With an ambition to accelerate the decarbonisation of UK homes by simplifying the process for both homeowners and installers, Hometree has already raised more than $83m from investors. A recently announced new debt facility from BlackRock will enable the company to further scale up its acquisition strategy.
The money has already been used to buy three installers, bringing the total number of companies acquired to eight and taking Hometree’s workforce to over 5,000 multi-trade engineers and installers.
From an initial focus on home emergency breakdown and insurance, Hometree has expanded into renewable installations and financing, with a growing portfolio of products and services under three business divisions (Home, Energy and Financial Services).
Over 100,000 customers rely on the company to keep their homes running smoothly with emergency heating, plumbing, electrical repairs and maintenance plans. In addition, through its Finance division, the company has the largest portfolio of residential heat, solar and battery leases in the UK. By financing and owning the assets, Hometree enables customers to benefit from lower energy bills, without the upfront cost of installation.
Simon Phelan, founder and CEO of Hometree, speaks passionately of his desire to accelerate progress in domestic decarbonisation by taking on the bigger home service providers, and the company is in a prime position to accelerate the change from gas boilers to heat pumps and other renewable solutions.
We speak with Simon to understand how his strategy of buying up independent energy installers across the country will benefit both the installers and the homeowners, how Hometree intends to challenge the biggest home service providers, and how the combination of its large customer base and suite of financing and insurance products can simplify domestic decarbonisation.
Please share your story before founding Hometree and tell us how the company came to be?
Before launching Hometree, I worked in private equity and it was there through an investment that I was first exposed to the opportunity of decarbonising our homes.
Back then, there were different incentives for homeowners to install solar panels and I could see how this market was beginning to develop and what the potential business opportunities could be.
How has the business evolved?
Hometree initially started with a focus on home emergency breakdown and insurance, but we have since expanded into renewable installations and financing, to support homeowners looking for green home energy solutions.
What drives you to diversify the business in this way and advocate for domestic decarbonisation?
Since before I started Hometree, the business and moral opportunity to decarbonise our homes fascinated me. The climate crisis is only increasing, temperatures are growing across Europe and the increase in natural disasters including flooding and droughts is all because of the rise in temperatures.
Renewable home energy is critical to reaching net zero but we need to ensure homeowners can easily access new solutions for their homes. We’re proud to lead the charge for home decarbonisation.
What have been the key milestones along the way?
We have reached over 100,000 customers and we have a nationwide network of over 5,000 multi-trade engineers and installers – these are our major milestones.
We’ve also raised over £85 million in equity funding including from Legal & General Capital, one of Europe’s largest asset managers, alongside a range of leading specialist energy investors including Energy Impact Partners, Inven Capital and 2150.
Earlier this year, we also secured a debt facility from funds and accounts managed by BlackRock to fund acquisitions of renewable energy installers, of which we have recently acquired three: Geowarmth, The Little Green Energy Company and IMS Heat Pumps. This brings the total number of companies we’ve acquired to 8.
As well, we recently raised a new £250 million asset-backed debt facility from Barclays to finance over 28,000 residential solar panel systems, batteries and heat pumps across the UK over the next two years. We will be offering low- cost, long-term leases & loans to homeowners, to continue to tackle the barriers to renewable adoption.
What’s the latest with Hometree and acquisitions?
We have recently acquired three renewable energy installers as part of our move to offer a ‘whole of life’ solution. As the UK phases out gas boilers in new homes by 2035, many consumers are investing in renewable energy sources to power their homes including heat pumps, solar panels and electric batteries. We want to be their partner by offering renewable energy installations across the company through our network.
What makes an acquisition strategy the right one for Hometree?
The companies will gain access to Hometree’s customer base, its suite of financing products and insurance services, so they can deliver even more value to their customers.
The acquisitions will enable us to bolster our engineering force and re-train more of our 5,000 engineers to be able to install, repair and maintain renewables. Reports have suggested that the UK needs 30,000 heat pump installers to meet its ambitious targets so we want to ensure we are at the forefront of this change.
Are there more in the pipeline?
The financing from funds and accounts managed by BlackRock means we have been able to acquire three companies: Geowarmth, The Little Green Energy Company and IMS Heat Pumps. The facility will further support our acquisition strategy so we will look to announce more in the future, as and when we can.
How does the Hometree approach simplify the sector from a consumer’s point of view?
The installation market in Europe is very fragmented – no company owns more than 1% of the market in terms of annual installations. That makes it harder for consumers to find the right installer for them – they have to do lots of research into different companies, and it is also difficult to find the right financing.
By offering financing, installation, servicing and maintenance under one umbrella company, we’re able to make it easier for consumers to buy, finance and maintain renewables.
What else do you think needs to happen to overcome some of the barriers to transition?
Affordability is the biggest barrier preventing people from installing green energy at home. The widespread availability of affordable long-term financing will be critical to removing the transition barriers to domestic green energy. That’s why we have received new debt financing from Barclays to make this a reality.
Similarly, despite the energy efficiency advantages of heat pumps, disparities in energy prices, especially the electricity to gas price ratio, is one of the primary barriers. To encourage adoption, it’s critical to close this gap through measures such as shifting taxes and levies away from electricity bills, introducing dynamic electricity tariffs, and carbon pricing mechanisms.
What are you hoping for from the new Government?
Concrete policies that will support homeowners’ transition to renewables and green energy, and a more stable policy framework that enables private capital to invest in these markets without fear of policy ups and downs and changes.
There also needs to be more effective training to create the right green skills we need for now and the future. Reports suggest that to meet current heat pump targets, the UK needs 30,000 heat pump installers. Improved training and incentives for new engineers is necessary to scale up to this target.
What does the future hold for Hometree?
The debt facility from BlackRock will enable us to acquire more regional installers to build that base up whilst the industry first financing structure we put in place with Barclays means we can offer low-cost, long-term loans to households to drive the uptake of renewable energy.
We’re on a mission to decarbonise 1 million homes by 2030, by becoming Europe’s leading residential energy services company, so we have a lot ahead of us to reach that target.
Image credit: Hometree
