Heat pumps (2025)

Heat pump takeup in Europe has stalled. Sales fell 23% last year, slowing the shift away from gas-burning boilers. These once-obscure devices — which are basically fridges in reverse, as they extract heat from the environment and add it to something we want to heat — experienced a surge in popularity after Russia’s full-scale invasion of Ukraine sent gas prices soaring in 2022. But last year, the demand for these devices fell by about half in Belgium and Germany, and by 39% in France. The UK was the only country to buck the trend, where sales rose 63% between 2023 and 2024.

Heat pumps are a common sight in cold Nordic countries where electricity is cheap and carbon taxes are high, but they’re a polarising item in most of Europe. The majority of European homes still use gas; heat pumps sell for on average €10k-15k each — a higher upfront cost than a gas boiler (although heat pumps are usually cheaper to run).

But for the EU to meet its carbon neutrality goal by 2050 something’s got to give. Heat pumps are seen as a key part of reaching that goal. There’s also money to be made by VCs who back the right horses — the market to replace more than 90m gas and oil heaters in Europe with cleaner alternatives could be as big as €150bn.

To this end, startups are manufacturing, installing and helping to sell or finance heat pumps. On the production side are European companies like Aira Home, Qvantum and Quatt. Sweden headquarter-ed Aira sells to the UK, German and Italian markets. The company opened a factory in Poland last April to produce 500k heat pumps annually. In 2024, Aira also raised a €200m debt facility from BNP Paribas. Dutch heat pump startup Quatt, which has raised €27m in equity, has developed a hybrid heat pump that lets homeowners integrate the product with existing gas boilers before gradually transitioning to an all-electric solution.

Installers include Enpal, 1Komma5°, Vamo, Hometree and Drem. Germany’s Enpal installs heat pumps made by manufacturer Bosch. By tapping its existing customer base for solar panels, Enpal has installed 5,000 heat pumps in the last 18 months — which has given it the leading spot for heat pump installations in Germany. 1Komma5°, also German, has grown by acquiring solar and heat pump installers across its markets in Germany, Sweden, Finland, Denmark, Netherlands, Spain and Australia. Similar to how Enpal is targeting its existing solar customers to sell extra heat pumps, the UK’s Hometree is tapping its 100k home emergency insurance and boiler customers for heat pump sales.

Another grouping are the matchmakers. Prague-based Woltair offers a platform that connects installation and maintenance businesses with consumers who want to install sustainable energy solutions, such as a heat pump or a solar panel. In 2022, the company completed a total of 1,900 installations of heat pumps and solar panels. Some startups offer heat pump financing. Berlin-based climate fintech Cloover, for example, has developed a platform that enables vendors of renewable energy technologies to offer their services through flexible subscription models.