Kensa has introduced a new funding model, separating the cost of ground source heat pumps and ground arrays, offering housebuilders ‘ground source for the price of air source’ – Lucy Dixon spoke to Kensa Contracting’s Commercial Director, Stuart Gadsden, to find out more.
Tell us about your new ground source heat pump funding model
Following several successful trial projects with housebuilders – Kensa can now finance the ground array infrastructure and that means you can effectively get ground source for the same cost as an air source heat pump.
In this arrangement, the underground infrastructure is owned by Kensa Utilities and there’s an ongoing annual connection fee, or service charge, which could be passed on to the residents. Ground source heat pumps are more efficient and so have lower running costs compared to air source heat pumps. The lower ongoing maintenance and servicing costs and the longer lifespan of ground source heat pumps ensures the lifetime ownership costs of the ground source are less than an air source heat pump.
Has cost traditionally been the main barrier to the take up of ground source?
In the past we were having conversations with housebuilders and fundamentally ground source heat pumps were not their first choice. If the legislation says they can install a gas boiler and that’s the cheapest thing for them to do, why would they do anything different? However, housebuilders are now having to think about meeting the Future Homes Standard and heat pumps offer the best route to compliance. But the upfront capital cost of installing ground source meant they were more likely to turn to air source. This funded offer levels the playing field, meaning housebuilders can get all the benefits of ground source for the same price.
So your funding means the housebuilder doesn’t have to pay any more and the resident ends up with a better performing system?
Yes. Housebuilders are understandably driven by cost and certainly in the discussions that I’ve been having with the private housebuilders, the thing that’s got them interested in ground source heat pumps is that they will be able to get the benefits, such as reliability, higher efficiencies, lower running costs and minimal maintenance requirements, without it costing them any more.
What about social housing?
Social housing providers have a duty of care to their residents. They don’t want people to be in fuel poverty. And they have targets around carbon reduction. Therefore, even though the cost of ground source is still a barrier to them, they are thinking more long term, over the lifetime of a housing asset – and ground source heat pumps offer the lowest lifecycle costs. With the funded offer, the standing charge could be an issue for social housing providers, as they want to reduce costs for residents, so many would still fund the project upfront themselves or pay the standing charge themselves, because then they know they’ve got absolutely the lowest running costs for their residents. The funded offer makes it possible for social housing providers to make their limited budgets stretch further and decarbonise more homes whilst taking more residents out of fuel poverty.
Why should they go for ground source?
The lowest carbon form of heating is a ground source heat pump system – that’s the driving force. Plus it’s more efficient and reliable than air source, more cost effective and accessible than hydrogen. This funding offer is sparking interest and giving Kensa the opportunity to have these conversations with private housebuilders and large developers. It’s an opportunity to get them to consider our solution. Clearly, air source heat pumps are going to be installed, but we want to make sure that people still understand there’s a place for ground source.
Is it open to all types of properties?
The developments need to be of a certain size, typically a minimum of 20 to 30 units, which means we can work on most new build projects in the UK and with all sizes of organisation.
elemental and Kensa are hosting a webinar about this ground source funding model – and funding options that might work for social landlords on 1st June. Free registration is: crowdcast.io/c/lowest-cost-heating-social-housing
