Integrated utilities often have a tangled set of systems that do everything from communicating with customers to detecting a power outage. Lily Stein, who runs customer success in North America for the energy management platform Kraken, said that detangling that “spaghetti soup” is a key part of its model.
“Most of [those utilities] see what the future of the energy system will look like, but their systems and their platforms don’t allow them to get there,” she told Latitude Media. “That’s what Kraken solves.”
The company, which is a part of the U.K. energy retail and services giant Octopus, has already had success in the United Kingdom and elsewhere in Europe, with 38 gigawatts of contracted capacity in total. But the vast majority of its existing customers are in regulated competitive markets. Both the integrated utility space and North America more broadly have so far remained relatively untapped, until today.
- The top line: Kraken Technologies has signed its first integrated utility customer in Canada’s Saint John Energy, or SJE, which will license the company’s operating system for both demand flexibility and customer service. This comes as the utility software-as-a-service company — which already calls itself “one of the largest residential virtual power plants in the world” — looks to expand its reach, particularly into North America and into the integrated utility segment.
- The market grounding: Octopus made its U.S. debut in 2020 when it acquired Evolve Energy, which became Octopus Energy U.S., starting in Texas. In 2023, the company partnered with Enphase Energy, also in Texas, which used the company’s Kraken Flex platform to create a virtual power plant from Enphase’s home battery systems, and then bid them into the ERCOT ancillary market. And in February of this year, Kraken rolled out its SmartFlex platform to the U.S. as well via a pilot with the Avangrid subsidiary United Illuminating, based in Connecticut.
Kraken’s platform for SJE will integrate both the company’s demand flexibility and customer service software onto a single operating system. According to Ryan Mitchell, president and CEO of SJE, one of the key challenges the utility aimed to address with Kraken was the patchwork nature of how its systems have always operated.
“Today, we…have a number of disparate systems that have to talk to each other in order for us to provide service to our customers,” he told Latitude Media. “And many of those platforms were approaching end-of-life, so we were at a natural investment point.”
So when Mitchell arrived at the Enlit conference in Paris last autumn, he already was on the lookout for new options. While he was already aware of Kraken on the recommendation of some consultants, once he encountered the company and saw a demonstration of the platform, he was convinced that it could be the right fit. And things “started to snowball from there,” he said.
In just a matter of months, the two companies signed the licensing agreement that will be made public later today, and are currently meeting in New Brunswick to iron out the rollout of the operating system.
How it works
Kraken’s system is onion-like, with a core layer consistent across all clients and territories. Then there’s a territory layer, consistent across all of Canada, for instance; then state-specific or region-specific layers; then the client-specific layer.
“When we’re building functionality for a new part of the energy system, that gets built into Kraken core, so that we will use that for every integrated utility that we work with in the future,” Stein said. “And I think that the joy of clients going first is that they get to help us define what that looks like.”
How the SJE partnership unfolds, Stein said, “will set the precedent for how we do that at scale across the region” for other integrated utilities.
And SJE is aiming to set a precedent as well. Mitchell said the company has already fielded interest from its peers in the company’s previous smart grid and demand response work, and Mitchell said he hopes a consequence of the Kraken partnership is to “host innovation” or even “become more of a service provider to those other utilities that perhaps don’t have the skill-set” necessary. (Going first is something that has already paid off for SJE; in 2019, it was the first utility in the world to deploy a Tesla Megapack battery to store power.)
But one potential snag in the rollout of any new software, Stein said, is the migration process. Utilities tend to be reticent to experiment when the reliability of their systems is at stake, so the actual moment of adopting a new platform can be anxiety-inducing.
Accordingly, Kraken takes a phased approach that essentially allows two systems to keep running at once, with the existing platform staying as-is. Stein likens the process to building a new house.
“Traditional transformations will renovate the house while you’re living in it,” she said. “We’re building a new house, so we can put the plumbing wherever we want; we can put the kitchen somewhere purposeful, not because that’s just where the pipes are. And then we move the customers across one by one.”
SJE is a relatively small utility, with around 36,000 customers. As Kraken courts larger utilities, though, migration could prove significantly more complicated, even with the two-houses approach. Major U.S. investor-owned utilities, for instance, have millions of customers apiece, and can span wide and varied regions.
Between now and June 2025, SJE will migrate all of its residential and business customers onto the new platform, which will handle customer service, billing, optimization, and asset management. That process will happen in phases: first one guinea pig, then a handful of employees or other utility friendlies, then 100 customers, and so on, with opportunities to fix any bugs at each stage.
How it’s getting funded
Another reason it can pay off to go first: access to funding that can lower the price of a full system overhaul.
“One of the benefits of the posture that we’ve taken toward being an early adopter…is it has attracted support from the Canadian federal government in order to de-risk the investment,” Mitchell said.
The Canadian government is in part funding Saint John Energy’s adoption of new technologies, including the Kraken platform. The country’s rural economic development agency is providing nearly $1.9 million (or nearly CAD$2.5 million) toward the utility’s project “to revolutionize the way it serves its customers and advances innovation in delivering energy.” For its part, Saint John Energy is investing roughly $625,000 (or roughly CAD$850,000).
“When we look at it holistically,” Mitchell said, “there is a very strong business case for Saint John Energy to pursue this deployment.”
While the Kraken adoption will use the bulk of the federal funding, Saint John Energy is also planning to develop a digital twin of its grid infrastructure.
The Kraken plan
The SJE partnership comes as Kraken — and Octopus more broadly — makes a real play to be a global platform. Late last year, Octopus raised $800 million aimed at expanding the company’s growth beyond the U.K.
According to Devrim Celal, CEO of the company’s KrakenFlex division devoted to distributed energy resource management, Kraken’s focus in 2024 and probably in 2025 as well is North American, Japan, and Australia.
But that expansion requires Kraken to adapt its platform to a new client type.
“The U.S. is one of the two cases where we’re working with regulated utilities,” Celal told Latitude Media, noting that the others are in Australia. “The majority of our work has been in the deregulated competitive markets.”
And regulated, integrated utilities have different incentives, he added. Especially in the U.S., rate structures tend to incentivize the build-out of new generation, rather than capital-light upgrades to the grid. (This is one of the reasons that adoption of grid enhancing technologies like dynamic line ratings has been such a challenge, as the Department of Energy outlined in its recent liftoff report.)
“I don’t think it’s that they’re willing or unwilling to change; the context that they operate in needs to change,” Celal said. “So there’s an onus on regulators to encourage that.”
As load growth and the grid’s complexity increases substantially, however, Celal sees the demand for a platform like Kraken’s — which combines demand response with an integrated operating system — as likely to grow.
“What I’m seeing, particularly in the U.S. is that utilities are launching demand response programs to tackle that initially,” he said. “But what we’ve seen in Europe, [is that] as the problem becomes bigger and bigger, those demand response program interventions will take you so far, but not all the way where you need to get.”
Editor’s note: This story was updated on May 10 to correct that Octopus entered the U.S. market in 2020 via the purchase of Evolve Energy, not in 2023 via its partnership with Enphase Energy.
