The UK’s first investor-funded ground source heat pump network has begun installation in South Wales, marking the start of a new £100 billion asset class in clean energy infrastructure.
The network, which is being installed by Kensa and financed through funds managed by Octopus Energy Generation, will provide renewable heating for 114 new homes at the Parc Eirin development in Tonyrefail, which are being delivered by Tirion Homes.
Unlike traditional heating systems, the upfront cost of installing underground heat pump infrastructure – pipes buried beneath the development that draw renewable heat from the ground – is covered by private investors, including pension funds. Each household then pays a standing charge to connect, similar to existing utilities like water or broadband.
This ‘funded network’ approach makes ground source heat pumps more accessible by removing the barrier of high installation costs, which have previously limited adoption. The infrastructure itself has a lifespan of over 100 years, creating a long-term, stable investment opportunity for institutional backers.
Tamsin Lishman, CEO at Kensa, said: /Kensa’s unlocking of third-party institutional investment is a major milestone for ground source heat pump deployment and will unlock access to deliver energy-secure heating for millions of homes, whether new build or existing homes.
‘By turning ground source infrastructure into an attractive investable asset for pension funds, we can address the financial barriers to adoption and empower the installation of highly efficient and affordable heating and hot water systems that cut both energy bills and carbon emissions.’
By 2040, the model is expected to support connections for 250,000 homes a year across the UK. At Parc Eirin, every property will be fitted with a compact Kensa Shoebox NX heat pump, providing clean heat at lower running costs and with dramatically reduced carbon emissions compared to gas boilers.
Octopus Energy Generation, which last year invested £70m in Kensa alongside Legal & General, recently secured £330m from Smart Pension to channel into projects such as this.
Alex Brierley, Co-Head of Octopus Energy Generation, said: ‘Decarbonising heat is one of the biggest hurdles on the UK’s path to net zero, and it calls for practical, scalable solutions. This project shows how we can do things differently – harnessing proven technology to deliver clean, affordable warmth from the ground up, without the usual upfront costs.
‘Working with Kensa, we’re proving a model that can grow to heat communities nationwide, helping households save money while moving the UK closer to a low-carbon future.’
Work at Parc Eirin is due to finish by the end of 2027, with homes also featuring solar panels and battery storage alongside the new heating system.
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