Octopus Energy Generation and Legal & General Investment are investing £70million in a ground source heat pump firm, in a move that they claim will drive down the cost of switching to green energy for customers.
The money will be invested in manufacturer and installer The Kensa Group, and is the biggest investment ever made in ground source heat pumps in Britain.
Octopus and L&G said it would allow Kensa to rapidly expand and install 50,000 ground source heat pumps a year by 2030.
The devices are a more energy-efficient replacement for gas boilers, but at the moment they cost tens of thousands for homeowners to buy and install.
Ground source heat pumps draw heat from the ground outside your home to heat your radiators or under-floor heating
Ground source heat pumps are also significantly more expensive than the main alternative, air source heat pumps. A ground source system can cost anywhere from £15,000 to £30,000.
Property owners also need to have land outside for the system to be installed, so they are not suitable for every type of home.
The UK is targeting 600,000 heat pump installations a year by 2028 as part of wider efforts to decarbonise the heating industry.
Kensa expects the investment to create more than 7,000 green jobs in the UK by 2030.
British Gas has also said it is hiring 3,500 engineers over the next decade to train in green skills, such as installing heat pumps.
British Gas and Octopus already offer some of the most competitive air source heat pump prices on the market.
But Kensa says this investment from Octopus and Legal & General will make heat pumps even more accessible to more properties – including retrofits for social housing, terraced housing, and non-domestic buildings.
As part of the deal, finance will be provided to offer housebuilders, housing associations and non-domestic customers Kensa’s ‘Networked Heat Pumps’ solution at a lower cost.
Commenting on the deal, Zoisa North-Bond, chief executive of Octopus Energy Generation – the investment arm of the utility company – said: ‘The heat pump revolution is off to a flying start: it’s a tried and tested replacement for gas boilers and can drive down consumers’ energy bills for good.’
The investment deal is expected to complete in the third quarter of 2023.
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