Transforming heating: £100 billion clean energy asset class to power homes

The UK’s first investor funded ground source heat pump network has broken ground in South Wales. Installed by British heat pump manufacturers Kensa and backed by funds managed by Octopus Energy’s renewable arm, Octopus Energy Generation, the project showcases a renewable heating method set to power millions of homes and kickstarts a new £100 billion UK asset class in clean energy infrastructure.

Funded networks, like the one being installed for 114 new homes at the Parc Eirin development in Tonyrefail, will be a cornerstone of the UK’s energy transition. By 2040, 250,000 homes a year are expected to connect to one of these networks.

The funded network model creates a new, subsidy free way to install clean heat, making it easier than ever for millions of households to benefit from the high efficiency and reliability of ground source heat pump technology.

Once complete, each Parc Eirin property will be fitted with a compact Kensa Shoebox NX ground source heat pump, housed inside the property like a traditional gas boiler. This shared underground infrastructure mirrors the way existing utilities like water, gas, and broadband are delivered, where the customer doesn’t have to pay the upfront installation cost.

The system uses underground pipes connected to a compact heat pump inside each home, offering the familiarity of a gas boiler but with lower running costs and dramatically reduced carbon emissions. Kensa’s high efficiency ground source heat pumps can deliver low carbon heat, cut energy bills, ease pressure on the grid, and work for virtually any property, from new builds to terraced houses and top floor flats.

The renewable heating method has been successfully fitted in thousands of new and existing UK homes, including over 100 other properties at Parc Eirin, completed during a previous phase of the development. Each new property from this latest phase will feature a ground source heat pump, solar panels and battery storage, with all works expected to be completed by the end of 2027.

Tirion Homes, alongside contractor Morganstone, is delivering the new homes. The not for profit housing provider received funding from the Development Bank of Wales and the Welsh Government to complete this phase of the Parc Eirin development. Private investors, including pension funds, will fund the long life heat pump infrastructure, expected to last over 100 years, with households paying a standing charge to connect and use it.

Octopus Energy Generation’s investment at Parc Eirin comes after it received £330 million from pension providers, Smart Pension, to support and invest in these projects. It also follows a £70 million joint investment in Kensa from Octopus Energy Generation and Legal & General in 2023.

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.

‘At Kensa, we are proud to be working with Tirion Homes, Octopus Energy Generation and the Welsh Government on this project. Parc Eirin is a flagship initiative showing how we can deliver game changing renewable heating at scale.’

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 are proving a model that can grow to heat communities nationwide, helping households save money while moving the UK closer to a low carbon future.’

David Ward, CEO at Tirion Homes, said: ‘We are delighted to be delivering the heating solution for Parc Eirin with Kensa with the support of the Welsh government. The delivery of renewable energy infrastructure remains a huge challenge, particularly in marginal locations, where project viability is challenging. Tirion has been working hard to identify opportunities to reduce the cost burden of energy infrastructure, and the Kensa model provides a commercial route to delivering our future heating needs without prohibitive up front costs to consumers, whether they be house purchasers or those renting homes.

‘Tirion is at the forefront of developing new partnerships and collaborating with energy investors and looks forward to rolling out these technologies with our partners on all our future schemes.’