Octopus expects £100m energy crisis hit

Octopus Energy has said it expects to incur around £100 million of losses as it absorbs the impact of wholesale price increases for its customers.

A spokesperson for the supplier told Utility Week that Octopus is buying energy for about £2,000 for an average home and selling it for £1,300.

The warning comes as the retailer reveals its financial results for 2020/21 and announces a move into the French market with the launch of Octopus Energy France, the eighth international retail operation in the group. This follows the acquisition of Plüm énergie. Plüm is an energy-tech startup which currently serves just under 100,000 energy accounts comprising domestic customers, businesses and local authorities.

Greg Jackson, chief executive and founder of Octopus Energy Group, said the move into France would help bolster the group’s global buying power and enhance its technology.

The company’s results for year end April 2021 show its retail arm posted a £1.9 billion revenue, an increase of 57%. Octopus Energy posted a headline operating loss of £85 million (compared to £48 million in 2019/20). However, after taking into consideration customer acquisition costs and exceptional accounting charges, on a revenue of £1.9 billion, the loss decreases to £1 million.

Customer numbers grew 46% across the year, to 2.1 million, with almost a million added since, including the integration of Avro’s accounts through the Supplier of Last Resort process.

Group revenue saw an increase of 62%, from £1.24 billion to £2.01 billion. It expects this to rise to nearly £4 billion by April 2022. Operating losses halved to £31 million over the year.

Otopus’ technology arm Kraken saw its revenue grow from £10.2 million to £69.4 million, a 584% increase, with an operating profit of £46 million.

Jackson added: “Our UK energy business charged loyal and new customers well below the price cap, whilst delivering close to breakeven operations and undented service throughout the pandemic.

“Our technology is now delivering strong financial returns, attracting huge investment which allows us to maintain the pace of growth across the energy value chain, globally.”

“2022 will be tough in energy, but we will fight for customer interests and work with government and industry to find solutions which may mitigate the issues for customers whilst doubling down on the investments in technology, growth and renewables which will help avoid such crises in future.”