Mission Radar: emerging signals and innovation trends in low-carbon heating

This first edition of Mission Radar launches a regular briefing series on innovation signals and emerging trends in Nesta’s mission, which focus on breaking the link between family background and life chances, increasing healthy life expectancy, and reducing home carbon emissions.

We use AI to scan for innovation in business, academia and policy. Our goals are to offer insights on where change is happening, identify what’s gaining momentum, and pinpoint what could impact these domains in the future.

This edition is on Nesta’s sustainable future mission.

Venture funding trends: Heat pumps drive low-carbon investment surge

Heat pumps attracted more venture capital investment than any other low-carbon heating technology between 2020 and 2024, signalling growing confidence in the long-term commercial potential of this technology.

Global early- and growth- stage investment in heat pump related ventures grew by 1,129% during this period, driven by consistent growth in early-stage investment.

Overall investment in low-carbon heating rose by 734% over the same period. This includes ventures related to technologies such as heat storage, geothermal and solar thermal.

The emergence of substantial growth stage deals suggests increasing maturity of this technology area. Three major growth-stage investments totalling €465 million were recorded in 2021 and 2023. All were for Enpal, a German solar leasing company that also offers broader home energy solutions including heat pumps. Enpal also opened a heat pump academy last year.

🛰️ On the radar: Companies raising money this quarter

These low-carbon heating ventures attracted investment in Q1 2025 and
stood out for their potential to accelerate home decarbonisation.

Green Fusion (Germany) | €12 million Series A | AI optimisation for home heating systems

🔎 What is it? AI is entering the boiler room. German startup Green Fusion claims its AI-powered software can reduce heating costs and emissions by 16% on average by optimising how household heating systems operate, including gas, district heating, and heat pumps.

💡 Why it matters: This tech could help homes start decarbonising now without major upgrades.

📡 What to track: Adoption rates. Solutions like this focused on individual customers (in this case housing companies) are often harder to scale quickly.

Nido (Spain) | €5 million seed round | Software to speed up heat pump installation

🔎 What is it? Installation times and staff shortages are a bottleneck in heat pump deployment, but new digital products are emerging to address this challenge. Spanish startup Nido claims its software, which includes a 3D modelling tool, can reduce installation times by over 40%.

💡 Why it matters: If scalable, this could enable faster and more cost effective heat pump rollout across households.

📡 What to track: Whether these time savings hold across all home types and installation scenarios.

Podero (Austria) | €5.5 million seed round | Smart energy control for utilities

🔎What is it? As homes adopt more flexible devices, like heat pumps, electric vehicles (EVs), and batteries, utilities face growing challenges in managing energy demand. Austrian startup Podero has developed software that helps utilities optimise how and when these devices operate. The company claims that its software reduces consumer electricity bills by over 25%. It also allows utilities to aggregate and trade this flexible demand on electricity markets.

💡 Why it matters: Smarter control of when devices use electricity at the utility level could be a game changer for demand flexibility, helping households save while supporting a more resilient grid.

📡 What to track: Adoption by utilities. Coordination across energy companies will be key to achieving scale.

Mixergy (UK) | £12 million (Series unknown) | Smart hot water storage

🔎What is it? Efficient water heating is an overlooked challenge in the shift to low-carbon homes. Oxford-based Mixergy’s smart hot water cylinders heat only the amount of water needed, which it claims reduces hot water bills by up to 40%. Mixergy’s tech is compatible with multiple heat sources, including gas boilers, solar PV, and heat pumps, and is designed to integrate with smart tariffs and home energy systems.

💡 Why it matters: The technology is particularly useful in homes where space constraints make it difficult to accommodate a full-sized hot water cylinder alongside a heat pump, such as in smaller homes, newer homes, or homes that currently have a combi boiler.

📡 What to track: Partnership agreements. Mixergy plans to use the funding to work more closely with other companies – like manufacturers, builders, or energy providers – who can help bring its technology to more homes than selling directly itself.

Nesta’s Impact Investments team is an active investor in Mixergy, with a total of £1.1 million invested to date following an initial £750,000 investment in 2023.

Research funding trends: Sustained funding for low-carbon heating projects while hydrogen energy and carbon capture dominate green tech research

The number of low-carbon heating research projects funded by the UKRI remained stable between 2020 and 2024. New awards totalled almost £40 million in 2024, which is comparable to levels seen since 2019. Research related to heat pumps, however, have seen a decrease in funding by about 30% over the same time period.

This could signal the maturity of heat pump technology and a shift in resources from research to deployment. This is especially when considered in parallel to the surge in venture investment.

Hydrogen energy and carbon capture have seen significant research funding growth, reaching more than £100 million in newly awarded project funding in recent years.

Hydrogen energy research growth has been driven primarily by efforts to develop scalable, low-cost green hydrogen production, particularly via advanced electrolysis and electrocatalysis. While hydrogen is not the solution for decarbonising homes, this foundational work could underpin progress for sectors that are considered hard to electrify, such as heavy industry.
The 2021 spike in carbon capture research funding was driven by four major research projects aimed at decarbonising industry in Northeast England and South Wales, totalling over £80 million.

🛰️ On the radar: Research funded this quarter

These research projects received funding in Q1 2025 and stood out
for their potential to accelerate home decarbonisation

ICAX (UK) | £49,865 grant | High temperature heat pump accreditation

🔎 What is it? Heat pumps that run at higher temperatures reduce the need to upgrade radiators or pipework, making them an attractive option for home retrofits and gas boiler replacements. ICAX’s Seren 10 heat pump uses R290 (propane) refrigerant and supplies water up to 75°C, higher than the typical 45°C-55°C range for most air source heat pumps.

💷 What’s the funding for? ICAX aims to achieve Standard Assessment Procedure (SAP) status for the Seren 10 with this research project, which could lead to it being eligible under the government’s Boiler Upgrade Scheme (BUS).

💡 Why it matters: It potentially addresses the major barrier of substantial heating system upgrades like radiators and pipework when switching to a heat pump.

📡 What to track: Electricity prices will be a key factor in the financial viability of higher temperature heat pumps, as higher operating temperatures require more electricity.

Sunamp (UK) | £49,040 grant |Validating latent heat battery for the Home Energy Model

🔎 What is it? Latent heat batteries are alternatives to traditional hot water cylinders, storing heat using phase change materials rather than as hot water in tanks. This enables smaller and more efficient heat storage, which is useful for compact homes.

💷 What’s the funding for? Sunamp received funding to validate its thermal battery technology, so it can gain regulatory recognition in the new Home Energy Model (which will replace the SAP), opening the door to wider scale adoption in home heating systems.

💡 Why it matters: This tech could make a big difference to heat storage in smaller homes where it is harder accommodate traditional cylinders.

📡 What to track: Whether validation accelerates adoption and if applications expand outside of smaller homes.

Tepeo (UK) | £49,951 grant | Electric boiler alternative for hard-to-retrofit homes

🔎 What is it? Low-carbon heating systems like heat pumps are not financially or practically viable for all households. One alternative is electric boilers. Tepeo’s Zero Emissions Boiler (ZEB) is 100% energy efficient (100% of energy used is converted into heat), higher than a typical 90% efficient gas boiler (but less than a typical 300% efficient heat pump). It’s designed to charge in off-peak hours, helping to reduce strain on the grid and lowering running costs.

💷 What’s the funding for? Tepeo’s research project is testing the ZEB at Salford’s Energy House in the conditions of a typical 1960s UK home which is necessary to secure SAP accreditation.

💡 Why it matters: The ZEB could offer a practical decarbonisation route for homes where heat pumps aren’t a viable option.

📡 What to track: If SAP accreditation leads to better Energy Performance Certificate (EPC) ratings, it could position the ZEB for wider adoption, particularly in large-scale retrofit programmes like social housing upgrades.

Policy trends: Increasing air time in parliament for heat pumps

Among low-carbon heating technologies, heat pumps featured in debates at the House of Commons most often this quarter. This includes many references to the Warm Homes Plan, which included a £30 million boost to the BUS, raising the total 2024/25 budget to £180 million. The government announced it will remove the rule requiring air source heat pumps to be installed at least 1-metre from property boundaries, reducing planning requirements for households. The government also earmarked grant-funded energy efficiency upgrades – including insulation and low-carbon heating – to social housing residents, lower-income householders and renters.

This comes as BUS grants saw a record number of applications in Q1 2025. Increased policy focus on heat pumps and growing consumer uptake suggests progress towards the Climate Change Committee (CCC) recommendation in the Seventh Carbon Budget that 6% of UK homes should be heated by heat pumps by 2030. Faster deployment will be needed to meet the CCC’s goal of 450,000 heat pump installations per year by 2030.

Despite increased focus on heat pumps, solar and energy efficiency were the most heavily referenced green technology topics in parliament in Q1 2025. The New Homes (Solar Generation) Bill had its second reading in January 2025. The bill, which sought to ensure all new homes built have solar panels, was rejected by MPs.

Sorting the signal from the noise

Finally, an alternative way to view and compare the innovation signals is to benchmark them against suitable baseline measures.

For example, venture funding growth rate for heat pumps can be compared with a baseline growth rate across all sectors to understand if startups related to heat pumps are performing better than the overall market. Similarly, the funding amount of a research project can be compared to an average project funding to ascertain the size and ambition of the proposed project.

Such a data-driven approach to measure signal strength is complementary to the Mission Radar introduced above (which is driven by expert judgement) and we can use it to identify the most significant outliers - signals that might warrant particularly close attention.

This brings into focus trends such as the surge in venture funding and parliamentary attention around heat pumps, which are among the strongest signals from this quarterly update.

Let us know what you think about our first edition of Mission Radar. We will continue improving this format and share more innovation signals in future editions.

Methodology

We sourced venture capital investment data from Crunchbase, a business information database covering more than 3 million start-ups and companies globally.

Research data was sourced from the Gateway to Research portal which lists projects funded by UK Research and Innovation (UKRI). UKRI is responsible for funding a large proportion of UK research and development (£6.3 billion, or about 36.2% of the UK Government’s R&D expenditure in 2022).

House of Commons debates were sourced from TheyWorkForYou, a free platform managed by mySociety to make Parliament data more accessible.

To assess the relevance of data to various green technology and low-carbon heating categories, we combined a keyword-based filtering approach with generative AI zero-shot classification. For low-carbon heating, we manually reviewed venture capital and research funding records in detail, while applying selective spot checks across other categories. Our method achieved an estimated labelling accuracy of 83%, with particularly strong precision at 94%. This means that while most of the data we included is accurately categorised, the method may miss relevant items - leading to a degree of underestimation. We’re continuing to refine this approach to improve coverage in future iterations.

Our datasets have inherent limitations (such as gaps in the coverage of private R&D spending) and the semi-automated nature of our data labelling approach can result in occasional false positive or false negative results. Moreover, our method identifies data that is likely to be relevant to low-carbon heating technologies, but the nature of the associated can vary from strong to circumstantial: for example, a technology might be the focus of a research project or just as part of a project but not the primary focus.

Due to these caveats, we interpret the reported trends as data-informed hypotheses about the innovation system rather than a definitive picture.

For the reported growth rates, unless specified otherwise, we use a three-year rolling average and compare the years 2024 and 2020 to produce a smoothed estimate that reduces the impact of annual variability.