Legal & General Capital has acquired a 36 per cent stake in heat pump firm Kensa as it amasses a portfolio of companies aiming to decarbonise heat and transport.
Legal & General increased its stake in electric vehicle charging company Pod Point when the firm was acquired by EDF earlier this year.
Announcing the Kensa deal, which is involved with another EDF company, Pivot Power, in the Oxford ‘Superhub’ project, L&G said it is “investing in sub-scale industries that it can use its platform to grow rapidly in the post-crisis period”.
Heat pump growth in the UK to date has been disappointing. However, many, including Legal & General, believe the sector is on the cusp of a boom. The company points out that government is set to ban new homes from taking fossil fuel heating within five years, creating a large addressable market. Meanwhile, mooted changes to carbon factors within Building Regulations could end up tipping the scales towards heat pumps over other technologies.
Retrofitting, while more challenging, also represents a “significant” market opportunity, according to the firm. Kensa’s new factory in Cornwall, ready to produce up to 30,000 units per annum, suggests some confidence in incoming market growth.
Legal & General’s housing business spans build-to-rent, build-to-sell, later living and affordable housing and the company aims to make all its new housing stock “operationally net carbon neutral between now and 2030″.
For starters, Kensa, which specialises in ground source heat pumps, looks set to deploy its technology across Legal & General’s retirement homes business. The Inspired Villages Group currently operates seven communities, and is set to commence building one of the UK’s largest at Legal & General’s former HQ in Kingswood, Surrey.
Scale and pace
“We invest our capital in clean energy assets, businesses and technologies which will help accelerate the UK’s progress to a low-cost, low-carbon economy,” said Legal & General Capital CEO, Kerrigan Procter.
“Our investment in Kensa will enable the business to scale up at pace, bringing vital capacity to the sector. Our partnership marks a major milestone for Legal & General as we look to invest in the transformation of the energy system, and also add critical capabilities to deliver our own ambitious target to achieve net zero homes.”
Procter added that “tackling climate change should dominate the agenda” post Covid-19, with the company anticipating “further accelerated growth” within the green economy.
Kensa Group CEO, Simon Lomax, said the “significant investment” from Legal & General will be harnessed in “accelerating Kensa Heat Pumps’ research and development programme, expanding Kensa Contracting’s district heating shared ground loop array activities, and providing zero-cost ground arrays via innovative funding programmes through Kensa Utilities”.
Kensa, Oxford City Council and Pivot Power will speak at The Energyst’s Delivering Net Zero event, 27-28 October, Silverstone. It’s free to attend, but you need to register at The EV Event or The Energyst Event.