Sweden's Aira opens $321 million heat pump plant in Poland

WARSAW (Reuters) - Swedish heat pump group Aira will open its first factory this week, a 300 million euro ($320.9 million) plant in Poland, with a plan to roll out full capacity of 500,000 units per year as European demand rises, its CEO said.

Aira, founded by Vargas Holding, which also owns battery maker Northvolt, is targeting European markets including Britain and Germany where heat pump penetration is relatively low compared to its home market, Martin Lewerth said in an interview.

He said the company had a "very positive outlook" on demand, with gas prices remaining at a historically high level.

Following Russia's invasion of Ukraine in 2022, which led to a major energy crunch, the European Union said it would aim to deploy at least 30 million heat pumps this decade to lessen dependence on imported fossil fuels.

European heat pump sales hit a record 2.77 million that year but fell 5% in 2023, data from European Heat Pump Association show, as divisions on the pace and cost of the green transition led to a phase-out of the German fossil fuel boiler ban last autumn.

In December, the European Commision delayed the announcement of the Heat Pump Action Plan until after the EU election.

Lewerth said he expects the slowdown to be temporary as the pace of installations is robust, while subsidies in key markets have increased.

"In the UK, they increased the subsidies from 5,000 pounds ($6,319) to 7,500 - in Germany, you can get up to 70% subsidy on your installation. I think these are very strong signals."

The company's backers include Lingotto, Statkraft Ventures, and Temasek.

($1 = 0.9349 euros)

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(Reporting by Marek Strzelecki; Editing by Jan Harvey)