Backing largest ever UK investment in ground source heat technology
A visualisation of a heat pump
As part of Wandsworth Council’s commitment to rebalance the borough’s pension fund towards green investment it has made major investments in carbon reduction technology.
It has pledge to reduce its pension fund’s investments in fossil fuel-based industries and switch funds to green energy projects. One of these is Britain’s biggest investment in the UK’s ground source heat pump industry.
Last year the fund announced plans to invest up to £80m in two energy transition funds based on non-traditional renewable projects such as battery storage, green hydrogen and other carbon reduction investments.
One of these funds - the Octopus Energy Transition Fund – is using those funds to invest £70m in ground source heat pump business Kensa Group – as part of efforts to replace gas boilers with more eco-friendly heat pumps.
Kensa Group is the country’s largest manufacturer and installer of ground source heat pumps and this investment the biggest ever made in Britain’s ground source technology. It will allow Kensa to rapidly expand and install 50,000 ground source heat pumps a year by 2030. The investment could help create around 7,000 jobs by 2030.
The UK is targeting 600,000 heat pump installations a year by 2028. 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 reducing the country’s reliance on gas.
Wandsworth’s total fund value is £2.7bn. It has set a net-zero target of 2050, with the goal of achieving a 60 per cent reduction in emissions by 2030.
If the fund aims to perform adequately any shortfall would by law need to be made up by local taxpayers.
Wandsworth and Richmond Councils operate a joint pension fund following the 2016 decision to combine the two sets of employees into a shared staffing arrangement (SSA) with a single workforce serving the two councils. The fund is supported by contributions from employees – with most members of staff contributing more than seven per cent of their salaries into the scheme.
The Chairman of the Joint Pensions Committee Norman Marshall said, “We continually strive to improve the performance of our pension fund so that it can fund our commitments without placing the burden on local taxpayers.
“Investing in renewable energy is not just good for the environment. It delivers a good return for the fund and will also help deliver energy self-sufficiency and security which is crucially important given the reprehensible actions of Russia in Ukraine.”
Judi Gasser, Wandsworth’s Cabinet Member for Environment added, “We have a clear manifesto commitment to achieve a 60 per cent reduction in the carbon footprint of the council’s pension fund by 2030. Switching historic investments away from fossil-fuel oriented industries to cleaner and greener energy sources is just one of the ways we are delivering on that commitment.”
Council finance department assistant director Paul Guilliotti added, “We are pleased to be able to invest in assets that meet the Fund’s investment objective and deliver real benefits to society. Our approach is to ensure we have a fully diversified portfolio aimed at achieving net zero by 2050 without impacting on returns or undertaking unnecessary risk.”
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 heat pump economy. 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.”
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