Heat Pump Market Report, By Technology (Air Source Heat Pumps, Ground Source Heat Pumps, Water Source Heat Pumps, Hybrid Heat Pumps); End-User (Residential, Commercial, Industrial, Agricultural); Application (Heating, Cooling, Heating and Cooling (Dual Mode), Water Heating); Product Type (Split Systems, Packaged Systems, Ductless Mini-Split Systems, Hybrid Systems); and Regions 2024-2032

Market Overview:

"The heat pump market size reached US$ 61.2 Billion in 2023. Looking forward, Reports and Insights expects the market to reach US$ 134.0 Billion by 2032, exhibiting a growth rate (CAGR) of 9.1% during 2024-2032."

Report Attributes	Details
Base Year	2023
Forecast Years	2024-2032
Historical Years	2021-2023
Market Growth Rate (2024-2032)	9.1%

A heat pump is integrated with a compressor and liquid refrigerant and is designed on the principle of an air conditioner, but in reverse, and serves to efficiently heat an area or environment, such as homes, offices, public places, industrial facilities, and in food and beverage and chemical processes, among various others. Heat naturally flows from a higher temperature area to a lower temperature area, and when energy is supplied, heat can be made to flow from lower to higher temperatures, against the natural tendency. Also, air to air heat pumps can conveniently be switched over to cooler mode during warmer periods.

Ducted air-source heat pumps is the most common type of heat pump used in households, and this type transfers heat between a house and the outside air. Other types include ductless air-source heat pumps, geothermal heat pumps, and absorption heat pumps. Industrial heat pumps are a class of active heat-recovery equipment designed to increase temperature of waste heat streams to useful levels, and facilitates energy savings in settings where conventional passive heat-recovery is not an option. In the food and beverage sector, heat pumps are integrated to maintain a safe and consistent temperature to reduce risk of bacterial growth throughout processes. Centrifugal, diaphragm, piston, and peristaltic pumps are common types used in the chemical industry.

Major types of heat pumps widely used include Air-Source Heat Pumps (ASHP), Ground Source Heat Pumps (GSHP), and Hybrid Heat Pumps (HHP). Instead of cooling down the setting or interiors, heat pumps use refrigerant to warm up the area, either by sourcing heat from the air outside or warmth from the ground, or both sources. ASHPs work on the principle of condensation and evaporation, similar to a refrigerator, and extract heat from the exterior air of homes. Two major types of ASHPs that are widely preferred are air-to-water systems and air-to-air systems.

Low running costs help to reduce household energy bills, while other benefits include no emissions, efficient in varying temperature, sustainable, and extremely quiet function. Heat pumps are used in households and residential, commercial, industrial, and agricultural settings and applications. Traction has been inclining in offices, and shopping centers, as well as across factory and manufacturing settings, and others. Advantages of heat pumps comprises ease of deployment and operation in a wide range of climates, low operating costs, as well as potential reduced dependency on fossil fuels. Heat pumps that function with natural refrigerants are gaining steady traction, especially those with ammonia (R717), carbon dioxide (R744), and hydrocarbon, owing to environment-friendly properties. Technological advancements and related developments in heat pump technology and compressors with more efficient and eco-friendly refrigerants are registering increasing adoption and this is a trend that is supporting revenue growth of the market.

Heat Pump Market Trends and Drivers:

The global heat pump market is registering a significant incline in revenue growth owing to increasing preference and shift towards more eco-friendly cooling and heating units, driven by noticeable effects and impacts of climate change, adverse weather conditions, rising emphasis on environmental sustainability, and a number of countries focusing on reaching carbon neutrality by 2050. These electric appliances are low-carbon alternatives, and governments and environmental organizations are also encouraging the use of cleaner and more efficient heating and cooling solutions across various industries as a result as well as to reduce carbon emissions. Rising energy costs and the need for energy-efficient heating and cooling alternatives are major factors prompting consumers and businesses to consider heat pumps as a cost-effective option to meet their needs.

A major factor driving traction of heat pumps is the life expectancy of these appliances, which typically averages 15 years, depending on type of heat pump, location of installation, maintenance, and some products of newer and more recent designs last longer. Advancements in heat pump technology, including improvements in efficiency, reliability, and integration with renewable energy sources, are also contributing to this growing popularity. In addition, these appliances typically require less maintenance, servicing, and repairs than traditional gas boilers, and there are no safety concerns such as those related to gas-powered appliances, machinery, or fuel-powered generators. Heat pump units offer higher efficacy rating than gas boilers, can function in reverse and remove heat from the indoor setting when it is hot, and functions on the lines of  an air conditioning unit.

Moreover, manufacturers of these appliances are making substantial investments in developing new, cutting-edge technologies to adapt to evolving consumer preferences. Additionally, the construction industry is registering rapid growth, particularly in developing areas, with greater emphasis on sustainable and energy-efficient buildings in both residential and commercial sector

The integration of smart controls and IoT technology enabling remote monitoring and optimization of systems, resulting in increased efficiency and convenience is positively impacting market growth. Research is also being conducted to develop advanced refrigerants and innovative heat exchanger designs, enhancing the performance of heat pumps, reducing costs, and expanding applications to industrial processes, district heating and cooling systems, and electric vehicles' thermal needs, and this is further supporting market revenue growth.

Heat Pump Market Restraining Factors:

Among the primary factors restraining adoption of heat pump units is high cost of the various types. The ground source heat pump or hybrid or air source heat pump and gas boiler can incur extremely high upfront installation costs. Also, the cost of electricity, in comparison to gas, to operate or run these appliances can be significantly high in homes or settings with poor thermal efficiency. In addition, heat pumps often require to be installed with a hot water storage tank that is compatible, and otherwise may need upgrades, such as new or larger capacity radiators, and insulation improvements and enhancements at locations, which can drive up overall costs quite significantly. Leaking refrigerant is one of the most common causes of heat pump problems.

Another primary concern is fire threat as refrigerants from heat pumps may be combustible, especially in commercial systems, which require large quantities and where potentially sufficient quantities can leak into the air source, thereby causing a fire. Insulation for piping systems can also be combustible, therefore increasing the overall fire load.

Furthermore, limited production of heat pumps is a factor limiting adoption rates, making them less accessible and available on the market. Heat pumps are currently produced in limited quantities as they are not yet as widely used as traditional heating systems, and smaller units being produced by manufacturers can be high cost.

Other factors restraining adoption and preference is that when the temperatures drops below 0 degrees Fahrenheit, a secondary heating source may be required to maintain a warm temperature within the setting. Also, furnaces running on gas and oil produce warm at higher temperature and at a faster rate compared to electric heat pumps, and this does have an impact on preferences among a sizable number of potential consumers. In addition, electricity may not be available to operate such appliances in remote and mountainous areas of some countries, and gas furnaces and boilers are the only likely option in such circumstances, which reduces the potential of new consumer bases.

Heat Pump Market Opportunities:

Appliance manufacturers are constantly innovating and adding features to products to stay ahead of the competition. A major opportunity can be leveraged to expand consumer base by improving installation options, with focus on reducing the overall cost of heat pumps. Manufacturers can leverage emerging green trends and develop and offer units that are more energy-efficient, and easier to install, while also engaging with distributors to offer ease of affordability and favorable financing or purchase schemes. Developing a heat pump installation workforce by working with industry and training providers to design a strategy for scaling it up can also create streams for revenue over the long term.

Manufacturers can leverage recent trends driven by the push for decarbonization and electrification of heat and government support through regulation and incentives to encourage adoption of greener energy options for machinery and equipment across the industrial sector.  As this trend continues to gain traction, it is estimated that demand for industrial heat pumps is likely to incline by over 15% between 2024 and 2030 with companies focusing on improving energy-efficiency and reducing carbon emissions and footprint. Major markets for heat pumps are currently China (33%), North America (23%), and Europe (12%), and demand is expected to further increase over the forecast period.

The United States is a relatively large and highly lucrative market for heat pumps, with gas furnace sales dropping substantially in 2020, and sales of heat pumps surpassing its gas-powered competitor by a wide margin. Heat pumps, including ground-source heat pumps and water source heat pumps, have a Coefficient O

of Performance (COP) of between four and five, and this positions these appliances three to five times more energy-efficient that gas boilers. In 2022, heat pumps in the country surpassed four million-unit sales and make up over 58% heating system sales, leaving gas furnaces way behind. Focus in Europe on sustainable low carbon emitting solutions for heating and cooling needs is driving traction among governments of countries in the region to commit on subsidizing heat pump installation. Climate change and temperatures in countries in the region are expected to further increase over the next five years, and break records of heat waves set earlier. Rising temperatures are already having a major impact on sales of air conditioners and heat pumps in 2024, and an increasing number of consumers are expected to explore such options for homes and businesses as the year progresses.

Heat Pump Market Segmentation:

By Technology

• Air Source Heat Pumps
• Ground Source Heat Pumps
• Water Source Heat Pumps
• Hybrid Heat Pumps

The Air Source Heat Pumps (ASHPs) segment is expected to dominate other technology segments in terms of revenue share over the forecast period. ASHPs are popular owing to cost-effective installation, adaptability to various climates, and easy setup compared to ground source and water source heat pumps. Also, advancements in ASHP technology have enhanced efficiency and compatibility with renewable energy sources, further driving preference and demand among an expanding consumer base.

By End-User

• Residential
• Commercial
• Industrial
• Agricultural

Among the end-user segments, the residential segment is expected to account for the largest revenue share. This projection is supported by the increasing demand for energy-efficient heating and cooling solutions in residential buildings, driven by rising awareness of environmental sustainability and the need to reduce energy costs. In addition, government incentives and regulations promoting the adoption of renewable energy technologies in the residential sector further supports growth of this segment.

By Application

• Heating
• Cooling
• Heating and Cooling (Dual Mode)
• Water Heating

The heating segment is expected to account for the largest revenue share among the application segments over the forecast period. This can be attributed to widespread adoption of heat pumps for space heating purposes in residential, commercial, and industrial buildings. Also, increasing demand for efficient and eco-friendly heating solutions, coupled with advancements in heat pump technology enhancing heating capabilities of these appliances, is driving incline in adoption rates of heat pumps for heating applications.

By Product Type

• Split Systems
• Packaged Systems
• Ductless Mini-Split Systems
• Hybrid Systems

Among the product type segments, the split systems segment is expected to account for the largest revenue share over the forecast period. This projection is attributed to widespread use of split systems in both residential and commercial buildings due to the versatility, ease of installation, and cost-effectiveness. In addition, advancements in split system technology, such as improved energy efficiency and smart controls, contribute to increasing preference and adoption.

By Region

North America

• United States
• Canada

Europe

• Germany
• United Kingdom
• France
• Italy
• Spain
• Russia
• Poland
• Benelux
• Nordic
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• South Korea
• ASEAN
• Australia & New Zealand
• Rest of Asia Pacific

Latin America

• Brazil
• Mexico
• Argentina

Middle East & Africa

• Saudi Arabia
• South Africa
• United Arab Emirates
• Israel
• Rest of MEA

The global heat pump market is divided into five key regions: North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa. The regional market scenario in the global heat pump market is dynamic, with different regions registering varying levels of growth and adoption. Currently, Asia Pacific stands out as the leading regional market in terms of units deployed, driven by rapid urbanization, increasing disposable income, and government initiatives promoting energy efficiency. Revenue growth and demand are significantly high in countries such as China, Japan, and South Korea owing to robust manufacturing capabilities, technological advancements, and supportive regulatory frameworks.

In North America, the United States and Canada lead in terms of revenue share and demand volumes respectively, supported by rising awareness regarding environmental sustainability, increasing energy costs, and incentives promoting the adoption of energy-efficient technologies in these countries. In Europe, Germany, the United Kingdom, and France lead in terms of revenue share contribution and deployment due to stringent regulations aimed at reducing carbon emissions, along with favorable policies incentivizing the use of renewable energy sources.

Some common factors driving overall growth across these regional markets include increasing demand for energy-efficient heating and cooling solutions, supportive government initiatives and incentives, and technological advancements enhancing the performance and efficiency of heat pump systems.

Leading Companies in Heat Pump Market & Competitive Landscape:

The global heat pump market competitive landscape is driven by increasing competition among key players focused on maintaining their positions and expanding consumer base. To achieve these goals, leading companies are implementing various strategies, with priority remaining continuous innovation and technological advancements to improve the performance, efficiency, and reliability of their heat pump systems. Also, companies are investing substantially in research and development to create new products and solutions that cater to changing consumer preferences and evolving market trends.

Also, strategic partnerships and collaborations with other industry players, technology providers, and government agencies help companies leverage complementary expertise, expand their market reach, and access new opportunities. Furthermore, effective marketing and branding strategies, including targeted advertising campaigns and promotional activities, are employed to raise awareness, build brand loyalty, and attract new customers. Companies are also entering into agreements and partnerships to address and resolve shortage of installers and design schemes and options to enable consumers to overcome high upfront costs of these products. Such strategies enable leading companies in the heat pump market to strengthen their competitive positions and drive sustainable growth.

These companies include:

• Daikin Industries, Ltd.
• Mitsubishi Electric Corporation
• Panasonic Corporation
• Carrier Global Corporation
• LG Electronics Inc.
• Johnson Controls International plc
• Trane Technologies plc
• NIBE Industrier AB
• Bosch Thermotechnology Ltd.
• Fujitsu General Limited
• Viessmann Werke GmbH & Co. KG
• Toshiba Corporation
• Stiebel Eltron GmbH & Co. KG
• Gree Electric Appliances, Inc. of Zhuhai
• Danfoss A/S

Recent Development:

• February 15, 2024: Arch, which is a data intelligence platform for Heating, Ventilation, and Air Conditioning (HVAC) contractors, announced raising US$ 6.2 million in seed funding from Gigascale Capital, Coatue, Floodgate, ReGen Ventures, and MCJ Collective, which is to be used to address shortage of installers and high upfront costs of heat pumps in the residential sector across the US. This investment will enable transformation of the sales process and position heat pumps as the primary option in terms of financial and performance for contractors and homeowners, as well as enable Arch to increase its engineering team and expand customer base in the Northeast and California.

• January 30, 2024: Daikin UK announced acquisition of heating service company, Robert Heath Heating Ltd., in a move to strengthen its residential heating service network in the country. The strategy also aligns with Daikin focus on leading in the shift towards low-carbon heating and consolidates its position in the renewable heating market in the United Kingdom. It also aligns with the government’s decarbonization goals with the installation or air source heat pumps playing a crucial role in this endeavor. In addition, Daikin is focusing on expanding its service and maintenance capabilities of its heat pumps accordingly, providing additional resource of qualified heating service engineers, and will be able to enhance its maintenance services for residential customers across the UK. Daikin had launched its Sustainable Centre network four years ago to lead the sustainable home heating movement in the UK, and this move enables the company to build momentum and move closer to delivering on its servicing and maintenance services goals in the country.

• June 2023: Trane Technologies, which is a global climate innovator, announced the three heat pump efficiency projects with partners, including DOE’s Oak Ridge National Laboratory, Purdue University, Texas A&M University’s Engineering Experiment Station (TEES) to reduce energy and efficiency and emissions across multiple industrial sectors such as food and beverage, chemicals and others. The projects had been recently awarded U.S. Department of Energy (DOE) grants for the R&D of transformational technologies with the objective of decarbonizing heavy industry. Trane is building on the position of its technologies as a leader in the industry through innovations in these new heat pumps and to further strengthen its decarbonization solutions for the built environment, and the company’s latest heat pump technology for commercial buildings combines cooling and heating systems into a single, high-efficiency electric solution.

Heat Pump Market Research Scope

Report Metric	Report Details
Market size available for the years	2021-2023
Base Year	2023
Forecast Period	2024-2032
Compound Annual Growth Rate (CAGR)	9.1%
Segment covered	Technology, End-User, Application, Product Type, and Region
Regions Covered	North America: The U.S. Canada Latin America: Brazil, Mexico, Argentina, & Rest of Latin America Asia Pacific: China, India, Japan, Australia & New Zealand, ASEAN, & Rest of Asia Pacific Europe: Germany, The U.K., France, Spain, Italy, Russia, Poland, BENELUX, NORDIC, & Rest of Europe The Middle East & Africa: Saudi Arabia, United Arab Emirates, South Africa, Egypt, Israel, and Rest of MEA
Fastest Growing Country in Europe	UK
Largest Market	North America
Key Players	Daikin Industries, Ltd., Mitsubishi Electric Corporation, Panasonic Corporation, Carrier Global Corporation, LG Electronics Inc., Johnson Controls International plc, Trane Technologies plc, NIBE Industrier AB, Bosch Thermotechnology Ltd., Fujitsu General Limited, Viessmann Werke GmbH & Co. KG, Toshiba Corporation, Stiebel Eltron GmbH & Co. KG, Gree Electric Appliances, Inc. of Zhuhai, Danfoss A/S