Kensa and Octopus Kick Off Ambitious Project to Bring Low-Carbon Heating to UK Homes

Image Credit: Kensa

In a move that signals a significant step forward for clean energy infrastructure in the UK, construction has officially begun on the country’s first investor-funded ground-source heat pump network. Located in South Wales, the project is being installed by British heat pump manufacturer Kensa. It is supported by funds managed by Octopus Energy Generation, the renewable investment arm of Octopus Energy.

This development is more than just a milestone for renewable heating. It marks the launch of what could become a £100 billion asset class in the UK, as investor-backed heat infrastructure begins to scale. The model being deployed here enables the large-scale, subsidy-free rollout of clean heating solutions, laying the groundwork for millions of households to transition away from gas and toward low-carbon alternatives.

The pilot network is being installed at Parc Eirin, a residential development in Tonyrefail. This phase includes 114 new homes, each equipped with a compact Kensa Shoebox NX ground-source heat pump. These units are installed inside each property, just like a traditional boiler, while the shared underground network that supplies the heat remains hidden beneath the surface. Residents benefit from renewable heating without needing to shoulder the upfront installation costs.

According to Kensa, this kind of network could soon become a cornerstone of the UK’s clean energy future. By 2040, the company projects that 250,000 homes a year will be connected to similar systems. And while Parc Eirin is the first of its kind, it is unlikely to be the last.

The technology behind it is remarkably straightforward. Underground pipework taps into the stable temperatures below the earth’s surface, transferring that energy into homes via a heat pump. The result is a heating system that resembles a conventional gas boiler in appearance but operates on clean energy, reduces operating costs, and lowers emissions.

This isn’t the first time Parc Eirin has turned to renewable energy sources for heating. Over 100 homes on-site were already equipped with ground-source heat pumps during an earlier phase of the development. The latest batch of properties will now include not only heat pumps but also solar panels and home battery storage systems. The entire project is expected to be completed by the end of 2027.

Tirion Homes is delivering the homes in partnership with contractor Morganstone. The Welsh Government and the Development Bank of Wales have provided funding for this phase. However, what makes this model unique is the role of private investors. Long-term infrastructure backers, including pension funds, will own and maintain the underground heating systems. Households will pay a standing charge to connect, similar to how people pay for other utilities, such as broadband or electricity.

This isn’t Octopus Energy Generation’s first significant move in this space either. In 2023, the company joined forces with Legal & General to invest £70 million in Kensa. More recently, it received £330 million from Smart Pension to continue scaling up its clean energy initiatives.

Taken together, these developments point to a clear trend. As the UK moves to decarbonise heat, one of its biggest remaining climate challenges, the intersection of private capital, scalable infrastructure, and innovative clean tech may be the key to getting there.