Octopus Energy Generations’s Zoe Reich speaks to PMP about why the next phase of the energy transition depends on investment in technology and why investors should view it as a commercial opportunity rather than a policy-driven necessity.
Octopus Energy Generation is the $8bn asset manager of Octopus Energy. Octopus Energy Generation invests third-party LP capital to target market leading returns with impact, leveraging the operational insight from the wider group.
Zoe Reich is the founding partner of the growth equity strategy, focused on backing step change, technological solutions for the expansion and acceleration of the clean energy value chain.
Now a strong foundation of renewables generation has been established, Reich argues the next stage of investment requires technologies that enables renewables to operate at scale – from optimised generation, grid integration and management to demand response measures.
Reich will be speaking at Longview Networks’ Institutional Venture & Growth Forum at the London Stock Exchange on 24 September.
PMP: How has the outlook for the energy transition been evolving?
Zoe Reich: We’ve moved from a world where the transition was driven by regulation to one where it’s commercially led. The commercial value of these technologies has expanded dramatically, making this an exciting time to invest.
Renewables generation is no longer novel. Wind and solar are mature asset classes, and they’re cheaper to build than oil and gas projects. With that base in place, the challenge now is to enable a robust yet flexible grid optimised for the unique demands of renewables. The largest change is switching from a system where supply is controlled by demand to a system where supply is variable according to when the wind is blowing and the sun shining. Substantial technological adoption is therefore required to adopt novel storage mechanisms, enable distributed generation and manage flex.
PMP: Portugal recently had major grid issues. Does the UK need to invest in technologies to avoid the same?
Reich: Exactly. Extreme weather impacting grid management is just one factor, and one that we will see more of as extreme weather events are becoming more common. Other significant factors exacerbating demand include needs of cooling, data centers, AI, industrial activity and population growth. Energy demand could increase by as much as 70% by 2050. All of this makes enabling technologies for the clean energy value chain both critical and commercially attractive, which are strong indicators of potential for investment returns.
The energy transition is enabling affordable, secure and sustainable energy
Octopus Energy Generations’s Zoe Reich
PMP: How dependent are these investments on government policy?
Reich: Policy plays a strong role and it was certainly the starting impetus for the energy transition. Policy has and will continue to dictate market conditions, legal operating frameworks, investment de-risking and support for new innovation and R&D.
However, on from policy, the critical point is that the rollout of technologies for the energy transition is commercial. The energy transition is enabling affordable, secure and sustainable energy. This is why globally, despite a scale back on net zero commitments, clean energy deployment and the associated technological adoption continues to break records. So far in 2025, 93% of new power capacity was clean. Targets have been set, and now the expansion is driven by market forces.
PMP: What is the investment profile of these opportunities?
Reich: We focus on growth equity. Around 45% of the technologies needed for grid expansion are at the pre-scaling stage – proven products, with a strong demonstrated market need that require scale-up capital.
The scale-up stage in the UK and Europe has historically been underserved, threatening the adoption of such essential solutions and in turn the sustainable growth of UK plc. Lower estimates place the growth stage gap at £5bn a year, higher put closer to £15m. Both are significant. We have a lack of domestic, growth equity funds with ticket sizes £10-40m that can support our step-change, deep-tech champions through to scale. In 2024, 30% of UK deep tech deals had no UK investor. Those that did were heavily biased towards the early stage, with companies needing to go overseas to scale. Our current financing system has created a critical drain on both essential innovation and talent.
The reasons for this growth equity gap include an average small fund size of £120m, forcing managers towards the earlier stages of investment. This is in part due to historic sources of LP capital, and the challenge of underwriting adoption pathways in heavily regulated, diverse markets. We tackle both of these with our strategy, operating under the fastest growing clean energy company in the world providing unparalleled access, and being built for scalable DC schemes with an evergreen structure. Our strategy cornerstone is a UK DC pension fund.
PMP: Do you focus primarily on the UK?
Reich: The UK is a key deployment market for us. The UK is a strong origination hub, thanks to its university ecosystem, depth of novel research, technology transfer network and thriving early-stage VC scene. The UK consistently receives between 30-50% of all early-stage VC capital in Europe due to such origination strength. Many spinouts here have the potential to be step-change companies. But these are global challenges, so we’d never back a solution that only works in the UK. The market isn’t large enough to deliver venture-style returns.
PMP: How important is software in the energy transition?
Reich: It’s about both hardware and software. In the technology stack of solutions, software sits at the top and mid layers, providing the markets and platforms translating capabilities to value, as well as much of the automation and optimisation ability. Hardware is the base layer, enabling measurement and physics level transformation. Hardware and software together are critical pieces of the puzzle.
The last few years have been transformational for the industry. Hardware always used to be heralded as the more challenging investment opportunity due to getting innovations to work in the field and complex supply chains, among other challenges. However, the software landscape is changing at lightening pace, including the advances in AI and large language models. What would have a long-term, defendable strategic edge in software now can erode within weeks. The winners will be those who integrate into others’ product lines or become foundational to the sector.
Octopus Energy provides a good example. Kraken and Kraken Flex are B2B software platforms that are foundational to many other utilities in the UK and beyond. They have helped scale the business to a £9 billion valuation in under a decade.
PMP: Software is less capital-intensive than hardware. Does that mean lower investment requirements?
Reich: Generally yes, but not always. Hardware can be capex-heavy, but major software rounds are happening, especially for novel algorithm development. Talent costs are substantial. While scaling software can require less capital, we’re still seeing big ticket sizes. The broader point is that Europe needs more growth-stage investors across both hardware and software to keep its champions delivering value.
PMP: Does the capital gap mean higher potential returns for investors?
Reich: That’s one reason we’re launching our growth equity strategy. Working under an operating company with presence in 30 countries and 70 million customers gives us unique insight into adoption profiles. Growth equity in this space is difficult – you need to understand regulation, customers and infrastructure across markets. That’s why not everyone can access the opportunity. But for those who can, it’s compelling.
PMP: How is the focus of energy transition changing?
Reich: Too often the transition is tied purely to net zero. That’s unhelpful, because if administrations roll back targets, people assume the transition is stalling. In reality, it’s about lowering energy costs, improving stability – avoiding shocks like those from the Russia–Ukraine conflict – and improving health by reducing fossil fuel use. The fact that this also drives net zero is the added benefit.
PMP: Can renewables reduce energy costs as penetration grows?
Reich: Absolutely. The cost of building new renewable sites is already lower than oil and gas. More importantly, renewables provide stability. The Ukraine conflict caused energy bills to rise 50% in a matter of months. Local renewables reduce that volatility, which is invaluable for economies and consumers alike.
Reich will be speaking at Longview Networks’ Institutional Venture & Growth Forum at the London Stock Exchange on 24 September.