Legal & General and Hodge announce £5.5m investment in Sero Technologies

Legal & General Capital (Legal & General) and Hodge have announced a £5.5million investment into Sero Technologies (‘Sero’), an energy technology and services company supporting the transition to net-zero across the residential housing sector.

Sero has developed digital tools and expertise to design and deliver cost-effective low-carbon solutions for both new build and existing homes. Sero works with landlords, mortgage lenders, housebuilders and more, to plot a pathway to net-zero for their homes.

Heating and hot water for UK homes make up 25% of total energy use and 15% of our greenhouse gas emissions. To achieve the UK’s legally mandated target of net-zero by 2050, almost every home in the country will need to be improved or retrofitted with some combination of enhanced energy efficiency and low carbon heating.

Retrofit represents a significant market opportunity in the UK alone, with the average home emitting nearly 6 tonnes of carbon per year, 23 million homes using mains gas (carbon-intensive) for heating, 2 million homes electrically heated (high running costs) and the remaining 2 million using heating oil or other fossil fuel systems (carbon-intensive and high running costs).

Net-zero planning also needs to be considered at the building design stage, with early planning having a major impact on long-term emissions.

With over 10,000 new build and existing homes within its identified pipeline, Sero has forged strong relationships within the housing sector, creating tailored net-zero energy retrofit plans for homes, assuring them using building passports and managing them using its smart home energy management system, ‘The BEE’ (Building Energy Engine) and comfort based service model.

Sero has initially focused on working with social housing providers facing major challenges around regulation and funding, as they look to meet net-zero targets. Legal & General and Hodge’s investment will support Sero in its next stage of growth, as well as its aims to support the delivery of net-zero financial products with institutional partners.

Legal & General invests its capital in clean energy infrastructure, businesses and technologies to help accelerate progress towards a low-cost, low-carbon economy – working with local authorities, government and key industry players to create scaled solutions.

Sero forms the latest part of its growing portfolio, which includes offshore wind, onshore wind, solar PV, EV-charging and ground-source heat pumps, amongst others. As one of the UK’s largest housebuilders by volume, with a commitment to deliver net-zero [operational] emissions from 2030 across its residential portfolio, there are significant opportunities for Sero to work with Legal & General’s existing housing assets and businesses.

Hodge, which is 79% owned by the Hodge Foundation, is a specialist in mortgages, commercial finance and savings. Since its inception more than 50 years ago, Hodge has sought new ways to help customers get the most from their money. This is the second major investment in less than a year for Cardiff-based Hodge as the bank looks to grow its investment portfolio in line with its ethos of using banking for good.

John Bromley, Head of Clean Energy at Legal & General Capital said: “Housing is a major contributor to carbon emissions, requiring some of the most challenging and immediate overhauls of any sector. We are delighted, therefore, to be investing in a business that will play a major role in putting UK housing on a pathway to net-zero, whilst providing significant job creation in the clean energy sector and supporting the UK’s SMEs.

“As an energy transition investor, we are aiming to support the scale up of innovative businesses capable of delivering the solutions needed to reduce emissions throughout the economy, and Sero represents another perfect partner for us in this space. We look forward to working with the Sero team to grow their innovative business as well as utilising their expertise across our own housing platform.”

James Williams, Chief Executive Officer at Sero said: “The challenge of upgrading existing housing stock is growing as the urgency of solving the climate emergency becomes even greater. Improving the energy efficiency of our homes can provide long-term economic benefit and comfort to residents, as well as reducing carbon emissions. This investment, therefore, is a huge milestone for Sero as we grow and bring new products to market to help the UK in its delivery of net-zero.

“We set out to find investors that share our vision, and this has been evident from both the Legal & General and Hodge teams from the outset. We look forward to now working together to create strategic opportunities for the business, in particular expanding our presence within new and emerging sectors, such as working with banks and building societies to support the development of green finance products.”