Heat Pump Startup Aira Raises $174M to Decarbonize Residential Heating

Stockholm-based heat pump startup Aira has announced a €150 million ($174 million) equity financing round aimed at supporting the expansion of its operations and product portfolio to help electrify and decarbonize residential heating. The funding was secured from existing investors including Altor, Kallskär related entities including Vargas, Kinnevik, Lingotto, and Temasek.

Heat pumps are rapidly emerging as a key energy-efficient and climate-friendly alternative to traditional furnaces and air conditioners, producing fewer greenhouse gas emissions and reducing reliance on fossil fuels. According to Aira, switching from a gas boiler to an air source heat pump with the company’s clean energy solution can reduce household heating costs by up to 40% and CO2 emissions by 100% when renewable energy powers the heat pump.

Launched in 2023 by impact company builder Vargas, Aira provides solutions for heating and powering homes with clean energy, including its air source heat pump technology that absorbs outdoor thermal energy and utilizes it to heat homes and water. The company has demonstrated rapid growth, expanding into Germany, Italy, and the UK while achieving a revenue run-rate of €200 million.

The company now employs 1,200 people and has opened 18 hubs and four Aira Academies to train heat pump installers across Europe. This infrastructure development reflects the growing demand for skilled technicians in the heat pump installation market and Aira’s commitment to building a comprehensive service network across its target markets.

The new capital will be used to accelerate the scale-up of Aira’s operations and offerings, with plans to invest in its Swedish R&D center to develop its integrated product portfolio and increase production capacity at its factory in Wroclaw, Poland. The company also intends to deepen its presence in existing markets and strengthen strategic partnerships with key players in the home and energy sectors.

“Backed by world-class investors, we’re building a clean energy-tech leader with expert teams and a clear mission to decarbonise residential heating, all while lowering energy bills and increasing household comfort for millions,” said Peter Prem, CEO of Aira Group. The investment comes at a time when European governments are increasingly focused on reducing carbon emissions from residential heating, creating favorable policy conditions for heat pump adoption.

Looking ahead, Aira has indicated plans to launch in additional European markets over the next decade, positioning itself to capitalize on the growing momentum toward electrification of home heating systems. The combination of cost savings, environmental benefits, and supportive policy frameworks suggests strong growth potential for the heat pump sector across Europe, with Aira well-positioned to capture market share through its integrated approach to product development, manufacturing, and installer training.