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
• Next step in Octopus’ drive to replace polluting gas boilers with heat pumps
• Further demonstrating Legal & General Capital’s dedication to scaling innovative businesses that reduce emissions
• Investment will create 7,000+ green jobs in Britain by 2030

London, Tuesday 16th May 2023 - Octopus Energy’s generation arm and Legal & General Capital are turbocharging Britain’s heat pump rollout by investing £70 million in the country’s leading manufacturer and installer of ground source heat pumps, The Kensa Group.

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 economy. 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 over 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. Finance will also be provided for Kensa to offer house builders, housing associations and non-domestic customers their ‘Networked Heat Pumps’ solution at a lower cost. This effectively creates a new renewable asset class, kick-starting a sector that could exceed £1bn by 2030.

Zoisa North-Bond, CEO of Octopus Energy Generation, 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. Backing Kensa will help rapidly expand Britain’s fast-growing ground source heat pump industry. This deal is a huge milestone for our exciting new energy transition fund, as we invest in ambitious companies rolling out tech to turbocharge the clean energy shift.”

Dr Matthew Trewhella, CEO of The Kensa Group, said: “This is a monumental moment for ground source heat pumps. This investment will help unlock Kensa’s vision of a mass transition to low carbon heating by replacing the gas grid with its 21st-century equivalent - an ambient temperature heat network. Our approach harnesses the power of investment capital funding infrastructure, reduces the strain on our electricity grid and enables a just transition - keeping heating costs low and addressing fuel poverty simultaneously with climate change mitigation. We’re extremely proud to partner with Octopus Energy and Legal & General Capital who show incredible leadership in bringing about our low carbon energy future.”

John Bromley, Managing Director – Clean Energy, at Legal & General Capital, said: “Legal & General Capital continues to invest in leading energy transition businesses capable of delivering significant economic, social, and environmental benefits for our economy. LGC first partnered with Kensa in April 2020 with the shared aim of scaling up the deployment of ground source heat pumps in the UK through their long-term solution that is highly efficient and reliable. Since our initial investment, they have grown quickly, opening a new factory and delivering some prestigious new-build and retrofit installations across the UK. We are delighted to make our third significant investment in Kensa together with Octopus Energy Generation, recognising the significant role Kensa can play in reducing UK dependence on natural gas through a transition to low-carbon heating.”

This latest Kensa deal heralds Octopus Energy Group’s entry into the ground source heat pump market, and complements Octopus’ existing air source heat pump expertise. Octopus’ heat pump R&D centre is leading the way in creating a thriving low carbon 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.

OETF includes a cornerstone investment from Wandsworth Pension Fund. OETF is backing companies rolling out technologies decarbonising the economy, with projects in the pipeline globally in storage, grid and low carbon transport, green hydrogen and e-fuels.

This latest Kensa investment is subject to applicable regulatory approval and is expected to complete in the third quarter of 2023.

-ENDS-

Notes to editors:

Sources:

*The Climate Change Committee and the Government’s Heat and Buildings Strategy

Press Contacts

Octopus Energy Group

Amy Boekstein

PR Manager

+44 (0)20 4530 8369

amy.boekstein@octoenergy.com

Legal & General Capital

Harriet de Beaufort-Suchlick

Senior Communications Manager

+44 7717 533079

Harrietdebeaufort.suchlick@lgim.com

The Kensa Group

Katie Maundrell

Head of Content and Communication

07949 446936

katie.maundrell@thekensagroup.com

About Octopus Energy Generation

Octopus Energy Generation is driving the renewable energy agenda and building green power for the future. This means reshaping the market by leading the transition to a cleaner, greener future through renewable projects connected more deeply to customers and businesses.

As one of Europe’s largest investors in renewable energy, its fund management specialist team launched in 2010 with a mission to accelerate the transition to a future powered by renewable energy. This team manages 3.2 GW of renewable energy assets like wind and solar farms across 13 countries, worth £6bn. These renewable projects generate enough green energy to power 2 million homes every year, and is the equivalent of taking over 1 million petrol cars off the road. The business also launched the Fan Club in the UK 2021, the world's first local energy tariff that provides cheaper, greener energy to customers living near local wind turbines when the wind blows, with a discount of up to 50%. Thousands of people have got in touch asking for the Fan Club in their community. For more information, check out our website.

About Octopus Energy Group

Octopus Energy is a global energy and technology group, driving the affordable, green energy system of the future. Its operations span 14 countries and the entire energy value chain. The group invests in, builds and flexibly manages renewable energy, operating a £6 billion portfolio of projects – one of Europe’s largest.

Octopus serves 5.3 million customers through its retail arm, and has licensed its advanced data and machine learning platform, Kraken, to support 30 million customer accounts worldwide through licensing deals with energy companies, including EDF, E.ON and Origin Energy.

Kraken enables Octopus to drive the electrification of heat and transport through smart tariffs and innovative cleantech. Backed by pension funds, investors and energy giants, Octopus Energy Group businesses deliver cheaper, greener energy and cutting-edge tech to countries and customers worldwide. For more information, check out our website.

About The Kensa Group

Established in 1999, privately owned, and headquartered in Truro, Cornwall, the Kensa

Group is a fast-growing collection of award-winning British businesses involved in the

manufacture and installation of ground source heat pumps and the ownership of associated

underground infrastructure.

• Kensa Heat Pumps remains the UK’s only manufacturer of ground source heat pumps and is the long-established market leader according to BSRIA annual reports.
• Kensa Contracting is an a ground source heat pump delivery partner and contractor that focuses on larger-scale new build, and social housing retrofit and non-domestic programmes. It has pioneered Networked Heat Pump infrastructure that allows ground source heat pumps to be installed at scale and in multiple occupancy dwellings, including heating tower blocks with their ‘shoebox heat pump’ small enough to fit under a kitchen sink - connected to ‘shared ground arrays’.
• Kensa Utilities is an infrastructure asset company that funds owns and maintains shared ground loop arrays that serve heat pump installations. Through its funded offer Kensa Utilities provides these assets at zero upfront cost to the housebuilder or social landlord.

In over two decades, Kensa has saved over 1 million tonnes of carbon through ground source ground source heat pump installations. The Kensa Group is partly owned by Legal & General Capital, part of Legal & General PLC and Octopus Energy Generation.

Kensa would like to thank our Corporate Financial Advisors, PMB Capital and EcoPragma

Capital LLP, and our legal team at Tozers and Lux Nova.

About Legal & General Capital (LGC)

Legal & General Capital (LGC) is Legal & General Group’s alternative asset platform, creating assets for Legal & General Retirement and third-party clients in order to achieve

improved risk-adjusted returns for our shareholders. LGC has built its capabilities in a range

of alternative sectors, including in residential property; specialist commercial real estate;

clean energy; alternative credit; and venture capital, which are all supported by long-term

structural growth drivers, meet a financing gap and respond to a scarcity of supply that is

underpinned by enduring societal needs.

Its purpose is to invest society’s capital for society’s benefit. Investing in the real economy

and supporting the Group’s focus on climate and inclusive capitalism, LGC’s investments

create jobs, change lives and contribute towards a net zero carbon future. Legal & General has invested over £29bn in levelling-up regional economies, including through major UK- wide regeneration schemes and has recently made a commitment to enable all its new

homes to operate at net zero carbon emissions from 2030.