Aira sets out bold ambition for UK heat pumps with £300m investment

Aira has launched into the UK, backed by £300 million in the first three years, with a distinctive and disruptive strategy selling direct to consumers on a monthly subscription with no upfront costs.

The Swedish-owned company believes that the strategy will persuade UK customers away from fossil fuels and toward heat pumps and an ‘electric ecosystem’.  Its ambition is to sell a million heat pumps in its first ten years, creating up to 8000 jobs in the process.

By offering a combination of initiatives, ranging from no-upfront cost to a ten-year maintenance plan to guarantees of installation times, Aira believes it will be able to remove the risk for customers of moving from boilers to heat pumps. Significantly, the company claims with the £7500 subsidy from the Boiler Upgrade Scheme factored in, its installation and maintenance model, combined with efficient performance, will cut the costs of heating by 25% against conventional boilers over the heat pump’s life. This figure could rise to a head-turning 55% if taking on elements like battery storage, the company believes.

The company has high hopes for its Comfort Guarantee model, where maintenance is rolled into the price and all breakdown servicing is free, backed by remote diagnostics. UK CEO Daniel Särefjord (pictured below) said:

Coming from Sweden, I have lived with heat pumps for my entire life, so I know they work. But we want to take the risk away, with the ten-year comfort guarantee. We are saying: ‘If you have any problems [during that time] it’s on us…We know there is a significant amount of work ahead of us, because there are 25 million boilers in the UK…the gas network represents a magnificent feat of engineering, but we can’t afford to let that stand in our way, we must move away from fossil fuels.

Initially the company will install other manufacturers’ heat pumps, principally Vaillant, ahead of the launch of its own-brand Aira range, using R290 propane refrigerant, by the end of the first quarter of 2024. The ranges will begin with 6-8kW and 10-12kW and then be expanded in line with demand. Daniel said:

We aim to be a bit like Ikea in that we might not have everything for everyone, we truly have something that fits the masses. And we can work with the Vaillants of this world to suit those customers that don’t.

The Aira heat pump range will be built in a ‘Gigascale’ factory in Poland, repurposed from its former use building diesel engines for buses.

A significant element in its plan is to create Aira Academies to train hundreds of current gas engineers to install its heat pumps and to become what it terms Clean Energy Experts. The first two academies will be in London and Yorkshire. The Aira model will see face-to-face visits ahead of design and installation, Daniel Särefjord emphasised:

These will be in-house visits, not be controlled by algorithms.

The company has already assembled a workforce of 200, including its recent acquisition All-Seasons Energy, and it plans 300-400 surveys in the first three months.

Aira’s strategy is to offer a full electric ecosystem to customers, ranging from heat pumps to solar and storage, dynamic tariffs and EV charging – and where required, insulation too. The ultimate ambition is to have much of this Aira-branded and controlled by its own management app. Daniel said:

The ecosystem is currently fragmented and complex, and the result is that many people simply give up. We want to make it hassle-free.

He stressed that it shouldn’t be a choice only for the affluent:

If you are only going to do one thing, the most important thing should be to install heat pumps, but if you are going to get the most out of your clean energy then you should install more of the ecosystem. But we recognise that it is a major investment – net of subsidy it can be £20-30k which is out of reach for the vast majority of people. But we believe that for a £200-300 monthly investment you could have the opportunity to almost eradicate your energy bills. Instead of sending money to the Norwegian state for instance [via gas bills] you could add value to your property with valuable equipment. That is the magic we are trying to make happen.

Aira also has unruffled attitude to the current level of competition in the UK heat pump market – with over 25 brands clamouring for attention – believing that at this early stage of the market, building awareness amongst consumers is the most important factor. Daniel said:

I honestly hope the likes of Octopus are successful because there are currently only 50,000 heat pumps sold every year against 1.8m boilers so we will all have to be working together.

Aira believes that a significant obstacle to the take-up of heat pumps in the UK is the potential installation time, so it is offering a guarantee to install within 30 days of order, providing that the installation doesn’t need planning permission or DNO.

Daniel noted that the need for planning permission to install heat pumps in some instances remains a key barrier and he urged the industry to help persuade the government to drop this requirement. He said:

Poor planning policy is a barrier and needs to change. You can’t wait two months for planning permission – particularly since many will want to do it when their boiler breaks down…I actually think that the admin is currently the biggest challenge. We have had to double or even triple our admin resources to cope with the paperwork around planning policy and DNOs and it creates a whole lot of uncertainty because you don’t really control the utilisation if you don’t know when authorisations will come in. If the government is really serious about net zero then these red tape issues need to be removed.

Aira group CEO Martin Lewerth added that the move to heat pumps would also make a major impact in carbon terms. He said:

Residential heating is the third biggest emitter of carbon in Europe. We don’t hear a lot about that. In the UK, it is responsible for 16% of emissions…This is an opportunity to drastically reduce CO2…It is the most carbon efficient change that consumers can make.

Martin also underlined how important the heat pump industry could be to the economy across Europe. He said:

By 2030 it could be a 100 billion euro market – it could be one of the biggest industries in Europe.