Earth, wind and fire: financing smarter, sustainable homes
Around two-thirds of UK households are failing to meet long-term energy efficiency targets. This means that approximately 12 million households spend more on energy bills and emit more carbon dioxide into the atmosphere than is sustainable or necessary*. Over the past few decades, huge strides in technology have made low or zero-carbon solutions a feasible choice for improving the energy efficiency of residential properties. In this blog, we look at three key areas of investment in these new technologies: smart meters, air source heat pumps, and solar.
Down to earth: smart meters
Smart meters are next-generation gas and electricity meters that help to bring technological enhancements to life, and bring bills back down to earth. You may well already have one installed in your home. Smart meters measure, in real time, how much gas and electricity you’re using, as well as what it’s costing, and this is shown on an in-home display. They allow us to become more conscious consumers by providing valuable information on our energy consumption, as well as communicating directly with the energy supplier. Suppliers are then able to use this data to better understand demand patterns and optimise the production of energy, thus reducing waste.
Wind: air source heat pumps
Air source heat pumps are effectively a central heating system that extracts heat from the air instead of creating the heat via a traditional gas-fired boiler system. They use the same technology as a fridge or air conditioner, but in reverse. By using a renewable, natural source of heat – air – the carbon footprint of the household is significantly reduced; the reduction will vary depending on the original heat source and will be greater if, for example, you are replacing oil rather than gas.
Solar panels on roofs have become a relatively common sight in residential streets, but without the means to store excess energy generated during the day householders don’t reap the full benefits. The popularity of solar power has, however, led to the rise of batteries, developed by companies like Tesla** which can store extra power for later use. We may also see a greater move towards incorporating energy-generating elements into the fabric of homes themselves. Solar tiles are already an established technology, but solar windows could be the next big thing, and maybe even solar paint!
Financing a sustainable future
As investors, we look very carefully at opportunities to support the roll-out of these technologies more widely across the UK, both through government-supported and private initiatives, and covering new builds and retro-fit programmes. Whether used in isolation or in conjunction with other technologies, we believe the examples mentioned above have real potential to improve the energy efficiency of residential properties, not only saving the occupiers money on their bills, but also creating more sustainable homes for the future. These homes will have a real positive social and environmental impact on the communities in which they are built.
*Source: BBC, March 2020
**For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.