarly with Genflex, that ability to think about how load and generation interact with one another. In principle, as retail supplier, I'm indifferent to whether I dispatch a wholesale battery or I turn down load.

Both of them exposed me to similar market dynamics. The challenge historically has been you don't have visibility into your load and connectivity between your generation and the load that you may have some control over. So you're not thinking about a co optimization. You're thinking about separate optimizations.

And in the end, because you can't really co optimize, you're not really trying to dispatch your load at scale. You're just managing your wholesale assets. An integrated system, you can do that co optimization, and you can think about at fifty dollars a megawatt hour, what is the optimal asset to dispatch? Should I turn down EVs, or should I dispatch my grid scale batteries?

That's what Kraken effect.

It's a portfolio effect. And that's what Kraken's generation and SmartFlex solutions allow us to do. On a standalone basis, though, we are deploying them. And say for our SmartFlex solution, that is the product that we have integrated into our Octopus app with Southern California Edison. So Octopus has the consumer front end of the app.

That mimics the customer experience that we give our Octopus customers in, say, Texas or the UK.

Behind that, the the brains that does the control and the optimization of the EV is is SmartFlex from Kraken. Similarly, GenFlex, was just licensed by Angi in Italy to manage a fleet of batteries there. So what that's allowing them to do is take the software that Kraken has, input their trading assumptions, and they operate those batteries based on their view of market prices, but with the orchestration capabilities that Kraken has built.

So if we just return to the US for a second, could you just give us the lay of the land for Octopus, the group in the US? Which markets are you in? And then what's the road map look like? What's coming next?

Octopus wants to be the company that is EVs for everyone. It's amazing customer service. It's elegant technology that's gonna empower the electron to be the fuel of the future. And we're pursuing all of those in the US. So Kraken is working with National Grid to deploy their system across their over six million customers in Massachusetts and New York. We're also working with Calpine in Texas with their retail customers.

And very, very exciting conversations happening with other large utilities across the country to help them improve their customer service, lower costs, benefit from all of the capabilities that Kraken will allow them to benefit from.

On the Octopus side of things, we have our Texas business.

We are absolutely focused Which is a like a energy retailer.

That's right. It's an energy retailer in Texas, and we're very focused on growing that business.

A little bit of a Texas flavor, so probably more batteries than we maybe have in the UK because of price volatility, but growing that business and we wanna be, you know, serving hundreds of thousands, if not millions of customers over the coming decade.

Are you working with, Base Power?

We're not working with BasePower at the moment. But a really interesting solution, and we're very much paying attention to what they're doing though.

And then in our flexibilities service solution, our roadmap is we want millions of connected devices that allow us to engage with tens of thousands, hundreds of thousands of households on behalf of our utility partners, help them orchestrate those millions of devices to lower costs and deliver better planning outcomes for the utilities.

So I've got to ask you. What's all this about proceduralism? What does that word mean to you?

So in the US, especially when we think about infrastructure planning, we have allowed the perfect to become the enemy of the good.

We will allow for study process to drag out years and years and years because one party says, I want to ask one more question. Imagine a criminal justice system where anybody from the public could say, I have a question I want to inject into the case.

And that forced the court to keep the proceeding dragging out forever. That's essentially what we have in a lot of environmental planning energy infrastructure.

And that means we're not building the transmission lines that we need to build. That means that we're building things at higher cost because it takes longer to build.

And we're not keeping up. Rates are going up. As rates rise, electrification actually becomes less cost effective. We're helping the fossil fuel industry by not building more transmission and more energy generation.

So what so what do we do about it?

But I I agree with you. I think it's some things that represents most most countries around the world at the moment. It's a difficult balance, isn't it? Because there is the not to get too philosophical philosophical about it, but property rights are sacred.

Right? So if you own property and your property is impacted by something, then you have a right to have a say on it. But on the other hand, we gotta build stuff. We gotta build stuff real quick.

I think the Texas model is a really a really good one for more states to think about. I live in California, and this will not be my controversial statement, but it is a controversial thing to say. And it's that states like California that have done such great work to advance clean energy.

Need to start thinking more like Texas.

They need to just get out of the way of innovators who wanna build things. Make it easy to connect to the grid. Make it easy to permit on your abundant land in the desert.

And people will build those things, and they'll build them cheap. And then as they build them, you will displace natural gas. You will displace coal because solar and storage in particular are just better. They're just faster. They're just cheaper.

Yeah. So California needs to be a bit more Texas. When I lived in Texas, that was the that was the mantra. Everybody needs to be a bit more Texas.

Not on everything, but I think on energy infrastructure, I think California could learn a thing or two.

Well, that feels like a good place to ask you about your contrarian view then. So so what is it that you believe that not a lot of other people believe?

As somebody who's worked in the energy transition space my whole career, I now believe we should stop talking about the energy transition.

Talking about it as a transition that is going to happen or needs to happen suggests that we're not already there, that there's somehow a choice. There is no choice. The die has been cast. We are electrifying our economy.

Maybe not necessarily in the US at in the current administration, But look at the types of cars that are being adopted everywhere in the world. It's electric vehicles. They're just beating ICE cars hands down.

It is solar and storage being deployed at massive scale all over the world. It is happening.

And so we need to move away from talking about the energy transition to talking about a term that the folks at Ember have come up with. I really like it. The electro tech transition.

We're moving from relying on the molecule to relying on the electron as our primary source of fuel, And the sooner we focus on that being the inexorable march forward, I think we start to take put down some of the political dynamics that we that exist when talking about something as a transition that may happen.

This is music to my ears. I actually wrote a blog per I didn't know you're gonna say that. I wrote a blog post in twenty nineteen called why we need to stop talking about the energy transition for that exact reason. Although I use some different words, I totally agree with you. I mean, you if you focus so much what we need to focus on is the energy abundance and the low cost power and all of the incredible societal societal value that that comes out of that. The problem with focusing on the transition is it inherently brings top of mind trade offs and compromise. And I think I think that that that undersells what what the opportunity is here.

I also think this is the case in California. This is the case in so many parts of the world That we have let the pursuit of hundred percent renewables get in the way of really important progress to decarbonize other sectors. Yes. So sixty five percent, seventy percent renewables with mass adoption of electric vehicles is just a better climate outcome and local air pollution outcome than one hundred percent renewables and electricity that is going to be more expensive and lower adoption of electric vehicles. And so thinking about these things holistically, thinking about really emphasizing the consumer products that are electrified that are better, electric cars, induction cooktops, getting people excited about the fact that their lives are gonna be better in the electro tech future, I just is something that, you know, we have to do.

Absolutely. Very much agree with you. So I wanna say a massive thank you, Nick, for joining us on the podcast. It's been a pleasure to have you on.

So fun.

Big fans of Constantine. Thank you again for bringing the lovely soft toy. And I'm I'm really interested to see how you guys get on for coast to coast coverage in the US. Really excited to see what Octopus can do to the retail environment here.

Thank you very much. Really great.

Thank you very much.

Alright.