Octopus Energy acquires heat pump manufacturer RED

Octopus Energy has announced the acquisition of Northern Ireland-based heat pump manufacturer Renewable Energy Devices (RED) to expand its low carbon production capabilities.

The renewable energy supplier said that the multi-million-pound acquisition would allow the company to produce over 1,000 heat pumps a month across its entire manufacturing operations by taking a controlling stake in RED. A full acquisition of the company, which is based in Craigavon in County Armagh, is then expected by the end of 2022 in a bid to “disrupt” the current heat pump market.

Octopus Energy told H&V News last month that it expected to install thousands of heat pumps annually as part of its business by capitalising on the Boiler Upgrade Scheme that aims to incentivise low carbon heat installations by up to £5,000.

It joins a range of other utilities and heat specialists such as British Gas that are launching heat pump installation services this year to begin to meet government decarbonisation targets to electrify heating in the home as a mass scale.

The acquisition of RED will allow Octopus Energy to produce a range of different heat pump systems including smaller technologies suitable for the most common types of housing in the UK.

A statement from the company said, “When bought with the government’s new Boiler Upgrade Scheme, they will cost about the same as a gas boiler. By scaling production, the partners are planning to bring costs down even further, with a view to eliminating the need for government support over time.”

An estimated 100 new ‘green jobs’ will be created by 2024 as a result of the deal to support an expansion of the production capacity at the Craigavon factory.  Work is also underway to look at other locations for heat pump manufacturing.

Alongside the manufacture of heat pumps, RED also produces the controls, software and heating distribution systems intended to support more efficient operation, Octopus Energy added.

The energy supplier said it would also provide its “smart grid” technology as part of its heat pump offering. This is intended to make use of any spare capacity in the electricity grid and distribution networks to lower energy costs and reduce load at peak points of demand.

Additional cost savings are also expected to be possible for homes that have electric vehicles or solar panels, the company claimed.

Dr Jason Cassells, RED’s founder and managing director will continue to work with his team at the Craigavon site to work on expanding uptake and the consumer appeal of heat pump systems.

Lord Callanan, the business and energy minister, welcomed the acquisition as an important step to support the UK’s recently published Energy Security Strategy that seeks to expand the role of renewable and nuclear energy in heating homes.  The strategy will be backed by a number of other programmes to incentivise the electrification of heat.

He said, “The government’s Boiler Upgrade Scheme will make grants of up to £5,000 available for fitting this green technology and together with private sector investment such as this by Octopus Energy, we’re making heat pumps an affordable, convenient and obvious choice for consumers – especially with global gas prices at record highs.”

Octopus Energy founder Greg Jackson said the acquisition marked a major investment in UK heat pump manufacturing that would support the UK’s recently published Energy Security Strategy by supporting more homes to transition from natural gas heating.

He said, “This is the ‘Model T’ moment for the heat pump industry. Thousands of heat pumps rolling out of RED’s Craigavon factory a month is just the beginning. Like the original Ford, we’re planning to scale production every year, cutting costs even further and making heat pumps affordable for everyone.”