Anzen’s Thermoelectric Heat Pumps: Innovation, Market Potential, and Investment Risks

Anzen offers innovative thermoelectric heat pumps for hard-to-retrofit existing buildings, but also faces critical scaling and validation risks. The investment is primarily suitable for specialized early-stage impact funds with hardware expertise—traditional VCs should wait for product-market fit and serial production.

The London-based climate tech startup Anzen has attracted significant attention with its recent £1.1 million pre-seed funding round. The development of a refrigerant-free, thermoelectric solid-state heat pump promises a true revolution for decarbonizing existing housing stock. But how innovative and scalable is the model really—and what does this mean for investors looking to combine impact, hardware, and scale?

Why Anzen Convinces Investors

Anzen’s solid-state heat pump takes a completely new approach: plug-and-play, no refrigerants, CE-certified, and installed within a few hours—addressing major weaknesses of today’s systems. Hard-to-retrofit or small apartments in particular benefit. It’s a compelling narrative for anyone looking to unlock the existing building stock (Sustainability as a Growth Engine). This approach aligns with the growing demand for decarbonization solutions that do not require invasive renovations, a challenge that has long stymied progress in older or multi-unit buildings (GoodWindCo.in).

With this technology, Anzen aims to decarbonize one million British households by 2035—a huge market with over 25 million potential units. Especially the target group of renters, low-energy households, and hard-to-retrofit buildings has so far been barely reached by conventional heat pumps (New Machines, Fewer Emissions). Notably, the UK government has set ambitious targets for heat pump installations, aiming for 600,000 units per year by 2028, yet adoption remains sluggish in the retrofit segment (CAN Europe).

Market Potential and Current Trends

Total Addressable Market: The addressable market is substantial—over 25 million hard-to-retrofit British households, focused on energy-poor households and rentals. This segment is severely underserved, as conventional heat pumps are not economically viable here. According to a 2025 market report, the global solid-state heat pump market is projected to grow at a CAGR of over 20% through 2030, driven by regulatory pressure and electrification trends.

Go-to-Market Challenges: The critical point lies in monetizing the target group. Low-to-middle-income households and renters are typically excluded from CAPEX-intensive solutions. Without attractive financing models (pay-per-use, leasing) or massive government subsidies, market access remains limited. Recent pilots in Germany and the Netherlands have shown that subscription-based models can accelerate adoption in similar demographics (BestHeating).

Sales Strategy Unknown: While the technology is convincing, the business model is still open: Will Anzen sell to end customers, utilities, or housing associations? Will they offer leasing or subscriptions to lower CAPEX barriers for renters and low-income users? Without a clear service and maintenance focus, there’s a risk of a price war in the low-end segment (Small, Smart, Effective – How Green Micro SaaS, Environmental APIs, and AI Deliver Real Impact). The experience of other climate tech startups suggests that partnerships with social landlords or energy service companies can be pivotal for scaling in this market.

The climate tech sector has enormous growth potential: global market volume is expected to exceed $220 billion by 2035 (StartUs Insights). However, VCs are currently showing some restraint, especially regarding hardware and deep tech—keyword “FOAK-fatigue” (What Climate VCs Are Looking For). Many investors are now focusing on software or capital-light business models, as hardware startups often face longer development cycles and higher capital requirements (4 Types of Climate Startups That Will Struggle to Raise in 2025).

Growth in the heat pump sector stagnated in 2023/2024 despite political support. Reasons include volatile gas prices, high electricity taxes, complex installations, and a shortage of skilled workers. These structural barriers also affect Anzen—however, the team is specifically addressing the market gap for plug-and-play solutions (Climate Risks and Insurance). For example, a 2024 report by Carbon Brief noted that installation bottlenecks and upfront costs remain the main hurdles for UK households (Carbon13).

Funding Context: £1.1 million pre-seed offers limited runway for hardware development and market entry. The next funding round will be critical—without measurable traction, Series A will be difficult. This is consistent with sector-wide trends, where hardware startups often require bridge funding or strategic partnerships to reach commercial scale.

Technology, Differentiation, and Defensibility

Anzen relies on a thermoelectric architecture and completely eliminates refrigerants. This is not only environmentally friendly but also a regulatory advantage (EU Taxonomy Checklist). CE certification is a strong signal for market readiness, and patents and initial IP rights strengthen the position. However, the decisive factor remains how robust and efficient the technology performs in the field—so far, there is a lack of independent long-term data or large-scale reference projects (Evaluating Climate Protection Technologies with LCAs and Project FRAME). Independent validation is a key milestone for any hardware startup, as demonstrated by the success of competitors like Blue Frontier and Gradient, who secured major contracts only after third-party performance verification (Verified Market Reports).

System integration, software, and the analysis of service and usage data could provide a competitive edge in the future. However, the technological lead is not yet secured by industrial scaling. Especially in hardware, the “fast follower” effect is real when large players like Bosch or Daikin invest billions in new platforms. According to POW Workshops, Anzen’s rapid prototyping is promising, but the leap to mass production remains a formidable challenge.

Other climate tech startups are working on similar retrofit heating approaches. Differentiation is becoming increasingly difficult, as seen with the entry of global HVAC manufacturers into the solid-state and hybrid heat pump space.

Impact, LCA, and Regulation

Anzen promises significant CO₂ savings—according to their own statements, two to three times more efficient than conventional electric heaters. Impact attribution (as is often the case in the industry) is based on “full substitution” (i.e., assuming each installed unit fully replaces an inferior technology). Additional CO₂ reduction has not been independently validated; lifespan, maintenance, and rebound effects are unclear. This mirrors a broader industry challenge, as highlighted by the IEA, which notes that real-world performance of heat pumps can vary significantly from lab results (IEA Heat Pumps Report).

This is crucial for genuine Article 9 financing and classification as an impact investment: Without solid evidence, the CO₂ claim remains vulnerable (How to Integrate Sustainability Early in Product Development). Investors increasingly demand rigorous Life Cycle Assessment (LCA) methodologies and third-party verification before committing capital.

In addition, Anzen has, for the first time, provided a transparent accounting of Scope 1, 2, and 3 emissions for pre-series operations and the first delivered units. During the analysis period (18 months), around 3.75 t CO₂e were recorded for operation and manufacturing (Scope 1, 2, 3). Most emissions stem from material use (mainly steel) and test operations. By replacing gas heating—and assuming full use and manufacturer data—each unit could theoretically save around 8.8 t CO₂e (Scope 4). For context, the average UK household emits approximately 2.7 t CO₂e annually from heating, underscoring the potential impact if Anzen’s claims are validated (UK Housing Energy Fact File).

A systematic transition plan outlines the targeted reduction of Scope 1–3 emissions by 2035, including material optimization, local supply chains, circular economy, and partnerships with CCUS providers. This proactive approach aligns with emerging EU taxonomy and SFDR Article 9 requirements, positioning Anzen as a credible candidate for impact-focused capital (How to Position Your Climate Tech Startup for Article 9 VC Funds).

Team and Traction

The founding team is diverse and brings both technical and market-oriented expertise. Motivation from personal experience and early involvement of impact-oriented investors are plus points. However, there is currently a lack of experience in industrial scaling and building manufacturing capacity. For the true mass market, large-scale proofs of concept, reliable KPIs, and a clearly communicated business model are still missing (5 Success Factors for Startup Scaling 2025). Notably, startups like Octopus Energy and tado° only achieved breakthrough growth after demonstrating scalable deployment and robust customer metrics (StartUs Insights).

Risks and Red Flags

• Scaling: Hardware scaling is capital-intensive; the transition from prototype to serial production is the classic “valley of death” for deep tech startups. According to StartUs Insights, over 60% of climate hardware startups stall at this stage due to funding or supply chain gaps.
• Competition: The big players aren’t sleeping—their scale advantages can overwhelm new entrants if they don’t develop a robust tech or cost moat.
• Traction and Market Acceptance: No proven revenues yet, no installed fleet, no partnerships with industrial manufacturing partners or major customers.
• Regulatory Dependency: Subsidy policies can change quickly, especially during political upheaval.
• Impact Attribution: Without independent LCA and field measurements, additionality remains unproven—crucial for all Article 9 investors (Sustainability as a Success Factor).

Investment Recommendation

For Impact/Hardware Funds:

Potentially interesting—but only with clear due diligence on:

• Independent LCA and impact validation
• Manufacturing scaling plan with industrial partners
• GTM strategy with CAPEX-light financing models
• Co-investor with deep tech expertise

It is a positive sign that Anzen already provides a transparent CO₂ balance sheet (Scope 1–3) and is developing a decarbonization strategy through 2035—this is not a given for deep tech startups at the pre-seed stage and facilitates due diligence for Article 9 investors.

For Traditional VCs:

Wait—until product-market fit and scalable serial production are demonstrated.

For Institutional Investors:

Too early—only relevant from Series B onwards, with proven commercial scaling.

Next Steps for Investors

Due Diligence Priorities:

1. Independent technical validation of efficiency claims
2. LCA and impact measurement framework
3. Manufacturing roadmap and partner strategy
4. Customer discovery and GTM validation
5. Competitive intelligence on incumbent strategies
6. Review of Scope 1–4 emissions balance, methods, and assumptions
7. Assessment of the climate transition plan (ambitious but realistic targets, clear milestones)

Red Flags to Clarify:

• Why are no manufacturing partnerships visible?
• How will the target group be monetized?
• How will the startup defend itself against big tech?

This investment remains a typical deep tech case: great potential, but massive execution risks. Suitable only for investors with corresponding risk tolerance and portfolio diversification.

Disclaimer & Methodological Limitations

This investment analysis is based on publicly available information and represents an external remote analysis without access to internal company data. The assessment was made solely on the basis of press releases, public funding announcements, media reports, and industry-standard market data.

The information on emissions balances and the transition plan is based on company assumptions and publicly communicated data (as of June 2025). No independent validation is available.

Important Limitations:

• No Due Diligence: This analysis does not replace professional investment due diligence with access to pitch decks, financial models, management presentations, or confidential company information
• External Perspective: Assessments are based on public sources and industry comparisons, not on internal KPIs, unit economics, or detailed technology assessments
• Timing Limitation: The status of the analysis reflects the information available at the time of writing (June 2025)
• No Investment Advice: This analysis does not constitute a buy or sell recommendation and is not a substitute for individual investment advice

Purpose: This analysis is intended solely for general market assessment and as an example of investment evaluation methods in the climate tech sector. For concrete investment decisions, professional due diligence processes with direct company access should be conducted.

Disclaimer: fiegenbaum.solutions assumes no liability for the completeness, accuracy, or timeliness of the analyzed information or for any investment decisions derived from it.

For professional investment advice and due diligence support in the climate tech sector, contact me directly.

Sources

Anzen. (2025). Scope 1, 2, and 3 with Transition Plan. https://docs.google.com/document/d/1QmNQ_ls8P9zhrovO6jZXymFjtqOvP9WL5S9Go95E37s/edit?tab=t.0

Carbon13. (2024, June 19). Anzen secures £1.1m pre-seed funding to revolutionise home heating. https://carbonthirteen.com/news/anzen-secures-1-1m-pre-seed-funding-to-revolutionise-home-heating/

Fiegenbaum Solutions. (n.d.). How to position your climate tech startup for Article 9 VC funds.

Fiegenbaum Solutions. (n.d.). What climate VCs are actually looking for beyond 2025.

Fiegenbaum Solutions. (n.d.). 4 types of climate startups that will struggle to raise in 2025.

POW Workshops. (2025, April 18). Anzen: From POW prototype to £1m funding. https://powworkshops.com/blog/anzen-from-pow-prototype-to-1m-funding

StartUs Insights. (2025, February 21). Climate tech market report 2025. https://www.startus-insights.com/innovators-guide/climate-tech-market-report/

BestHeating. (2025, June 24). The biggest home heating trends for 2025. https://www.bestheating.com/info/biggest-home-heating-trends-for-2025/

Verified Market Reports. (2025, May 12). Solid-state heat pump market size and forecast. https://www.verifiedmarketreports.com/product/solid-state-heat-pump-market/

CAN Europe. (2025). Submission to public consultation on EU's Heat Pump Plan. https://caneurope.org/public-consultation-eu-heat-pump-plan/

GoodWindCo.in. (2024). Thermoelectric heat pump technology explained. https://blog.goodwindco.in/thermoelectric-heat-pump/

IEA. (2023). Heat Pumps Report. https://www.iea.org/reports/heat-pumps

UK Government. (2013). UK Housing Energy Fact File. https://www.gov.uk/government/statistics/uk-housing-energy-fact-file-2013