Speaker 1: Bloomberg Audio Studios, podcasts, radio News. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: Octopus energy group planning to spin off it's Cracking Technology
Speaker 2: software platform unit. If you're not familiar, well, energy companies
Speaker 2: definitely are. Cracking is a software platform, as we mentioned
Speaker 2: a company, it helps utilities manage the transition to cleaner energy.
Speaker 2: And we've got a great guest to explain what it's
Speaker 2: all about. What's going on.
Speaker 1: I'm heir Arit is here CEO of Cracking Technologies, as
Speaker 1: the company bio notes, he's a multi time CEO, entrepreneur
Speaker 1: and an AI analytics, cyber and fintech veteran. He's here
Speaker 1: in the studio with us. Welcome, How are you very good?
Speaker 3: Thank you.
Speaker 1: Look, as Carol mentioned, energy companies are very familiar with
Speaker 1: what you do. But if people think about utilities and
Speaker 1: the transition to renewables, how does your company help them
Speaker 1: do that?
Speaker 3: So every utility on the planet is evolving these days
Speaker 3: because the technology behind the energy is evolving. You have
Speaker 3: from electricity at every home Smiths Homes evs although it's
Speaker 3: renewable solar and the like vainly to modernize their entire infrastructure,
Speaker 3: from billing to communication, from hard price to modern technology.
Speaker 3: We help him do that.
Speaker 1: Hold on, I thought the president is canceling wind projects
Speaker 1: and he's talking about drill drilling more in the US
Speaker 1: and building nuclear. Look, nuclear takes a really long time.
Speaker 1: We've spent a lot of time talking about that. Are
Speaker 1: utilities pulling back on renewables?
Speaker 3: The state with the most investment in renewable right now
Speaker 3: is Texas. It's cheaper, Solar is cheaper, more accessible, more affordable.
Speaker 3: Un can bite faster than building a new nuclear power plants,
Speaker 3: more solar investments than any other energy form.
Speaker 1: It's a political Can it be done even with tariffs
Speaker 1: on hardware that comes from China?
Speaker 3: Obviously it's more expensive that way, But in general, solar
Speaker 3: became so cheap and it's getting cheaper every day that
Speaker 3: everyone are moving to that. But it's a mix. It's
Speaker 3: never just all wind or nuclear. It's always a mix.
Speaker 2: Well, so I'm still trying to understand what you guys
Speaker 2: do your platform, So what are you helping energy companies do?
Speaker 3: I'll give you an example. If you have you're cooling
Speaker 3: your home during the summer, or you have an electric
Speaker 3: vehicle you charge at seven pm when you get home.
Speaker 3: That creates a massive spike on the grid. And the
Speaker 3: issue is the grid is actually built for the maximum
Speaker 3: point in time, so every spike is really expensive for
Speaker 3: us as consumers. What we do is help manage that spike.
Speaker 3: Spread it a bit. Maybe we charge your call a
Speaker 3: bit later at night, as long as you wake up
Speaker 3: and you have enough juice. Maybe we cool your home
Speaker 3: slightly differently during the day. That's one example. There's many
Speaker 3: examples like that. We can move shift load between the
Speaker 3: weekend during the day. You can do dynamic pricing, so
Speaker 3: you incentivize consumers to spend the right time and right energy.
Speaker 1: Is your software necessary because the grids in many parts
Speaker 1: of the United States are not sufficient.
Speaker 3: For two decades we did not have any increase in
Speaker 3: load and demand in.
Speaker 1: The US, And now we found AI.
Speaker 3: Not just SAYI with more manufacturing, more evs, we move
Speaker 3: from gas to electricity and so on.
Speaker 1: What was moving from gas to electricity the right move
Speaker 1: in hindsight.
Speaker 3: Yes, houses burn less if you use electricity. It's a
Speaker 3: fundamental it's a safety thing. It's easier, easier to transport.
Speaker 3: There's a lot of advantages, but we do need to
Speaker 3: update our agreed.
Speaker 1: But does it financially make sense?
Speaker 3: It's consumers gas perces go up and down. An electricity
Speaker 3: form solar is actually really cheap when the sun is up.
Speaker 3: If you put the buttery, you store it for night.
Speaker 3: You can actually reduce electricity prices using these technologies.
Speaker 2: You know what's interesting is I mean Octopus has said
Speaker 2: that you guys help lower bills when renewable surge, but
Speaker 2: energy prices are still high for many households. Just talk
Speaker 2: to my husband's like, why is it so high? Why
Speaker 2: should consumers believe that this software or benefits them and
Speaker 2: not just your bottom line?
Speaker 3: Because unrelated to cracking, the entire industry now need to
Speaker 3: invest in infrastructure, adding more capacity and improve the grid.
Speaker 3: That is going to cost a lot of money. Any
Speaker 3: usage of technology to optimize that will reduce that investment
Speaker 3: because we reduce the peaks and part of that saving
Speaker 3: can go to every household.
Speaker 2: Is there a point though where the grids are built?
Speaker 2: I mean, we've been talking about this and how much
Speaker 2: they're maxed out, and now we've got all of the
Speaker 2: AI demand kind of starting to be factored in. But
Speaker 2: is there a point where the grid is built out
Speaker 2: and we don't need a software platform because we don't
Speaker 2: have peaks or we have enough.
Speaker 3: Even when the grid is perfect, we still need to
Speaker 3: choose which energy source do we use. The sun happens
Speaker 3: to be free, but it's not always there. If we
Speaker 3: can shift the usage and pick the right moments, we
Speaker 3: can reduce costs.
Speaker 1: You've talked a lot about solar, but wind is also
Speaker 1: of interest to us, not just because of what's happening
Speaker 1: offshore of the United States or what's not happening sure
Speaker 1: of the United States right now? Is this administration making
Speaker 1: a mistake canceling wind power projects?
Speaker 3: Look, some countries believe it's a really good investment for
Speaker 3: the future. The truth is you need to mix, You
Speaker 3: need variety. The ideal mix is a bit of everything,
Speaker 3: versus choosing one over the other.
Speaker 1: So you think the US should have wind power.
Speaker 3: I think we need to have a mix of everything
Speaker 3: versus just pick one or favorite and price goes into account.
Speaker 3: Investing in you gaz for example, there's a five yew weight.
Speaker 3: There's a line to get a new generator, a new turbine,
Speaker 3: So we have to have a mix.
Speaker 2: We are talking with a mirror.
Speaker 1: Aort.
Speaker 2: He is chief executive officer of krack and Technology is
Speaker 2: joining us here in studio. There. Let's talk about the
Speaker 2: spin off and why it's happening. Critics are saying that
Speaker 2: spinning this off is less about strategy and more about
Speaker 2: extracting value for investors. So how do you respond to
Speaker 2: this view a mirror that this is a financial engineering
Speaker 2: play rather than an innovation story.
Speaker 3: Yeah, Kracken was born inside an energy company. Very few
Speaker 3: successful tech companies were born inside an energy company. It's
Speaker 3: such actually quite rare. It made us who we are,
Speaker 3: improved our technology and knowledge of the space tremendously. But
Speaker 3: we would like to work with other energy companies who
Speaker 3: may compete with our parent company. We'd like to invest
Speaker 3: in other markets that our parent company may not play in.
Speaker 3: So we cannot grow and innovate and service the market
Speaker 3: when we're limited to a certain parent company.
Speaker 2: So you're saying that by going out on your own,
Speaker 2: you're able to access a lot more companies. What does
Speaker 2: that mean dynamically in terms of how big your company
Speaker 2: could be? I mean, Sky News reported that you guys
Speaker 2: could be worth as much as fourteen billion. We have
Speaker 2: heard ten billion.
Speaker 3: I've heard the rumors. I have no clue what's the number.
Speaker 2: But you understand the business and you understand that by
Speaker 2: spinning off what you might be able to access. So
Speaker 2: what does it mean in terms of valuation or is
Speaker 2: this all hype in terms of do those numbers make
Speaker 2: you nervous?
Speaker 3: First of all, expectations should make you nervous. Our job
Speaker 3: is to be with a great business and hopefully meet
Speaker 3: each and every expectation down the road. But by splitting
Speaker 3: the two companies, we can attract capital in investors that
Speaker 3: are experts in software, not just in energy experts at
Speaker 3: lad stage software companies. Five hundred million dos ERL is
Speaker 3: not your typical startup. This is scale, so it would
Speaker 3: definitely allow us to attruct the right capital structure and
Speaker 3: the right investors over time.
Speaker 1: Some of the mag seven are actually eyeing energy, Amazon, Google,
Speaker 1: Microsoft looking at the energy space, especially AI driven grid management.
Speaker 1: Why should utilities bet on you rather than going with
Speaker 1: a larger player.
Speaker 3: So kracking is unique in that it does only one thing.
Speaker 3: We only do the platform four utilities for energy companies,
Speaker 3: and it's a very wide system end to end the
Speaker 3: problem is the alternative you can go with ORACID and
Speaker 3: SAP and other companies. You will need to buy a
Speaker 3: dozen to three, four or five all the way to
Speaker 3: fifty systems in order to service for technology stock. It's expensive,
Speaker 3: it's slow, it's not fit for purpose, it's not designed
Speaker 3: for the needs of an energy company. And that's where
Speaker 3: we're coming.
Speaker 2: So when does this all happen?
Speaker 3: So we've been running independently operationally for the last eighteen
Speaker 3: months two years. We're now splitting physically the two structures
Speaker 3: the cup table, and that is going to end by mid.
Speaker 2: Next year, by mid next year, and are you going
Speaker 2: to be a publicly held.
Speaker 3: Entity or will stay private at that point in time.
Speaker 3: Obviously it opens options down the road, but right now,
Speaker 3: the first step is split the two.
Speaker 2: What's a risk to the business. What's the thing that
Speaker 2: kind of worries you usually look at the outlook? What
Speaker 2: is it that's the thing that I hate to say
Speaker 2: keeps you up at night because everybody throws that out there.
Speaker 3: I have three teenagers.
Speaker 2: Okay, there's more than one.
Speaker 3: But the number one thing is the demand right now
Speaker 3: to modernize our energy infrastructure in every country is spiking
Speaker 3: in each and every country. And our job is how
Speaker 3: do we service as many utilities as we can and
Speaker 3: make sure each and every project is a success. To date,
Speaker 3: all of our migrations we serve you seventy million households,
Speaker 3: all of them have been successful. Want to keep that
Speaker 3: truck recorded while handling more and more demand, just.
Speaker 2: Real quickly twenty seconds. Is most of your business in
Speaker 2: the US or is it.
Speaker 3: Global globally all over Europe? Half of the UK is
Speaker 3: running on Krakcke in Australia, Japan and Germany Front and
Speaker 3: the US National GRIE just announced we picked Krakcken to
Speaker 3: run ver Technology.
Speaker 2: We'll stay in touch, love to hear more as you guys,
Speaker 2: and when you are officially I guess I mer ord.
Speaker 2: He's THEEO of Krakin Technology is joining us in studio