The announced demerger of the Kraken platform from Octopus Energy is more than a footnote in corporate restructuring. While the strategic rationale for the demerger – unlocking value, enabling neutrality, focusing investment – is clear, this separation signifies a fundamental shift in where value resides within the energy sector. It presents both opportunities for innovation and efficiency, while simultaneously posing deeper questions about intelligence, purpose, and control in an increasingly data-driven world.
A Data Driven Evolution
The Australian energy sector is undergoing a rapid transformation, driven by the shift towards renewables, the proliferation of distributed energy resources (DERs) like rooftop solar and community batteries, and increasing customer demand for more transparency and control. And we are likely to face even greater desire for control at the residential level as fossil fuels exit the NEM and growing data centres continue to draw down what will end up being our most precious commodity.
At the heart of this change is the rapidly increasing adoption of sophisticated platforms, with AI playing a more central role in managing the grid and revolutionising customer-facing services like billing. What was once powered by a desire to reduce the cost to serve a customer is being driven by a desire to access, own and use data for business benefit. AI-powered systems are moving beyond simple meter reading and invoice generation to become dynamic, real-time engines for pricing, grid management, and customer engagement. Generative AI, in particular, is being explored for its potential to reshape operations, enhance services, and unlock new business models. Citizen Developers are now a reality, with Natural Language Querying and Gen-AI unlocking data sets. And all of this is being enabled by the data that underpins it.
The Value of Collective Intelligence
Kraken wasn’t just built by its creators. It was, in a sense, co-created by millions of customers. Every billing cycle, every smart meter reading, every interaction with a DER was not just an operational data point but a lesson; training the algorithms that formed Kraken’s core intelligence. When this collective intelligence becomes a standalone asset, it offers significant potential, providing scalable insights from one market to many others, aiding our ability to manage complex grids worldwide.
While the entities funding the pipes of the platform capture the financial benefits, those that provided the foundational base only receive the original service it was built for.
Kraken wasn't just built by its creators. It was, in a sense, co-created by millions of customers.
This isn’t about demanding shares but recognising a governance gap. Current frameworks like Australia’s Consumer Data Right (CDR) focus on raw data portability, not the ownership or equitable sharing of the aggregated intelligence derived by AI. The decoupling of Kraken from Octopus highlights this – how do we value and govern the powerful insights generated from collective data, beyond the rights to individual data points? This conversation, while unlikely to be led by individual consumers challenging AI models, is crucial for shaping future policy, evolving data rights beyond mere portability, and structuring markets fairly. So far, equitable exchanges between business to business to consumers and back is what has enabled centuries of economic growth and advancement. AI looks to be disrupting this proven relationship, causing us to examine social concepts of ownership and fairness.
The Necessity and Consequence of AI Platforms
In energy, the explosion of DERs, real-time balancing needs, and bi-directional data flows, along with all the other complexities of a modern data grid, resulted in traditional legacy systems quickly becoming overwhelmed, enabling AI engines like Kraken as the next evolutionary step.
In this light, decoupling appears as a logical step. The intelligence became too powerful and too universally applicable to remain serving just one company. Spreading this capability is arguably essential for the entire sector to transition efficiently, while making a tidy profit from its adopters.
Sophisticated, AI-driven platforms like Kraken are an evolutionary necessity, not a luxury.
The potential benefits of this platform model are significant. By licensing best-in-class technology, innovation can be democratised and accelerated. Retailers can focus on service differentiation rather than costly backend development, fostering broader competition and potentially better consumer outcomes. Specialised platforms can achieve economies of scale and expertise in managing complex data and AI systems that individual retailers might struggle to replicate, leading to greater overall system efficiency.
Precisely because these platforms are becoming necessary infrastructure, questions around governance and market power are critical:
Concentration Risk
Does reliance on a few dominant global platforms concentrate too much operational power and systemic risk? What happens if such a platform fails or significantly changes its terms?
What is the sustainable role for retailers if core intelligence is outsourced? Does it diminish their function to primarily branding and customer acquisition, potentially reducing differentiation over time?
Fair Value
How is the value generated by the platform – partly derived from broad data pools – fairly distributed or overseen to ensure it serves the long-term interests of the consumers and the system, not just shareholders?
How we use energy isn’t changing. But how we create it, transfer it, store it, trade it, profit from it, is. Kraken’s demerger isn’t just a business event; it’s the beginning of the shift in how energy markets operate. And with this shift, our concepts of ownership, value and fairness all need to evolve in order to remain adequate for these complex tools that are now managing critical parts of our society.
The ghost is emerging from the machine; achieving a balanced and beneficial future requires us to decide how we engage with it, harnessing its power while mitigating its potential risks.