Heat pump startup Aira announced today that it has raised €150 million (USD$174 million) in a new equity financing, with proceeds aimed at supporting the expansion of its operations and product portfolio to help electrify and decarbonize residential heating.

Heat pumps are rapidly emerging as a key energy efficient and climate-friendly alternative to 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 100% if renewable energy is used as the source of power for the heat pump.

Launched in 2023 by impact company builder Vargas, Stockholm, Sweden-based Aira provides solutions for heating and powering homes with clean energy, including its air source heat pump, which absorbs outdoor thermal energy and utilizes it to heat homes and water. To date, the company has expanded into Germany, Italy, and the UK, with a revenue run-rate of €200 million, and it now employs 1,200 people and has opened 18 hubs and four Aira Academies to train heat pump installers across Europe. The company has said that it plans to launch in to European markets over the next decade.

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

The equity financing was secured from Aira’s existing investors, including Altor, Kallskär related entities including Vargas, Kinnevik, Lingotto and Temasek.

Aira Group CEO Peter Prem said:

“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.”