Are you familiar with challenger banks? Now, a similar disruption is occurring within the energy sector with the emergence of challenger energy suppliers. Octopus Energy, based in the U.K., has achieved a valuation of $2.06 billion (£1.5 billion) after securing a $200 million (£150 million) investment from Tokyo Gas, which will grant them a 9.7% ownership stake, leading to the formation of a new joint venture. Octopus will hold a 30% share in this venture, while Tokyo Gas will maintain the majority ownership position. Having operated for five years, Octopus Energy is now valued comparably to Centrica, the parent company of British Gas.

Octopus Energy is preparing to enter the Japanese market under its established brand, offering 100% renewable electricity powered by a cutting-edge, AI-driven platform designed to effectively manage energy distribution across the power grid. Furthermore, its Kraken software is currently licensed to a diverse range of energy companies including Origin Energy, nPower, E.On, Good Energy, and Hanwha Corporation, collectively serving 17 million energy accounts globally.

“This joint venture will introduce our innovative approach to renewable energy and technology to the world’s largest competitive energy market, and the investment will significantly accelerate our efforts to transform the global energy landscape,” stated Greg Jackson, chief executive (pictured above), in a recent announcement.

Origin Energy, an Australian energy provider, is also poised to acquire a stake in Octopus Energy for $50 million (£37 million), building upon a previous, larger investment made in April where Origin obtained a 20% stake.

Octopus Energy has stated its ambition to serve 100 million customers worldwide by 2027, and has recently expanded its operations into the U.S., Australia, Germany, and New Zealand.

Within the U.K., Octopus Energy currently holds a 5% market share in the energy supply sector and manages a retail portfolio encompassing 1.8 million households, as reported by the company.

Takashi Uchida, president of Tokyo Gas, commented: “Through this collaboration, we aim to enhance the quality of life for our customers by delivering customized value and innovative solutions tailored to their individual needs.”

Renewable energy adoption in Japan currently trails behind the U.K. by 50% – in 2019, renewables accounted for 18.9% of Japan’s electricity generation compared to 37.9% in the U.K. – indicating substantial potential for future growth. Japan’s Prime Minister Yoshihide Suga has committed the nation to achieving net-zero emissions by 2050.

In the U.K., Octopus Energy has also introduced Electric Juice, a network for electric vehicle charging, and has partnered with Tesla to launch Tesla Power.