Heat Pump Market Size, Share & Trends Analysis Report By Technology (Air Source, Water Source, Geothermal), By Capacity (Up to 10 kW, 10-20 kW, 20-50 kW, 50-100 kW, 100-200 kW), By Application, By Operation Type, By Region, And Segment Forecasts, 2025 - 2030

Heat Pump Market Size & Trends

The global heat pump market size was estimated at USD 86.5 billion in 2024 and is expected to grow at a CAGR of 9.5% from 2025 to 2030. The growth of the global heat pump industry is being driven by several key factors. One of the main drivers is the increasing focus on energy efficiency and sustainability. Heat pumps are highly efficient systems that use renewable energy sources, such as air, water, or ground, for both heating and cooling. This efficiency is appealing as businesses and homeowners seek to reduce energy consumption and lower their carbon footprints in response to climate change concerns.

Government regulations and incentives also play a significant role in the market's expansion. Many governments around the world are offering subsidies, tax rebates, and other incentives for installing energy-efficient systems, including heat pumps. These policies are part of broader efforts to reduce greenhouse gas emissions and promote the adoption of renewable energy technologies.

Market Concentration & Characteristics

Despite the growing adoption of heat pumps, the global market remains moderately fragmented, with a mix of large multinational companies and regional players competing for market share. Leading manufacturers are focused on offering specialized and highly efficient heat pump solutions that cater to the diverse needs of residential, commercial, and industrial sectors. Innovations are centered around enhancing performance in varying climatic conditions, improving energy efficiency, and integrating smart technologies, which open up new growth opportunities.

Regulatory bodies, including the International Energy Agency (IEA) and national governments, enforce stringent standards related to energy efficiency, emissions reduction, and safety, all of which manufacturers must adhere to. Compliance with these regulations is vital to ensuring product quality and meeting the sustainability goals of countries aiming for carbon neutrality. Furthermore, with growing concerns over environmental sustainability, heat pump manufacturers are investing in the development of eco-friendly refrigerants and systems that minimize carbon footprints. As global demand for energy-efficient, low-emission technologies increases, manufacturers must navigate these regulatory landscapes and innovation trends to maintain competitive advantage and foster long-term growth in the global heat pump market.

The competitive landscape of the global heat pump industry is further shaped by the increasing integration of renewable energy solutions, such as solar and wind, into heat pump systems. This trend is driving collaboration between heat pump manufacturers and renewable energy providers, creating opportunities for synergies that enhance system efficiency and appeal to environmentally conscious consumers. As the demand for smart, interconnected systems rises, manufacturers are also focusing on creating heat pumps that can integrate seamlessly with smart home technologies, offering consumers greater control over energy consumption.

Additionally, the growing awareness of climate change and the push toward decarbonization are prompting both public and private sectors to invest in sustainable infrastructure, creating a favorable environment for the expansion of heat pump technologies. However, the market also faces challenges from competitors offering alternative energy-efficient solutions, such as traditional gas-based heating systems or newer technologies like geothermal heat pumps. To maintain a strong position, companies will need to continuously innovate, adapt to regulatory changes, and meet the evolving expectations of a market increasingly focused on sustainability and energy efficiency.

Drivers, Opportunities & Restraints

The growing adoption of renewable energy sources, like solar and wind, is complementing the use of heat pumps, as these systems can be powered by clean energy. As countries strive for decarbonization goals and greater energy independence, heat pumps offer a practical and effective solution for both residential and commercial applications.

Although heat pumps are energy-efficient and can save money in the long term, the upfront investment required for the system and its installation can be a barrier, particularly for residential consumers and small businesses. Additionally, the performance of heat pumps can be affected by extreme climate conditions, especially in regions with very cold temperatures, limiting their effectiveness in certain geographical areas.

The growth of smart homes and the integration of heat pumps with smart technologies also provides new opportunities, as consumers increasingly seek energy-efficient, automated solutions for home heating and cooling.

Technology Insights

The water-source technology is most suitable for those who live near water sources. These pumps provide very high efficiency with a COP of around 5, which means for every unit of electricity it delivers 5 units of heat. Geothermal heat pumps offer higher efficiency than air source heat pumps owing to the advantage of stable temperature of their geothermal subsoil heat source. It is one of the most sustainable and cost-effective solutions available in the market. The growing importance of GSHP in global market owing to its high energy efficiency is expected to drive market growth over the forecast period.

The air-source technology segment dominated the market in 2024 by accounting for a share of over 84.7%. Air source heat pump works through wet central heating systems to heat radiators and provides hot water. Similar to a refrigerator, these pumps absorb heat and transfer it to other mediums. The majority of air-source heat pump integrations involve air-to-air heat pumps, which warm or cool air. Its ability to provide water-heating solutions along with heating and cooling of space is expected to boost demand for air source technology over forecast years.

Capacity Insights

The demand for heat pumps with a capacity of up to 10 kW is growing rapidly, particularly in residential and small commercial applications. These systems offer an efficient and cost-effective solution for heating and cooling smaller spaces, benefiting from rising consumer awareness of energy efficiency and sustainability. Government incentives and advancements in technology are further boosting their adoption in regions with moderate climates.

The heat pump segment with up to 10-20 kW capacity accounted for a market share of 21.9% in 2024. The growth is attributed to capacity type being suitable for a wide range of uses such as in hotels, swimming pools, factories, restaurants, and schools. The majority of heat pumps in this capacity provide quiet operation, are environment-friendly, offer high efficiency, and have a wide range of hydraulic options and communication protocols.

Application Insights

Increasing demand for waste heat recovery heat pumps is projected to drive demand over coming years. Heat pumps are used in multiple industrial processes including dehumidification, evaporation processes, distillation, and water heating or cooling applications. Food & beverage, chemical, and petroleum are major end-use sectors of heat pumps that are expected to drive market growth.

The residential application segment dominated the market in 2024 by accounting for a revenue share of over 80.3%. Rapid urbanization coupled with increasing demand for energy-efficient products is expected to drive demand for heat pumps in residential sector. Favorable government initiatives and tax rebates offered on energy-saving product installation are also expected to propel demand for heat pumps over coming years.

Operation Type Insights

Hybrid heat pumps guarantee long-term savings by reducing end-users’ monthly energy expenditure. By adopting hybrid heat pumps end-users can also benefit from a tax credit or rebate thereby driving this segment’s growth. Moreover, utilizing a hybrid heat pump reduces carbon footprint as these heat pumps can switch between a gas furnace and a heat pump.

The electric operation type segment accounted for a revenue share of 86.1% in 2024. An electric heat pump utilizes electricity to transfer heat from a cool space to a warm space. These heat pumps are not only used for heating but also for cooling during the summer season. Owing to the benefits of electric heat pumps such as better air quality, energy efficiency, quiet operation, safer than gas pumps, and others segment demand is expected to showcase lucrative growth.

Regional Insights

North America, led by the U.S. and Canada, accounted for a significant share of the global heat pump industry in 2024. Government initiatives and rebates offered to promote the incorporation of energy-saving and environment-friendly technologies are projected to augment demand for advanced heat pumps. Furthermore, increasing carbon emissions and fluctuating energy prices have encouraged consumers to use renewable heating sources, which are expected to boost growth of regional market.

U.S. Heat Pump Market Trends

The U.S. accounted for 88.8% of the regional market share in 2024. Increasing emphasis on energy efficiency and sustainability is encouraging consumers and businesses to adopt heat pumps as a cleaner alternative to traditional heating and cooling systems. Government incentives and rebates at the federal, state, and local levels are also playing a significant role in making heat pumps more affordable and attractive to consumers. Additionally, stricter building codes and regulations aimed at reducing carbon emissions are pushing the construction industry to integrate energy-efficient technologies like heat pumps into new buildings and retrofits.

Europe Heat Pump Market Trends

The growth of the heat pump industry in Europe is largely driven by stringent environmental regulations and a strong focus on sustainability. The European Union’s ambitious climate goals, including reducing greenhouse gas emissions and achieving carbon neutrality by 2050, have prompted governments to offer subsidies and incentives for energy-efficient solutions like heat pumps. The increasing adoption of renewable energy sources, such as wind and solar, is also contributing to the demand, as heat pumps can be integrated with these systems for improved performance. Additionally, growing awareness of the environmental impact of traditional heating methods is encouraging both residential and commercial sectors to invest in cleaner alternatives.

The heat pump market in France dominated the market in 2024, accounting for 20.2% of the overall revenue share of the regional market. France’s focus on energy transition and sustainability is propelling the demand for heat pumps. The country offers strong government subsidies for energy-efficient technologies, and the growing push for decarbonization in the building sector, particularly in new constructions and renovations, is driving heat pump adoption.

The Germany heat pump market is expected to grow at a rapid CAGR of 10.6% over the forecast period as the country continues to focus on extracting valuable minerals like gold and coal indicating a notable growth potential.

Asia Pacific Heat Pump Market Trends

Growth of the Asia Pacific heat pump industry is fueled by rapid urbanization, industrialization, and government policies promoting energy efficiency and carbon emission reductions. Countries like China, Japan, and South Korea are leading the way, with advancements in heat pump technology making them more viable across varying climates, particularly for residential and commercial applications.

The heat pump market in China accounted for a majority market share of 59.4% of the overall revenue share of the regional market. In China, rapid urbanization, industrial growth, and government policies promoting energy efficiency and emissions reduction are key factors driving the market growth. Increasing demand for environmentally friendly solutions, coupled with government incentives, is accelerating the adoption of heat pumps in both residential and commercial applications.

The India heat pump market is projected to expand at a CAGR of 11.0 over the forecast period. In India, rising energy costs and the need for more sustainable cooling and heating solutions are fueling the market growth. Growing urbanization, a focus on energy efficiency, and government initiatives promoting renewable energy are also encouraging the adoption of heat pump technologies in residential and commercial buildings.

Middle East & Africa Heat Pump Market Trends

The Middle East & Africa market is propelled by the region's shift toward renewable energy and the need for more efficient cooling solutions in hot climates. Investment in solar energy integration and the growing demand for energy-efficient systems in both residential and commercial buildings are driving the adoption of heat pumps in these regions.

Latin America Heat Pump Market Trends

In Latin America, growing concerns over energy costs and environmental sustainability are driving the demand for heat pumps. Government incentives and rising urbanization, along with an increased focus on energy-efficient building construction, are pushing both residential and commercial sectors toward adopting heat pump systems.

Key Heat Pump Company Insights

Some of the key players operating in the market include Caterpillar Inc. and XCMG Group.

• Carrier is a global provider of heating, ventilation, air conditioning, and refrigeration systems. The company offers a wide range of products and services, including commercial and residential HVAC systems, refrigeration equipment, heat pumps, building automation systems, and aftermarket parts and services. Carrier is known for its innovative products and solutions and has a long history of technological advancements in the HVAC industry.

• DAIKIN INDUSTRIES Ltd. primarily manufactures and sells air conditioning systems. The company owns 313 consolidated subsidiaries worldwide and offers air-conditioning systems, room heating & heat pumps, hot water supply systems, room air conditioning systems, packaged air-conditioning systems, and air conditioning systems for plants, facilities, and office buildings.

Recent Developments

• In January 2023, Johnson Controls acquired Hybrid Energy AS. Hybrid Energy's innovative technology will provide customers with fresh, cost-effective solutions while tackling decarbonization and sustainability efforts in Europe and beyond. This acquisition is expected to enhance the capability of Johnson Controls in terms of hybrid heat pumps for high-temperature heating requirements.

• In February 2023, LG. introduced its latest energy-efficient heating solutions at ISH 2023, featuring the Therma V R290 Monobloc and Therma V R32 Split air source heat pumps. The R290 Monobloc utilizes a refrigerant with a remarkably low Global Warming Potential (GWP) of three, aligning with upcoming European regulations aimed at reducing greenhouse gas emissions. This model is designed to seamlessly integrate into various home exteriors, boasting an elegant appearance and enhanced remote management capabilities for user convenience.

Heat Pump Market Report Scope

Global Heat Pump Market Report Segmentation

This report forecasts volume & revenue growth at global, regional & country levels and provides an analysis on the industry trends in each of the sub-segments from 2018 to 2030. For the purpose of this study, Grand View Research has segmented the global heat pump market report based on technology, capacity, application, operation type, and region:

• Technology Outlook (Volume, Thousand Units; Revenue, USD Billion, 2018 - 2030)

  • Air Source

    • Air to Air

    • Air to Water

  • Water Source

  • Geothermal

• Capacity Outlook (Volume, Thousand Units; Revenue, USD Billion, 2018 - 2030)

  • Up to 10 kW

  • 10-20 kW

  • 20-50 kW

  • 50-100 kW

  • 100-200 kW

  • Above 200 kW

• Operation Type Outlook (Volume, Thousand Units; Revenue, USD Billion, 2018 - 2030)

  • Electric

  • Hybrid

• Application Outlook (Volume, Thousand Units; Revenue, USD Billion, 2018 - 2030)

  • Residential

  • Industrial

  • Commercial

• Regional Outlook (Volume, Thousand Units; Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Sweden

    • Germany

    • France

    • Norway

    • Spain

    • Italy

    • Finland

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • UAE