Pump it up: Octopus Energy and Legal & General make Britain’s biggest investment in ground source heat pumps

• £70m investment to scale ground source heat pump business Kensa Group
• Further demonstrating Legal & General Capital’s dedication to scaling innovative businesses that reduce emissions
• Next step in Octopus’ drive to replace polluting gas boilers with heat pumps
• Investment will create 7,000+ green jobs in Britain by 2030

 This marks the biggest investment ever made in ground source tech in Britain. It will allow Kensa to rapidly expand and install 50,000 ground source heat pumps a year by 2030. The move will drive down costs of heat pumps and reduce reliance on polluting gas boilers.

The UK is targeting 600,000 heat pump installations a year by 2028 as part of wider efforts to decarbonise the heating industry and realise its net-zero ambitions. Unlocking investment through deals like this will help rapidly grow the country’s heat pump industry, meet net zero targets and deliver jobs. Kensa expects its growth to create more than 7,000 green jobs in the UK by 2030.

By harnessing freely available heat energy in the ground or water, electrically powered ground source heat pumps work like a fridge in reverse. They produce around four units of clean heat for every one unit of electricity they consume, making them much more efficient than gas boilers. They’re recognised by the Government as a key solution to tackling heating emissions and weaning the country off gas.

This investment 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 house builders, housing associations, and non-domestic customers Kensa’s ‘Networked Heat Pumps’ solution at a lower cost. This effectively creates a new renewable energy asset class – kick-starting growth towards a sector that could exceed £1bn by 2030.

This latest Kensa deal heralds Octopus Energy Group’s entry into the ground source heat pump market and builds on Octopus’ existing air-source heat pump expertise.  Octopus' R&D centre is leading the way in creating a thriving renewable heating economy, from training, engineering, and installation. Octopus Energy Generation - which manages £6bn of renewable assets and energy transition projects - makes this investment as the first deal from its new £500m Octopus Energy Transition Fund (OETF), which is currently raising capital from investors.

As an energy transition investor, Legal & General Capital (LGC) supports the growth of a ‘new generation’ of energy providers and other early-stage, innovative companies whose work supports the transition to net zero. It does so by working with organisations ranging from start-up and scale-up companies to established clean energy investors and asset managers. Investees—called ‘partners’—are supported both with financial investments and with business expertise and non-executive support to help them scale up jobs, clean technology, renewable energy, and low-carbon infrastructure.

The investment, which is subject to applicable regulatory approval, is expected to complete in the third quarter of 2023.