Octopus Energy targets 1 million German customers by 2025

By Vera Eckert and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) -Britain’s Octopus Germany, a relatively new market entrant for retail electricity and gas, is seeking one million German customers by the end of 2025 after wholesale price surges caused a two-month stop in customer acquisitions last year.

“We needed to pause our expansion for a while,” said German Chief Executive Andrew Mack in an interview.

“Our ambition is still to reach a million retail customers within the next three years,” he added.

“We launched our heat pump business in the middle of last year and it really starts ramping up now.”

In Britain, the company’s low overhead model has allowed it to make large inroads in the marketplace quickly and in late December, it received a further push by closing a takeover of collapsed rival Bulb under a 4.5 billion pound ($5.47 billion) provision linked to a government loan that is, however, repayable.

“I don’t see anything that will disrupt the acquisition,” said Mack.

Recent falls in wholesale energy prices will be helpful for suppliers like Octopus because less money is needed to buy wholesale volumes, and for customers, as pressure from sky-high prices is easing, he said.

“Right now, energy is looking much more affordable than it was even a month ago,” he said.

“We are able to pass on those price falls to consumers very quickly,” he said, adding assessments were made weekly.

German customers have been increasingly attracted to digital energy vendors, with many frustrated by locked-in price deals with little transparency and the bureaucracy of trying to communicate on adjustments and price changes with some traditional players.

Dutch gas prices for delivery in a month last month halved to 70 euros per megawatt hour, although remaining at over three times their pre-2021 levels.

The drastic curtailment of supplies from Russia following its invasion of Ukraine sent prices spiralling up in 2022 but European countries have now replenished gas stocks and the current winter is mild.

Moving to Germany-specific goals, Mack said Octopus was backing its retail business with onshore wind assets, bought by Octopus Energy Generation, in line with the group’s environmental strategy.

Octopus believed that electric heat pumps to replace oil and gas heating boilers in German households were the most suitable add-on service to household energy contracts.

Currently, such pumps heat only 2.7% of German homes while gas accounts for 49.3% and oil for 24.7%.

($1 = 0.8222 pounds)

(Reporting by Vera Eckert and Tom Kaeckenhoff, editing by Rachel More and David Evans)