Legal & General has provided £22m debt finance to HeatRHIght, a renewables funding scheme that supports the delivery of air source heat pump technology to the social housing sector.
This long-term financing will accelerate HeatRHIght’s delivery of low carbon heating to Housing Associations across the UK.
As an investor, house builder and long-term owner, Legal & General said it was taking action to play its part in addressing the challenge of reducing emissions from the built environment.
The housing sector is a major contributor to carbon emissions, with heating and hot water for UK homes accounting for 25% of total energy use and 15% of the UK’s greenhouse gas emissions. If the UK is to meet its climate targets, the housing sector requires some of the most radical and comprehensive overhauls of any industry.
With this long-term financing in HeatRHIght, alongside Legal & General Capital’s corporate investment in ground source heat pump firm Kensa, Legal & General has invested in two of the most efficient forms of heating technology using electricity. This presents an immediate opportunity to enable positive change, reducing running costs as well as carbon emissions.
Today, over 23 million homes in Great Britain are using carbon intensive gas as their heating fuel; two million homes electrically heated; and the remaining two million using heating oil or other fossil fuel systems. In its ‘Ten Point Plan’, the UK Government set a target to install 600,000 heat pumps every year to 2028, as part of a bid to ensure homes are greener, warmer and more energy efficient. Both air and ground source heat technology will play a vital role in the UK’s journey to a ‘Green Industrial Revolution’.
Matthew Taylor, head of alternative debt, LGIM Real Assets, said: “As the UK navigates its way through the fallout of the coronavirus pandemic, future-proofing our society has never been more important. Legal & General is delighted to have made another investment in the low carbon heating space, an area where we intend to increase our exposure in the coming months.
“As we continue to invest in businesses where we can deliver social and economic good, whilst driving value and offer secure returns, clean energy technology has become an increasingly attractive match for our clients long-term pension commitments.”
Bill Hughes, head of real assets, LGIM, said: “Climate resilience must be embedded into the heart of investment decision-making, which under the challenges presented by Covid-19 resonates strongly with the emphasis on Building Back Better.
“As one of the largest managers of real assets in the UK, we have a duty to invest in a more resilient and responsible future. With heating representing such a significant proportion of the UK’s total energy use, investment in the delivery of low carbon heating solutions will play a vital role in how we future proof our society and progress to a net zero carbon future.”
Daniel Gardner, managing director of HeatRHIght, said: “Legal & General’s meaningful facility for our renewables funding solution provides capital payments to Registered Providers and Registered Social Landlords, to enable improvements in energy efficiency and a reduction in fuel poverty. Partnering with Legal & General significantly assists our mission to become a leading energy efficiency finance provider to the social housing sector.”