In a landmark move that signals significant momentum in the renewable energy technology sector, Octopus Energy is preparing to spin off its innovative AI software unit, Kraken Technologies, with a remarkable $8.65 billion valuation.

The groundbreaking funding round, which secured $1 billion in standalone investment, marks a pivotal moment for the British startup's technology division. Origin Energy, a major stakeholder, confirmed the strategic development and will invest $140 million as part of the transaction, underscoring strong confidence in Kraken's potential.

Kraken Technologies, which supplies sophisticated energy software to utility giants like EDF and E.ON, has seen its contracted annual recurring revenue more than double in the past 18 months. The company's CEO, Amir Orad, has described Kraken as the 'modern operating system for utilities', highlighting its transformative role in the energy technology landscape.

The spinoff, targeted for mid-2026, will see Octopus Energy retain a 13.7% stake in Kraken, while Origin Energy maintains a 22.7% interest. A major, yet unnamed Kraken customer and prominent hedge fund D1 Capital Partners, led by Daniel Sundheim, participated in the investment round, further validating the company's strategic vision.

In a previous interview with CNBC's 'Squawk Box Europe', Orad expressed optimism about Kraken's future, noting the 'significant opportunity' ahead while emphasizing the importance of evolving into a pure software company. The funding round and planned separation are expected to attract more long-term, software-focused investors to the enterprise.

Origin Energy's CEO Frank Calabria celebrated the milestone, stating that these transactions position both Octopus and Kraken strongly for their next growth phase, with an appropriately structured capital foundation. The company is rapidly approaching its ambitious goal of reaching 100 million customer accounts ahead of schedule, demonstrating remarkable technological and market momentum.