Octopus Energy has acquired nCube Home, a smart home startup that Octopus will put to use in its renewable energy utility business. Using the devices and supporting software, Octopus can push nCube’s technology as a way to help homes participate in demand-response projects. With 1.3mn customers, Octopus could soon have a lot of clout in that market.
nCube Home, not to be confused with Ukrainian software-house nCube, was founded back in 2012. It has plugged away at creating a smart home hub that could connect disparate devices in the home and allow a user to control them in a coordinated fashion. Unfortunately, Amazon and Google have surged to the fore of this market, and while there is still plenty of space for smaller companies to target niches, nCube still lived in a crowded marketplace.
Octopus Energy, meanwhile, is a subsidiary of the Octopus Group, which was set up in 2015 as a utility that would differentiate itself by selling ‘green’ energy to environmentally conscious customers. A raft of deals saw Octopus quickly swell its customer base. It had reached nearly 200,000 by April 2018, before UK regulator Ofgem ordered that Iresa had over its 100,000 customers after it closed down.
Octopus then managed to steal M&S Energy from SSE, and also bought Affect Energy and its 22,000 customers – bringing it to around 600,000 customers in March. Just a couple of months ago, it passed 1mn through a white label deal with Midcounties Co-operative’s Co-op Energy customers, and now it stands at around 1.3mn. The venerable Which? magazine approves, as Octopus is the only energy provider to earn its ‘Recommended Provider’ badge.
This rapid growth has been driven by Octopus Group’s deep pockets and the focus on renewable energy. The Group says it is the biggest investor in UK solar farms, but Octopus Energy itself doesn’t produce any energy – buying everything from the wholesale market. Octopus Energy now claims that all the energy it supplies comes from renewable sources, including its natural gas thanks to a carbon offsetting program.
This is where nCube comes in. Joining the dots, you can see how a smart home hub would become very valuable to Octopus, as the platform would allow it to adjust its customer usage patterns, to optimize its purchasing decisions. This could be the first largescale deployment of Automated DR (ADR) in Europe, if Octopus wants to start shipping these hubs to its customers and can find a way to start integrating the household appliances, HVAC, and hot water systems with the nCube hub.
Octopus Energy currently uses some Behavioral DR (BDR) techniques, mostly via messages to its customers that will tell them when it is most beneficial to use energy. Its ‘plunge pricing’ periods will pay users for using energy, but much of those notifications are for times of the day when most people are asleep. Currently, it’s rather difficult to schedule a washing machine to run overnight, or for your boiler to fill the hot water tank, or the heating system to bring the house up to temperature ahead of its usual routine, and so these appliances can’t take advantage of the low or negative prices.
This is where the smart home gear will come in. Octopus currently offers three tariffs that have laid the groundwork for ADR technologies. The Tracker tariff sets a daily price that varies according to the wholesale market. Agile has prices that change every thirty minutes that are set out a day in advance, which allows customers to plan when it is cheapest to use energy in the home. The Go tariff has cheaper prices overnight, and is aimed at those with EVs to charge.
With nCube’s assets, Octopus can ship the hardware needed to fully embrace its variable pricing. This helps keep its customers’ bills lower, but also helps Octopus best purchase power on the wholesale market – keeping its own costs as low as possible. If it has a mechanism in place to time-shift its customers’ usage into the cheapest periods possible, in terms of its own power purchasing agreements, it can run a very lean ship.
Notably, Octopus looked like it had made a decision on this platform back in March, after announcing an Amazon Alexa integration, following in the steps of a number of US utilities that had tied their colors to the Amazon or Google smart home mast. However, Octopus buying nCube Home is a pretty clear sign that it has something more planned.
At £150, the nCube hub wasn’t exactly cheap. It did feature Amazon Alexa support, as well as Z-Wave, Bluetooth and WiFi, but it was a pretty basic unit – with an Ethernet and a power port in the back. Reviews of the unit found it to be pretty unexceptional – competent, inoffensive, but not exactly sock-off-blowing. Later updates added Zigbee, as well as Voice, Storage and Security modules, which you would stack according to need. It was an interesting form factor.
However, it seems that you can’t buy the nCube hardware anymore, as it has been pulled from the virtual shelves. It is not clear what happens to existing customers in terms of continued support, but it’s not even clear how many customers the firm had managed to sign up. nCube’s website is also currently down, and forces web browsers to return a security warning, and its Twitter account has no activity since September 2018, which isn’t exactly a good look.
No price has been given, but it does look like nCube was probably under duress. CEO and founder Phil Steele is joining Octopus as its Future Technologies Evangelist. With the 100 established product integrations, Octopus can get to work on its apparent ADR strategy.
“I first met Octopus Energy at its Agile Hackday last year, and saw the team shared my vision of a greener energy system, enabled by technology. I’m thrilled that Octopus have embraced nCube and am excited for the next stage in making homes and businesses smarter and cleaner,” said Steele.
Octopus Energy’s CEO Greg Jackson added ““With Octopus’s smart tariffs, customers get cheap green electricity when the wind blows, the sun shines and the grid is quiet. nCube’s technology means this whole process can be automated so customers get cheap, green energy without even thinking about it.”