Octopus to acquire heat pump manufacturer

Octopus Energy Group agreed to acquire Northern Irish heat pump manufacturer Renewable Energy Devices (RED) for an undisclosed eight-figure sum.

Founded in 2014, RED designs and manufactures in-house a range of patented air-source heat pumps, including their controls, software and heating distribution systems.

Octopus will take a controlling stake in the Craigavon-based firm, before a full acquisition by the end of this year.

The partnership with RED will see the companies develop products in a range of sizes, with a focus on smaller options suitable for the most common homes in the UK.

Octopus said, when purchased with the government’s Boiler Upgrade Scheme, the devices will cost about the same as a gas boiler. By scaling production, the company added, the pair plan to bring costs down further, with a view to eliminating the need for the £5,000 government grant over time.

The company added that under the deal RED’s Craigavon factory will see a “significant expansion”, creating 100 new green engineering jobs by 2024. Octopus said it expects the factory to produce more than 1,000 heat pumps per month by the end of 2022.

The two companies are also scoping other locations to build further heat pump manufacturing facilities.

Octopus noted that RED sources more than 80% of parts for its products within the UK. The company plans to incorporate its smart grid technology into the heat pumps which it said will enable them to make the most of spare capacity on the electricity grid and reduce the load at peak times.

Greg Jackson, founder and chief executive of Octopus Energy Group, said: “This agreement will involve major investments into heat pump manufacturing, creating valuable green jobs across the UK and helping increase our energy security by getting more homes off gas, and drive down costs for customers.

“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.”

Jason Cassells, founder and managing director of RED, said: “When I founded RED, I had a dream to make heat pumps affordable, to put as many heat pumps in as many homes as possible and to make green heating accessible to everyone.

“With Octopus’ financial backing, industry knowledge and tech expertise combined with our heat pump know-how, this dream will finally become reality. We’re at the cusp of a clean heating revolution and Octopus is leading it.”

Speaking at Utility Week’s Future of Heat conference recently Octopus Energy’s head of commercial Aimee Clark said concerns arising from the energy crisis makes it an ideal time for heat pumps to become a mass-market product.

She said that “energy is on the news every day, unfortunately. It’s really coming to the forefront of people’s minds.”

“So now is the time to move into that mass market, but to do that we need to take a very different approach,” she added.

You can read more about Octopus’ heat pump ambitions here.