Britain’s plan to wean homes off fossil fuels has had a tepid start, but despite its lukewarm beginning, the market for heat pumps is hotting up.
The Swedish clean energy company Aira is leading a new wave of companies preparing to harness the growing interest in low-carbon home heating, and is positioning itself as the “Spotify of heat pumps”.
The company’s chief executive, Martin Lewerth, believes its subscription service could soon help 5m households across Europe – including 1m in the UK – turn their back on gas boilers for good.
Aira hopes to counter the nagging concerns that have hampered Britain’s take-up of heat pumps by offering an end-to-end subscription service. For a monthly payment and no upfront charge, its engineers will install and then service the kit.
“The number one hurdle for many consumers is the high upfront costs of buying and installing a heat pump. So we’re removing that,” he said. “We don’t want to help affluent households only – we want to make heat pumps available to many households across Europe.”
Aira was founded last year in Stockholm with the backing of the Swedish impact investor Vargas, but it has its sights set on European countries where the heat pump market is preparing to grow at pace. It began a pilot scheme in Italy earlier this year, and plans to launch in Germany as well as the UK.
As part of this plan, it will invest £300m in the next three years in a series of academies across the UK, which it predicts will produce an 8,000-strong army of skilled installers to fit the heat pumps, manufactured at its factory in Poland. Its first two UK academies will be based in Sheffield and London.
This workforce will underpin Aira’s commitment to complete each installation within 30 days of order, and provide a 10-year service guarantee that households will enjoy 20C comfort on even the coldest day of the year.
Aira customers typically choose to pay back the cost of the heat pump, and its installation, over 10 years, or half the expected lifespan of the heat pump. If a customer moves house, they are able to pass the contract to the next owner, or pay the balance of the deal off with the proceeds from the sale.
“We’re providing a hassle-free, one-stop shop experience. It’s a confidence guarantee. If the heat pump doesn’t work, or if you need to repair or maintain it, it’s on us,” Lewerth said. The company will even fill out the paperwork required to access the government’s gas boiler replacement scheme.
Official figures released late last week revealed that the government’s recent decision to increase the size of the grants available towards a new heat pump to £7,500 had ignited a surge in demand.
The number of households applying for a grant, which goes towards the cost of a new heat pump, reached 1,150 in the first week at the more generous level – more than three times higher than the average weekly rate before the change. In the three weeks that followed, new applications remained almost 60% higher, according to the government.
Lewerth acknowledges that, though he is offering a novel business model for Britain’s heat pump market, it is unlikely to remain unique to Aira for long. He expects others to follow suit, and has already been approached by energy suppliers potentially interested in partnering with the company to bring the offer to their customers. It is likely to become a crowded marketplace, but gaining even a small foothold in the UK could prove lucrative.
The UK still relies on 25m gas boilers to heat homes, which make up about 16% of the nation’s total greenhouse gas emissions. In the coming decades these will need to be replaced by low-carbon alternatives.
The government hopes that as many as 600,000 electric heat pumps will be installed every year as part of the drive to decarbonise.
Lewerth has only ever used heat pumps for his home and said he found the “unfair myths” circulating in some of Britain’s newspapers about the technology “amusing”.
“If it works in Scandinavia, which is not known for its mild winter climate, then it will work in other markets. Some people will say that heat pumps won’t work for every house … but honestly, I think the important thing to remember is that they already work for the majority of UK households. And I don’t know a single technology or product that would be able to serve 100% of Europe’s households. I look at opportunities, not problems.”
