The Stockholm-based firm, launched in June 2023, has quickly expanded into Germany, Italy and the UK, achieving an annual sales run-rate of €200 million. Aira’s customer offer combines monthly payment plans, end-to-end service, and a 15-year guarantee. The company employs 1,200 staff, operates 18 hubs and has opened four Aira Academies to train heat pump installers.

Chief executive Peter Prem said the funding reflects “the strong, long-term support” of its investors and will help Aira “double down” on its mission to take Europe off gas. “We’re transitioning from start-up to scale-up, launching new innovations, and accelerating our growth to bring clean energy-tech to millions of homes,” he said.

The fresh capital will be used to expand Aira’s operations, scale its intelligent energy-tech offering, invest in its Swedish R&D centre, and increase manufacturing capacity at its Wroclaw, Poland factory. The company also plans to deepen its footprint in existing markets and strengthen partnerships in the home and energy sectors to widen its customer base and deliver further cost savings.

With 130 million gas boilers still in use across Europe, residential heating accounts for 10% of the continent’s CO₂ emissions. Aira says replacing a gas boiler with one of its air source heat pumps can cut heating costs by up to 40% and eliminate emissions entirely when paired with clean energy tariffs.

Prem believes the opportunity is vast: “The European heat pump market is expected to exceed €150 billion by 2030. With our vertically integrated model and world-class products, Aira is ready to lead the clean energy transition – one home at a time.”

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The scheme, which forms part of the £6.6 billion warm homes plan and will be allocated in next year’s spending review, is expected to target both fuel-poor and wealthier families.

Under proposals still in development, low-income households would receive upfront grants for installing solar technology, while households on higher incomes could access cheap loans underwritten by the government. Repayments might be added to energy bills at a more affordable rate, potentially lowering annual electricity costs. Ministers are also weighing whether to boost the current rate homeowners earn by selling surplus power back to the grid, which stands at just 4.1p per kilowatt-hour (kWh)—far lower than the average electricity price of around 24p/kWh.

Officials believe that helping more people switch to homegrown solar energy could be critical for broader decarbonisation efforts. The government’s target includes installing 600,000 heat pumps annually by 2028, but many consumers find them costly both to install and operate. Rooftop solar and battery storage could transform this balance, offsetting electricity charges and shortening the payback period—currently averaging between five and nine years.

The energy department’s clean energy plan, released earlier this month, aims to boost installed solar power capacity from 16.6GW to up to 47GW by 2030, with around a third expected to come from residential schemes and the remainder from large-scale solar projects. Ministers say ramping up rooftop installations could ease pressure on using agricultural land for solar farms.

Despite cross-party support for the concept, the scheme’s details still require Treasury approval. Whitehall officials point to past initiatives that proved complex and had lower-than-expected uptake. Budget constraints have also played a role: Rachel Reeves, the Chancellor, has already scaled back annual net-zero spending plans from £28 billion to £15 billion.

Industry voices have welcomed the proposal. Chris Hewett, chief executive of the Solar Trade Association, said solar would have a “critical role” in achieving the government’s clean power targets, while Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, stressed that more rooftop arrays would reduce controversy over land use.

A government spokesperson confirmed more details would follow once the spending review concluded, and emphasised the central role of consumer-focused incentives in the push to halve food waste by 2030 and scale up low-carbon heating. Meanwhile, the newly formed circular economy taskforce is expected to outline further waste and efficiency measures next year.

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According to a report by the NAO, assumptions regarding consumer demand for heat pumps have proven to be overly optimistic. Despite government efforts to promote awareness and offer grants to facilitate the replacement of oil and gas-fired boilers with heat pumps, public engagement in the transition remains lacking.

The report highlighted that only 18,900 heat pumps were installed under the grant scheme between May 2022 and December 2023, representing less than half of the anticipated installations. While there has been a modest increase in installations following an increase in grant funding, doubts persist regarding the sustainability of this upward trend.

Two primary barriers to increased installations were identified: poor awareness among consumers and the high upfront cost of heat pumps, despite grant assistance. Heat pumps are considerably more expensive than traditional gas boilers, despite their greater efficiency.

The government has set ambitious targets for the installation of 600,000 heat pumps annually by 2028. However, divisions within the Department for Energy Security and Net Zero (DESNZ) regarding the strategies to achieve this goal have emerged.

A mechanism aimed at penalising boiler manufacturers failing to meet electric heat pump sales targets has led to conflict, with companies raising prices to offset potential fines. Energy Secretary Claire Coutinho has initiated an investigation by the Competition and Markets Authority (CMA) into the home heating market in response to these developments.

The NAO recommended that the government make a decision on the role of hydrogen in reducing emissions before the planned deadline of 2026.

Gareth Davies, head of the NAO, emphasized the necessity for comprehensive engagement with households to achieve the government’s decarbonization objectives. He noted that progress in raising awareness and encouraging the adoption of low-carbon alternatives has been slower than anticipated.

In response, a spokesperson for DESNZ defended their approach, highlighting the success of initiatives such as the heat pump grant increase and the Welcome Home to Energy Efficiency campaign aimed at educating households about emission-reducing measures.

Despite these efforts, the government faces continued scrutiny over its ability to effectively drive the transition to clean heating and achieve its emissions reduction targets.

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Recent data from the official standards body for renewable technologies, MCS, reveals that the country has witnessed a remarkable increase in the installation of these energy-efficient solutions in both households and businesses.

Record-Breaking Installations

In the first half of 2023 alone, over 120,000 certified installations of heat pumps, solar panels, and other renewable technologies have been logged. This marks a substantial increase compared to previous years, demonstrating a growing embrace of sustainable energy solutions in the UK.

The data also shows that monthly installations have consistently surpassed 3,000 for the first time this year, indicating a steady upward trend in renewable energy adoption. This positive trajectory suggests that nearly 250,000 households could potentially have renewable energy installations by the end of the year.

Government Targets and Incentives

The UK government has set ambitious targets to accelerate the transition to renewable energy. By 2035, the country aims to achieve a solar capacity of 70GW and install 600,000 heat pumps annually by 2028. To incentivize the adoption of these technologies, the government has introduced schemes to provide financial support.

Under the boiler upgrade scheme, eligible homeowners in England can receive grants ranging from £5,000 to £6,000. In Scotland, the incentive is even more substantial, with grants between £7,000 and £9,000, along with an optional loan of £7,500. These financial incentives aim to make renewable energy installations more accessible and affordable for households across the country.

Positive Impacts and Cost Savings

Norman Pitt, a homeowner who took advantage of the government scheme, had solar panels, a heat pump, and batteries installed in his home. Despite the initial cost of nearly £30,000, Norman believes it was a wise investment. He shared, “Putting aside the upfront costs, our electricity consumption costs have dropped significantly. We are going green, saving our planet. We have also purchased an electric car, and the overall costs of this installation are comparable to what I used to spend on fuel. We are extremely pleased with the results.”

The adoption of renewable energy technologies not only contributes to a greener future but also provides significant cost savings in the long run. Many households experience a substantial reduction in their energy bills, thanks to generating their own clean energy and reducing reliance on traditional fossil fuel sources.

The Importance of Affordability and Accessibility

While the current government scheme has facilitated a considerable increase in installations, there is still a need to address affordability and accessibility concerns. For many households facing a cost of living crisis, investing in renewable energy installations may be financially unattainable. It is crucial to ensure that initiatives prioritize those most in need to address energy poverty and provide equitable access to clean energy solutions.

Aimee Ambrose, a professor of energy policy at Sheffield Hallam University, emphasizes the importance of prioritizing households that struggled to heat their homes during the previous winter. She suggests that government intervention is necessary to ensure that landlords support their tenants by providing safe and warm homes.

MCS’s Call for Expansion and Workforce Development

MCS, the body accrediting low carbon products, calls for an expansion of the boiler upgrade scheme to provide more substantial grants and vouchers each year. In addition to financial support, there is a need to focus on building up the installation workforce to meet the government’s ambitious targets.

Ian Rippin, CEO of MCS, highlights the increasing consumer confidence in investing in small-scale renewables. However, he emphasizes the importance of making the transition to renewable energy even easier. This includes streamlining the installation process, reducing costs, and improving accessibility and affordability for all households.

The Government’s Response

In response to the growing demand for renewable energy installations, a spokesperson for the Department for Energy Security and Net Zero highlights the government’s significant investments in improving energy efficiency across the country. They mention that £6.6 billion has been invested in upgrading 2.5 million homes, resulting in 47% of homes having a rating of C or above. The Great British Insulation Scheme aims to further support an additional 300,000 homes by extending the legal duty on suppliers to help customers insulate their homes.

The government remains focused on achieving its target of 600,000 heat pump installations per year by 2028. The grants offered towards the cost of installations, ranging from £5,000 to £6,000, are instrumental in incentivising households to embrace renewable energy solutions and contribute to the national transition to a low-carbon future.

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A UK Government spokesman said the Department for Energy Security and Net Zero still aims to phase out the installation of new and replacement gas boilers by 2035 at the latest.

It comes as Michael Gove hinted that plans to replace gas boilers with heat pumps in homes should be reviewed in a recent interview.

The Government plans to phase out gas boilers by 2035.

On the question of targets to install heat pumps in new homes, Gove said: ‘That is one area that I do think that we need to review … it’s important that new homes meet net zero standards but one of the challenges that we have is with our existing housing stock.’

But when asked about plans to review the proposal to replace gas boilers with heat pumps, a UK Government spokesman told This is Money: ‘We are aiming to phase out the installation of new and replacement natural gas boilers by 2035, at the latest, in line with the natural replacement cycle and once costs of low carbon alternatives have come down.

‘This includes phasing out installation of new hydrogen-ready boilers in areas not converting to hydrogen. This will ensure that all heating systems used in 2050 are compatible with net zero.

‘We will further consider the Net Zero Review’s recommendation in relation to this ambition.’

The Boiler Upgrade Scheme is the Government’s flagship scheme to achieve this. In March, the scheme was extended by three years to 2028 with a target of installing 600,000 heat pumps a year by then.

Under the scheme, the Government is currently offering households a grant of £5,000 to install an air source heat pump, or £6,000 for a ground source heat pump.

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Despite the slow adoption of the £5,000 government vouchers to assist with the cost of exchanging a gas boiler for an air source heat pump, the survey conducted by the Nesta innovation charity found that people who have heat pumps installed in their homes expressed comparable levels of contentment to those with gas boilers.

The level of contentment among those who put in a heat pump in either a new-build home or an older one was more than 80%, regardless of the continued worries that heat pumps function better only in contemporary buildings.

The largest inquiry into how households have reacted to heat pumps to date is believed to be the survey of more than 2,500 domestic heat pump owners and more than 1,000 domestic gas boiler owners in England, Scotland and Wales during the last winter season.

Gabriel, the leader of sustainable development at Nesta, asserted that the results should dispel “outdated” apprehensions about the low carbon heating technology and motivate the government to “intensify” its mission to supersede fossil fuel heating.

The government’s plan to have 600,000 heat pumps installed in the UK annually to reduce carbon emissions has come under fire due to worries about their efficiency.

In the last fiscal year, just over a third of the government’s £5,000 vouchers for replacing a gas boiler with a new heat pump were taken up by households. Usage of the grant was relatively slow.

Eunomia Research and Consulting conducted a survey that revealed that a majority of households, 81%, were equally or more content with their heat pump compared to prior heating systems such as gas boilers, electric heating, or oil and LPG boilers.

The level of satisfaction for households inhabiting Victorian or older buildings was found to be 83%, which appears to disprove the idea that heat pumps are only useful in newer constructions or those that have had considerable energy efficiency improvements.

Gabriel remarked that the installation of heat pumps in all types of British homes has demonstrated that the age of a property is no longer necessarily a deciding factor for getting an eco-friendly heating system.

When it comes to running expenses, a significant worry for households that are thinking of getting a heat pump, the survey revealed that two-thirds of heat pump owners and almost sixty percent of gas boiler owners were content, regardless of not having done any significant energy efficiency improvements.

The survey determined that a combination of building fabric upgrades with heat pump installations is frequently done, although not always. Approximately 36% of those who had a heat pump installed had already done loft insulation prior, with 23% choosing to add wall insulation or extra window glazing. However, only 14% decided to implement multiple measures.

Clem Cowton, Octopus Energy’s director of external affairs, noted that the survey’s results were consistent with the tremendous demand the company has observed for its heat pumps.

Octopus has reported that it has an estimated 50,000 households wanting to get one of their heat pumps installed. To fulfil this request, the company is currently training hundreds of fitters in the UK. Additionally, they have recently invested in Renewable Energy Devices, a heat pump maker based in Northern Ireland, to manufacture around 1,000 units every month.

Cowton stated that the government should be sure in their decision to take away the taxes associated with household electricity bills, as well as modernizing the regulations for heat pumps to make them more cost-effective and secure for everyone to utilize.

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Buying and installing Octopus’s new self designed heat pump will cost homeowners as little as £2,500.

It comes weeks after British Gas separately announced it would fit heat pumps for as little as £2,999, kicking off a price war. Octopus currently charges £3,000 and upwards.

Installing a heat pump can currently set homeowners back by between £7,000 and £13,000 when costs such as home adaptations are factored in. A government voucher can knock £5,000 to £6,000 off the final bill.

Octopus said the overall cost of its new heat pumps will start at £2,500 when government grants are included. However, most consumers are expected to end up paying between £3,000 and £3,500, depending on the size of their home.

That is roughly on par with what it costs to install a typical gas boiler – and cheaper in some cases.

Heat pumps draw warmth from outside air and run on electricity, an increasing proportion of which comes from green sources such as wind and solar power. They are seen as the future of home heating as Britain moves towards net zero.

However, adoption has so far been slow because of the prohibitive cost and the home adaptations that are needed in many homes to make them effective.

Official figures show the Government’s boiler upgrade scheme only issued 7,600 vouchers out of a total 30,000 available for this financial year. The scheme was launched at the end of May 2022.

A price war among major suppliers could help bring down costs. Greg Jackson, Octopus’s chief executive, said engineers have shrunk the cost of manufacturing the heat pumps, reducing the total cost to consumers.

“It’s designed to be lower cost hardware, lower cost to install and to be able to cover a bigger percentage of UK homes. It’s a serious breakthrough,” he said of Octopus’ new device.

Mr Jackson said: “At the moment, if we have to buy a heat pump, typically we are looking at £3,000 for the hardware. This will now enable us to get hold of them for £1,500.

“It’s a bunch of major leaps forward and we can keep on pushing prices downward from there.”

The new heat pump was designed by engineers at the Octopus research and development centre in Slough and staff at RED, a Northern Irish heat pump business which the company acquired last year.

Octopus has begun to manufacture the devices and plans to launch them in the second half of this year. It plans to sell the heat pumps both to its own customers and third parties.

The Government wants to rapidly increase the number of heat pumps being installed, as part of efforts to replace gas boilers to cut carbon emissions.

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Redrow said its move would make it the first of the country’s big developers to commit to installing heat pumps and underfloor heating as standard.

The company, based in Ewloe, north Wales, built 5,715 homes last year, about half of which were detached.

Working with manufacturers such as Mitsubishi, Vaillant and Daikin, Redrow has been testing heat pumps at homes on sites in the Midlands, Buckinghamshire and Kent.

Matthew Pratt, its chief executive, said he had committed to installing them on all further detached houses it built as a way of “future-proofing our homes and helping our customers to lower their energy use”.

Other developers are likely to follow suit, although some of Redrow’s bigger rivals are still trying to shore up their supply chains, with the heat pump industry being relatively new.

The government’s Future Homes Standard will require all new-build homes to be gas-free by 2025 and the builders themselves, including Redrow, have looming net zero carbon goals that they are working to hit.

Redrow wants to achieve net zero by 2050 and it said that introducing air-source heat pump technology would have “the biggest impact to date” on the efficiency of its homes, which it claims, even now, are 63 per cent more efficient than those built in the 1970s.

By rolling out heat pumps now, the company can “manage this industry transformation at our own pace”, rather than being forced by the government in two years’ time.

Redrow’s switch from gas boilers is as much to meet consumer demand as it is for regulatory purposes. The surge in gas and electricity prices has brought energy efficiency to the front of homeowners’ minds. Redrow’s polling shows that three quarters of British adults think that living in an energy-efficient home is more important now than it was a year ago.

“We know how important energy efficiency is to our customers and we’re proud to be investing in newer, greener technology and leading the way by offering these energy-efficient features,” Pratt, 47, said.

Heat pumps typically cost more than a traditional gas boiler but Redrow’s research shows that 83 per cent of would-be buyers are willing to pay extra for an energy-efficient home. Costs are expected to come down as the technology becomes more widespread.

In one of its heat pump trials with Mitsubishi, the Japanese electronics group, customers tried the new technology under real conditions for a year. Redrow monitored the energy consumption and found that heat pumps used “significantly less energy” than gas boilers and were between two and three times more efficient than an A-rated boiler.

Heat pumps work by sucking in ambient heat from outside, even in sub-zero temperatures, which is then used to heat the home, typically through underfloor heating downstairs and radiators upstairs.

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The Energy and Utilities Alliance (EUA) estimates almost three times as many installers than planned for will be required if the Government is to meet its targets for rolling out electric heat pumps.

Mike Foster, chief executive of the EUA, says underestimating the number of workers “deals a hammer blow” to the heat pump rollout ambitions.

He added: “The world and his dog know it takes considerably longer to fit a heat pump than replace a gas boiler, yet it seems this basic fact has been ignored by Whitehall officials desperate to stick to a plan no one believes in.”

Most homes in Britain are heated by gas-fired boilers, but this is a major source of carbon emissions and will need to change if thc country is to meet its aim of net zero carbon emissions by 2050.

Replacing gas boilers with electric heat pumps is one way to do this, and the Government wants roughly 600,000 to be installed each year by 2028.

It has pointed to research by the Heat Pump Assocation, a rival trade group, in 2020 which indicates about 50,200 heat pump installers will be needed by 2030, climbing to 69,500 by 2035.

However, the EUA argues the figure is likely to be more than 140,000 by 2028 to hit the roll-out target, given the time it takes to fit heat pumps and the other work and admin tasks that generally occupy a heating installer’s time.

Mr Foster added: “We are both suggesting that the target figure is wrong and won’t deliver 600,000 heat pumps a year and also suggesting ways in which the industry can help the government train more installers.” More than 40,000 heat pumps were installed in the UK in 2021.

The Heating and Hotwater Industry Council, a subsidiary of the EUA, will say in a report on Monday that to meet the roll-out targets, about 55,500 boiler installers will need to be upskilled, and 87,000 new heat pump installers will need to be trained. Estimates suggest there were about 3,000 heat pump engineers in Britain as of the middle of 2022.

The report assumes heat pumps take about three times as long to install compared to a gas boiler, and assumes similar working patterns to a typical gas installer, who it says spends more than half of their time on other tasks such as servicing, repair and plumbing.

“The principal aim of this work is to highlight that many more new installers are required in the industry to achieve the Government targets for installation of the 600,000 heat pumps by 2028,” it adds.

The EUA represents companies that make and install radiators, boilers, heat pumps, gas meters, and heat networks, including Worcestor Bosch and Baxi. It says the research on installer numbers was led by a senior manager from Vaillant, which makes boilers and heat pumps in Belper, Derbyshire.

The future of home heating is the subject of intense lobbying as policy starts to shape, and companies try to promote their technologies.

The EUA has been skeptical about heat pumps, highlighting challenges such as power supply, and supportive of hydrogen boilers. In December it wrote to the Government urging them to carry out village-scale trials of heat pumps.

The Heat Pump Association, which said its members represent 95pc of the heat pump market by manufacturing share, said it was “confident that the resources are in place to meet government heat pump installation targets and that the installer base is robust enough to help ramp up heat pump deployment”.

A spokesman for the Department for Business, Energy and Industrial strategy said heating engineers could train to install heat pumps in one week, adding there are more than 110,000 domestic heating engineers in the UK.

The spokesman added it was confident its plans would “deliver the skilled workforce we need as we accelerate our progress towards net-zero greenhouse gas emissions”.

He added: “Industry groups are confident of enough capacity to train installers as heat pump deployment increases.

“The Heat Pump Association has estimated that we will need at least 50,200 heat pump installers by 2030 and their modelling accounts for the time taken to install a heat pump.”

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Britain’s largest household energy supplier says it will price match any offer by a rival company for accredited installations.

It has set a starting price of £2,999 per install for an air source heat pump – which is £1 lower than the £3,000 starting prices for a standard installation offered by rival Octopus Energy.

That price does not reflect the total cost of installing heat pumps, as it factors in government grants currently on offer for £5,000-£,6000 per installation.

The Government wants to rapidly increase the number of heat pumps being installed, as part of efforts to replace gas boilers to cut carbon emissions.

Heat pumps draw warmth from the outside air and run on electricity, an increasing proportion of which comes from green sources such as wind and solar power.

A price war among major suppliers could help bring down costs which have been considered prohibitively high for many households.

Andrew Middleton, managing director of British Gas’s new net zero business division, said: “Heat pumps are an essential part of the UK’s journey towards a decarbonised future.

“We recognise that many households are being cautious with their spending in the current climate and want to do all we can to make this technology more affordable – so that those customers who can make the move to low carbon heating feel compelled to do so now.”

British Gas, which is owned by the FTSE 100 company Centrica, says it has installed more than 2,300 heat pumps so far.

Ministers want 600,000 heat pumps to be installed each year by 2028, compared to about 40,000 in 2021.

Under the Government’s Boiler Upgrade Scheme, homes can get grants of £5,000 for an air source heat pump, £6,000 towards a ground source heat pump, and £5,000 towards a biomass boiler.

Lord Callanan, business and energy minister, said: “It is fantastic that homeowners across England and Wales will benefit from the clean, efficient energy that heat pumps deliver and at a much more competitive price than they would have been sold for just a few years ago.”

Octopus Energy, now the country’s third largest household supplier after its takeover of Bulb last month, said it was “delighted” at the competition on heat pump sales.

Rebecca Dibb-Simkin, global product director at Octopus Energy, said: “We often disagree with the incumbents but on this occasion we’re delighted – unleashing market forces is what’s needed to quickly bring down prices and roll out heat pumps across the country. We’re more than happy to enter a price war over green heating with British Gas – bring it on!”

Home heating is currently one of the largest sources of carbon emissions, as most homes are heated by methane gas-fired boilers.

This will need to change in line with the Government’s legally binding target of net zero carbon emissions by 2050.

As well as heat pumps, boilers fed by clean-burning hydrogen are also being considered as a possible alternative.

This is further behind than heat pumps, however, as hydrogen is not yet produced in large volumes and tests are still being carried out to determine how easily it can be used.

As the country’s largest household energy supplier, British Gas sells gas and electricity to more than 7.4m households. The division’s profits are expected to have dipped during 2022 due to warmer weather.

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