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Managing Director, Clean Energy Strategy & Investments
Legal & General Capital
In the UK, heating and hot water for homes create 15% of our greenhouse gas emissions, and the average household emits almost six tonnes of carbon per year. If the legally mandated target of net zero emissions by 2050 is to be met, green tech will have a crucial role to play.
That’s why, in partnership with the specialist lender Hodge Bank, we’re making a multimillion-pound investment in Sero Technologies, whose digital tools help landlords, mortgage lenders and housebuilders plot a path to net zero for their homes.
Sero’s tools and expertise create cost-effective low carbon solutions for both new and existing homes, offering ongoing optimisation, as well as developing carbon-neutral new-build homes.
In the UK, 23 million homes still use carbon-intensive mains gas for heating, while two million have expensive-to-run electric heating systems. “The challenge of upgrading existing housing stock is growing as the urgency of solving the climate emergency becomes even greater,” says James Williams, CEO at Sero. “Improving the energy efficiency of our homes can provide long-term economic benefit and comfort to residents, as well as reducing carbon emissions”.
New homes are important too, but these must be fit for the future. Homes built by Sero are true grid zero carbon, meaning that they emit zero greenhouse gases. The company is also working to reduce the embodied carbon of its developments (total emissions throughout the entire life cycle of a building, including those arising from its materials and construction).
The challenge of upgrading existing housing stock is growing as the urgency of solving the climate emergency becomes even greater.
Sero is innovating on several different fronts. One example is ‘building renovation passports’, which are growing in popularity in other countries. These provide homeowners with a digital logbook of works done to a building, information about its construction and energy performance, and a “renovation roadmap” of decarbonising measures that can be carried out in the future.
Harnessing smart home technology, Sero has also developed an energy management system called ‘The BEE’ (Building Energy Engine). Its algorithm takes multiple data points into account, including weather and renewable energy generation forecasts, electricity prices, and occupants’ schedules and preferences. Using this data, the system is able to draw down energy from the National Grid when it is cheapest, and can even return surplus energy at peak times to help balance out surges in demand – all while keeping occupants comfortable and their bills to a minimum.
We’re delighted to be investing in a business that will play a major role in putting UK housing on a pathway to net zero, while providing significant job creation in the clean energy sector and supporting the UK’s SMEs.
Our £5.5 million joint investment will support Sero in its next stage of growth. The company is another example of our focus on sustainable investing and clean energy. The move follows our investment in The Kensa Group, one of the UK’s largest players in the ground source heat pump technology sector, in which we took a 36% stake in 2020.
We’re one of the UK’s largest housebuilders by volume and have committed to deliver net-zero operational emissions by 2030 across our residential portfolio. Sero will be able to work closely with our existing housing assets and businesses as we help achieve sustainable cities and communities.
“As an energy transition investor, we are aiming to support the scale-up of innovative businesses capable of delivering the solutions needed to reduce emissions throughout the economy, and Sero represents another perfect partner in this space,” says John Bromley, Head of Clean Energy at Legal & General Capital. “We’re delighted to be investing in a business that will play a major role in putting UK housing on a pathway to net zero, while providing significant job creation in the clean energy sector and supporting the UK’s SMEs,” he adds.
Both Sero and Hodge are, in the words of Hodge CEO David Landen, “proud Welsh businesses”, and L&G is proud to be investing in Wales: our £475m investment in the regeneration of Cardiff’s Central Square is the largest privately funded development in the country, and we’re one of the city’s largest employers. In November, we announced our partnership with Wales’ Social Enterprise Academy, working to help businesses bounce back from the pandemic and continue supporting their communities. Back in 2019, we invested £95 million in Newport City Homes, supporting its plan to deliver 1,000 new affordable homes in the city over four years.
As the 2050 deadline for net zero emissions draws closer, L&G will continue to invest in projects and businesses working to tackle the climate crisis. We are delighted to be working with the Sero team to grow their business, supporting further job creation in the local area and scaling an innovative Wales-based SME.