Decarbonising heat is one of the biggest challenges to face in meeting our climate targets.
Currently, heating is responsible for a third of the UK’s greenhouse gas emissions. There is an urgent need to deliver a mix of new, low-carbon heating solutions to meet our legally binding target to end the UK’s contribution to climate change by 2050.
Cheltenham-based Rendesco Group is dedicated to combating climate change through renewable heat installations and has been on a mission to tackle this challenge head on. Rendesco is one of the UK’s largest owner-operators of ground source heat pump systems and a leading designer and installer. A ground source heat pump effectively performs the same role as a boiler in a central heating system but uses ambient renewable heat from the ground rather than burning fossil fuels. The pump requires electricity to run, but uses less electricity than the heat it produces, therefore it generates lower CO2 emissions.
Triodos Bank first worked with Rendesco Holdings Limited (now Renewable Heat Holdings Ltd or RHLL) in 2018 by raising over £4m through a bond offer promoted on the Triodos Crowdfunding platform to fund the installation of ground source heat pumps in new-build development for retirement homes, as well as providing a bank loan. While the original plan to install and own 100 ground source heat pumps had to be scaled back, the company has installed an additional 51 ground source heat pumps over the last three years, increasing the portfolio from 21 at the time of the bond offer to 72 currently.
As part of the Government’s Future Homes Standard, gas boilers will be banned from new build properties by 2025. Rendesco Group’s work installing ground source heat pumps is key to transitioning away from gas boilers and they now have the platform for further growth albeit through a slightly different future business model. The Non-Domestic Heat Incentive Scheme stopped taking new applicants in March 2021 and the company is now focusing on installing and managing sites rather than installing and owning.
RHHL was recently able to repay its £4.1m bond four years early, while it embarked on a new capital raise to help fund the next stage of its growth. RHHL’s existing bondholders were given a one-week exclusivity period to rollover their 2018 bond into the new bond offer. Many of them did just that so when the new bond offer launched on the platform, £2.5m of the £3m target had already been raised from existing bondholders and the offer closed in record time.
Corporate finance manager Richard O’Brien said: “We are delighted to be helping the Rendesco Group once again to raise capital to grow its business, which is so clearly helping the country to meet its climate change targets. The confidence shown by its existing bondholders and the speed at which the offer filled underlines yet again the interest of our investors in sustainable solutions to these complex challenges.”
Rendesco co-founder and managing director Alastair said: “With the move towards ground source heat pumps gaining real momentum in the UK it’s a real turning point for our business. Innovations like these make a real difference to low carbon heat generation so our investors can be assured they are supporting a tangible move to reduce carbon in the UK and to build a more sustainable country.”