Rendesco raises £6 million to replace gas grids with low-carbon heat

Source: 6/13/2024, Location: Europe

- Fundraise led by Clean Growth Fund, Eurazeo, and Aviva Ventures
? - New investment comes as demand for clean heat technology is increasing rapidly
? - Demonstrates investor confidence in ground source heat pump technology as the UK transitions to a decarbonised economy

? Rendesco, the leading clean heat network developer and owner-operator, has raised £6m to rapidly expand its operations and further develop its solutions in the UK and European energy markets.

? The new investment has been led by Clean Growth Fund, Eurazeo’s Smart City fund, and Aviva Ventures. They join existing investor Copley Point Capital.

? The funding will accelerate Rendesco’s ambitious growth and innovation plans to reduce consumer energy bills, decarbonise heat at scale, and provide a low-carbon alternative to gas grid infrastructure. It will also enable a broadening of its climate technology capabilities with more intelligent and consumer-centric home energy management systems.

? As the third largest source of CO2 emissions in the UK, decarbonising heat in buildings is a critical challenge which Rendesco is at the forefront of tackling; with their networks set to enable households to reduce their energy bills and save over 100,000 tonnes of CO2 per year, at scale.

? The investment comes as the UK finalises its proposals to decarbonise heat in buildings following the conclusion of the Future Homes Standard consultation earlier this year, which will mean gas boilers will no longer be installed in new homes from 2025. Similar legislative measures are also driving decarbonisation across Europe.

Rendesco already works with many of the UK’s leading property developers, such as Cala Homes and Telford Homes, to design and install low-carbon and low-cost ground source heat networks. It also operates low-carbon heat networks which supply clean heat and hot water to 8,115 homes across the UK.

? The new investment is separate from, but complementary to, Rendesco’s joint venture with Last Mile Infrastructure, Last Mile Heat. Rendesco’s new build home solutions are owned by Last Mile Heat, enabling house builders to install ground source heat solutions in their developments at a considerably lower cost than other low-carbon solutions. The joint venture has already developed a pipeline of £150m worth of clean heat infrastructure, significantly increasing access to future proofed heating. The new capital from this raise is being directly channelled into innovation that improves the efficiency and affordability of Rendesco’s clean heat networks, enabling them to be deployed at a much greater scale than air source heat pumps.

? The news also follows Rendesco’s recent announcement that it is designing and installing the UK’s largest water-source heat network at Welborne Garden Village, which will provide clean heating and cooling to 6,000 new homes. The first of its kind technology sets a viable blueprint for successfully providing clean heat networks to housing developments at scale, whilst also serving as a game changer for future homeowners who will benefit from clean and affordable heating and cooling.

? With an already profitable underlying business, the incremental capital into Rendesco will enable it to expand its heat network projects further, advancing its end goal to replace gas heating with clean heat networks, and significantly reduce the carbon emissions associated with heating in the UK and Europe.

? Rendesco was advised on the raise by Opus Corporate Finance and Squire Patton Boggs.

? Alastair Murray, CEO and founder of Rendesco, said:
“I am pleased to welcome Clean Growth Fund, Eurazeo and Aviva Ventures as investors in Rendesco. The completion of this funding means Rendesco is incredibly well capitalised, in parallel to the significant capital available to deploy into capex costs via Last Mile Heat. Their collective expertise and support will be invaluable as we pursue our ambitious growth plans, rapidly expanding our clean heating solutions to reach millions of homeowners and making a major – and much needed – dent in the UK's carbon reduction efforts.”

? Susannah McClintock, Investment Partner at the Clean Growth Fund, the UK specialist clean tech VC firm, said:
“Decarbonising heat is critical to achieving our net zero targets. Rendesco's heat network solutions provide a cost effective and efficient route to delivering the low carbon heat required for the transition away from gas to renewable alternatives. This investment aligns with our commitment to empower early-stage entrepreneurs to tackle the climate change crisis.”

? Pierre Devillard, Managing Director at Eurazeo for the Smart City fund, said:
“Rendesco fits very well within Eurazeo's investment strategy. Indeed, the company leverages mature technologies, strong digital and industrial capabilities as well as smart financing structure to deploy at scale profitable assets that decarbonise heat. We plan to leverage our pan-European presence to catalyse the development of those climate solutions in the UK and beyond.”

? Anthony Barker,Director at Aviva Ventures, said:
“This investment forms part of Aviva’s commitment to back British companies with a strong sustainability mission and which will help support growth in important UK sectors, helping the UK get-ready for the future. Rendesco has an excellent track record and this investment will help UK households transition to greener energy by providing clean heat networks across the country.”

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