Northvolt founder launches household energy’s answer to Tesla

Swedish-based VC firm Vargas – which specialises in launching clean tech unicorns – has announced a large-scale direct-to-consumer operation, Aira, that will offer air source heat pumps to residential customers for a fixed monthly fee.

The scandi private equity company – which helped found energy storage firm Polarium, EV battery manufacturer Northvolt and sustainable steel maker H2 Green Steel – hopes to popularise and demystify heat pumps across European households.

Air source heat pumps use electricity to operate – and work in a similar way to a fridge – but in reverse.

According to CEO of Aira Martin Lewerth – who spoke at the Vargas launch event of its fourth venture this morning, the pumps use a small amount of energy to extract heat from the air outside and uses it to warm homes.

Lewerth claims that these pumps are four times more efficient than a gas boiler.

One of the key factors preventing households from switching to heat pumps has been the initial outlay. Pumps can cost between €15K to €25K to install.

However, Vargas is offering to bake the cost in a fixed contract subscription (like a mobile phone deal) that could come in at around £75 per month, depending on the size of the property and its location.

After the heat pump, Aira said that it also plans to also supply solar panels and batteries for energy storage.

“We hope to build out the ecosystem so that consumers can store energy when the tariff is low. If you start to combine it with solar system you will not have to buy that much energy from the grid and it will be managed through an app,” Lewerth explained.

The firm believes that combatting residential energy emissions by offering a cleaner energy supply will reduce energy bills by 30% and could cut a nation’s direct carbon emissions dramatically.

In Sweden, where 43% of households have a heat pump, direct emissions from household heating are 1%.

Compare this to gas-reliant territories such as the UK or Italy where emissions are closer to 16% which is five times more of a pollutant that the cement industry, 2.5 times more than the steal industry and as much as the carbon emitted by cars, according to Vargas.

Within ten years Aira said that it aimed to serve five million European homes with “much needed greener and cheaper residential heating”.

At the launch event Lewerth confirmed that the venture would initially focus on residential rather than commercial buildings.

“We are focusing on large existing housing stock. Maybe we will go b2b in the future,” he added.

Gigafactory

To support the firm’s efforts, Aira is building a heat pump gigafactory in Wroclaw, Poland, on the site of a former Volvo factory, inheriting some of its former staff and facilities. Production is due to start next year.

“We want to make the same impact as Tesla has with EV cars,” said Lewerth.

“Since its inception Tesla has sold 2.5m EVs– and I think in this space [heat pumps] we can do this with households,” he added.

Vargas said that the start up would also train thousands of gas engineers by investing in training and retraining academies across Europe.

Aira has said that it hoped to have 10,000 clean energy experts and technicians employed across Europe by the end of the decade.

Other significant investments will be made in its salesforce as well as raising consumer awareness around gas pumps and busting some of the current myths.

So far, Aira has raised £30m from Vargas and will need £130m in total.

Aira is currently piloting in Italy and will launch in Germany and UK later this year, adding that its “2030 ambition” is to be present in more than 20 markets.