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

Heat Pump Water Heater Market Trends

The global heat pump water heater market size was valued at USD 12.87 billion in 2024 and is expected to reach USD 25.16 billion by 2030, growing at a CAGR of 12.1% from 2025 to 2030. The heat pump water heater (HPWH) market is experiencing significant growth, driven by the increasing demand for energy-efficient and environmentally friendly alternatives to traditional water heating systems. With rising energy costs and growing awareness about climate change, consumers and businesses are seeking solutions that reduce energy consumption and greenhouse gas emissions. HPWHs use electricity to transfer heat from the air or ground to heat water, making them far more energy-efficient than conventional electric or gas water heaters. As a result, they are gaining popularity in residential, commercial, and industrial sectors.

Several factors are fueling this market trend, including advancements in heat pump technology, government incentives, and the global push towards sustainability. Many regions are introducing rebates and tax credits to encourage the adoption of energy-efficient appliances, and this has made HPWHs more attractive to cost-conscious consumers. Additionally, improvements in product design and performance-such as quieter operation, increased efficiency, and smarter control systems-are expanding the market's appeal. As environmental regulations tighten and the emphasis on renewable energy sources grows, the HPWH market is expected to continue expanding, with strong potential for further innovation and widespread adoption.

Market Concentration & Characteristics

The heat pump water heater market is characterized by moderate industry concentration, with several key players dominating the global landscape, while a wide range of smaller manufacturers also contribute to the sector’s growth. Major companies, such as Rheem Manufacturing, A. O. Smith Corporation, and Stiebel Eltron, have established a strong market presence due to their years of experience, brand recognition, and extensive distribution networks. These players typically focus on enhancing the technological capabilities of their heat pump water heaters, such as improving energy efficiency, integrating smart features, and expanding product lines to cater to residential, commercial, and industrial markets.

Smaller companies, including emerging startups and regional manufacturers, are also active in the market, often focusing on innovation and cost-effective solutions. These companies may target niche segments or specific geographic regions where large companies are less prevalent. The competition in the market is driven not only by product quality and price but also by customer service, reliability, and the ability to meet increasingly stringent environmental standards. As a result, while the market remains moderately concentrated, there is also a dynamic and competitive landscape where new entrants have opportunities for growth.

The characteristics of the HPWH market reflect the broader sustainability and energy efficiency trend shaping the home appliance industry. Heat pump water heaters are considered a more environmentally friendly alternative compared to traditional electric or gas water heaters because they use renewable energy sources, such as air or ground heat, to heat water, reducing energy consumption and carbon emissions. As such, the industry is increasingly focusing on green technologies, as consumers and businesses prioritize reducing their environmental footprint. This focus is further supported by global regulatory policies and government incentives designed to promote energy-efficient appliances.

Innovation plays a critical role in the HPWH market, as manufacturers continually strive to improve performance, efficiency, and customer experience. Technological advancements include improved heat pump designs, better integration with renewable energy systems like solar panels, and the development of quieter, more compact units suitable for a variety of applications. Additionally, advancements in smart home integration and the ability to control water heaters remotely via mobile apps or other connected devices are enhancing the appeal of HPWHs. As the industry matures, these innovations, combined with regulatory support, are expected to drive continued growth, attracting both established companies and new entrants looking to capitalize on the growing demand for energy-efficient home and commercial heating solutions.

Drivers, Opportunities & Restraints

The heat pump water heater (HPWH) industry is being driven by growing demand for energy-efficient and environmentally friendly home appliances. As energy costs rise and consumers become more environmentally conscious, HPWHs offer a more sustainable solution by using renewable energy sources to heat water. Additionally, government incentives, rebates, and tax credits are encouraging the adoption of HPWHs in many regions. The increasing focus on reducing carbon foot print and achieving sustainability targets has made these systems more attractive for residential and commercial applications.

The HPWH industry presents significant opportunities, particularly in emerging markets where demand for energy-efficient appliances is increasing. With ongoing advancements in technology, there is potential for further improvements in the efficiency, affordability, and design of HPWHs, making them more accessible to a wider audience. Moreover, integrating HPWHs with renewable energy systems, such as solar power, presents a key opportunity for growth, as consumers and businesses seek holistic, sustainable solutions. Additionally, expanding the use of HPWHs in commercial and industrial sectors could lead to broader market penetration.

Despite their benefits, heat pump water heaters face some challenges that may limit their widespread adoption. The high initial installation cost compared to traditional water heaters can be a barrier for price-sensitive consumers, particularly in regions with lower electricity prices where the cost savings may not justify the investment. In colder climates, HPWHs may require supplementary heating, which can reduce their energy efficiency and increase operating costs. Moreover, limited consumer awareness about the advantages of HPWHs and the need for specialized installation and maintenance may also hinder market growth.

Technology Insights

The air to water technology segment dominated the market in 2024 by accounting for a revenue share of over 62.7%. The air-to-water heat pump water heater market is growing rapidly due to its energy efficiency and ability to reduce heating costs. These systems use ambient air to transfer heat to water, making them more environmentally friendly compared to traditional water heaters. Increasing demand for sustainable and low-carbon solutions, coupled with government incentives, is driving market growth. Technological advancements in air-to-water heat pump systems, such as improved efficiency and integration with smart home technologies, further support market expansion. The market is expected to continue growing as consumers seek more cost-effective and eco-friendly water heating options.

The water-source heat pump water heater market is experiencing steady growth due to its high energy efficiency and sustainability benefits. These systems extract heat from water sources like lakes, rivers, or wells to heat water, making them ideal for locations with abundant water resources. The increasing focus on reducing carbon emissions and lowering energy costs is driving adoption in both residential and commercial applications. Government incentives and regulatory support for energy-efficient technologies are further propelling the market forward. As technological advancements continue to improve system efficiency, the water-source heat pump water heater market is expected to expand, particularly in regions with favourable natural resources.

Capacity Insights

The up-to-20kW heat pump water heater market is witnessing significant demand, particularly in residential and small commercial applications. These units offer a balance of efficiency and affordability, providing ample hot water for medium-sized homes or businesses while reducing energy consumption. The growing emphasis on sustainability and cost savings is driving adoption, especially in regions with high electricity costs or strong incentives for energy-efficient products. Technological improvements, such as quieter operation and better performance in colder climates, are expanding their appeal. As consumers increasingly prioritize eco-friendly and cost-effective solutions, this segment of the market is expected to continue growing.

The 21 to 50 kW heat pump water heater market is primarily driven by demand from larger residential buildings, commercial establishments, and industrial applications that require higher hot water capacity. These systems offer enhanced efficiency and cost savings for medium to large-scale operations. As sustainability and energy efficiency become more critical, businesses are increasingly investing in these solutions to meet regulatory standards and reduce operational costs. The market is expected to grow with continued technological advancements and the expansion of green building initiatives.

Application Insights

The residential application segment dominated the market in 2024 by accounting for a revenue share of 56.1%. Heat pump water heaters are gaining popularity in residential applications due to their energy efficiency and cost-saving potential. They provide an eco-friendly alternative to traditional water heaters by using renewable energy from air, water, or ground to heat water. Homeowners are increasingly adopting these systems to reduce energy consumption and lower utility bills, especially in regions with high electricity costs or supportive government incentives. Additionally, the integration of smart technologies allows for greater control and convenience, enhancing their appeal in modern homes.

In industrial applications, heat pump water heaters are used to provide large volumes of hot water for processes such as manufacturing, food processing, and hospitality services. These systems offer a sustainable solution for industries looking to reduce energy consumption and carbon emissions, particularly in facilities with high heating demands. By utilizing waste heat or renewable energy sources, industrial heat pump water heaters can significantly cut operating costs and improve overall energy efficiency. Their ability to integrate with other renewable energy systems, such as solar or geothermal, further enhances their viability for large-scale industrial use.

Operation Type Insights

The electric operation type segment accounted for a revenue share of 74.6% in 2024. Electric heat pump water heaters are widely used due to their high energy efficiency, as they use electricity to transfer heat from the surrounding air to heat water. They are particularly attractive in regions with high electricity availability and are favored in residential settings for their lower environmental impact compared to traditional electric or gas water heaters. Electric HPWHs are known for their ability to provide significant energy savings over time, making them a popular choice for homeowners aiming to reduce their utility bills and carbon footprint.

Hybrid heat pump water heaters combine the technology of a heat pump with traditional electric or gas heating elements, providing versatility in various climates and usage demands. In hybrid mode, the system primarily uses the heat pump for efficiency but switches to the backup heating element during periods of high demand or cold temperatures. This hybrid design allows for more consistent performance across different environments, making them a great option for both residential and commercial applications where hot water needs fluctuate. These systems provide enhanced efficiency with the reliability of conventional heating methods.

Tank Capacity Insights

The market for heat pump water heaters above 500L is primarily driven by large-scale commercial, industrial, and multi-family residential applications. These systems are designed to meet the substantial hot water demands of hotels, hospitals, factories, and apartment buildings, offering high efficiency and significant energy savings. With the growing emphasis on sustainability, businesses and institutions are increasingly adopting these large-capacity units to reduce operational costs and minimize their carbon footprint. As technological improvements continue to enhance performance, these larger heat pump water heaters are becoming more accessible and attractive for large-scale operations.

The market for heat pump water heaters up to 150L is focused on residential applications, catering to smaller homes, apartments, or individual households with moderate hot water needs. These compact units are ideal for energy-conscious homeowners looking to reduce their electricity consumption and lower utility bills. The growing demand for energy-efficient solutions in the residential sector, along with government incentives and rebates, is driving the popularity of these smaller-capacity heat pump water heaters. As environmental awareness increases, this segment is seeing steady growth, particularly in regions with high energy costs and a push toward sustainable living.

Regional Insights

North America heat pump water heater market is growing steadily, driven by a rising demand for energy-efficient technologies and increasing awareness about sustainability. The U.S. is the largest market in this region, with incentives like tax rebates and energy efficiency programs encouraging consumers to adopt these systems. Companies such as Rheem and AO Smith are prominent players, offering innovative products to meet residential and commercial needs.

U.S. Heat Pump Water Heater Market Trends

The heat pump water heater market in the U.S. is expected to grow at a CAGR of 14.9% from 2025 to 2030. The U.S. market is expanding due to the increased focus on reducing energy consumption and lowering utility bills. As a result of federal tax credits and state-level rebates, consumers are increasingly opting for these energy-efficient systems. The product is gaining popularity in residential and commercial sectors, especially in regions with high electricity prices. Brands like Whirlpool and Bradford White are making strides in this market.

The heat pump water heater market in Canada is expected to grow at a CAGR of 14.7% from 2025 to 2030. Canada is witnessing a steady uptake in heat pump water heaters, especially in provinces such as British Columbia and Ontario, where government incentives and rebates are available. Cold climates in these regions are a challenge, but newer heat pump technologies are overcoming efficiency issues in lower temperatures. Manufacturers such as Viessmann and Thermo Dynamics are notable players catering to this market, offering systems that work well in Canada's diverse climate conditions.

Europe Heat Pump Water Heater Market Trends

Europe's heat pump water heater market is thriving, driven by stringent environmental regulations, government incentives, and growing consumer interest in energy savings. Countries such as Germany, the UK, and France are key markets, with heat pumps being used in residential, commercial, and industrial settings. The European Union's Green Deal and Energy Efficiency Directive further stimulate the market demand.

Germany's heat pump water heater market held 15.2% share in the European market. Germany is a front-runner in the adoption of heat pump water heaters, driven by its commitment to sustainability and renewable energy. The market is mature, with increasing demand from both residential and commercial sectors. The German government offers significant subsidies for heat pump installations, making them an attractive option for consumers.

Heat pump water heater market in France is expanding, fueled by the country’s net-zero emissions targets and the growing emphasis on reducing energy consumption. The government has been supporting the transition to heat pumps through grants and subsidies, making these systems more accessible to homeowners.

Asia Pacific Heat Pump Water Heater Market Trends

Asia Pacific region dominated the market and accounted for 46.9% of the global market share in 2024. The region is seeing robust growth in the heat pump water heater market, with countries such as China, India, and Japan leading the charge. Economic growth, urbanization, and a growing middle class are all driving the demand for energy-efficient water heating solutions. In addition, governments in the region are implementing stricter energy efficiency standards, which is further encouraging the adoption of heat pumps.

China heat pump water heater market held 60.5% share in the Asia Pacific market. China’s heat pump water heater market is one of the largest in the world, fueled by rapid urbanization, industrialization, and government incentives. As the country works toward its carbon neutrality goals, there is significant push for energy-efficient technologies. Leading Chinese manufacturers like Midea and Gree are making heat pump water heaters widely available, particularly in urban areas. In addition, the government has been implementing energy-saving policies, further boosting adoption.

The heat pump water heater market in the India is expected to grow at a CAGR of 13.7% from 2025 to 2030. India's heat pump water heater market is in its early stages, but it is expected to grow quickly due to increasing demand for energy-efficient and environmentally friendly products. With a high reliance on electrical energy for water heating, heat pump technology offers a cost-effective alternative. Companies such as Racold and Blue Star are leading the way in promoting heat pump water heaters in the country, primarily for residential use in urban areas. The government’s push for sustainable energy solutions is also contributing to this growth.

Middle East & Africa Heat Pump Water Heater Market Trends

The Middle East & Africa market for heat pump water heaters is in the early stages but is showing potential for growth. Countries like Saudi Arabia, the UAE, and South Africa are gradually adopting these systems due to increasing energy efficiency awareness and the need for more sustainable energy solutions. The hot climate in the region means that heat pumps can work efficiently, and companies like Haier and Thermowatt are expanding their reach in the market.

Saudi Arabia heat pump water heater market is poised for growth, especially as the government seeks to diversify its energy sources and reduce dependence on fossil fuels. The Kingdom’s Vision 2030 initiative, which aims to promote renewable energy, is helping drive the demand for energy-efficient technologies like heat pumps.

Latin America Heat Pump Water Heater Market Trends

Latin America’s heat pump water heater market is gaining momentum, particularly in Brazil, Mexico, and Chile, where there is an increasing demand for energy-efficient solutions. Brazil is one of the leading countries in the region, with rising awareness of sustainability driving demand. As the region faces growing energy challenges, heat pump water heaters are seen as a way to reduce energy costs.

Brazil heat pump water heater market is growing, driven by the need for more energy-efficient products. The country faces high energy costs, making heat pump water heaters a desirable option for residential and commercial applications. Local manufacturers like Lorenzetti are offering solutions tailored to the Brazilian market, and there is increasing interest in integrating these systems into new construction projects, particularly in the residential sector.

Key Heat Pump Water Heater Company Insights

Some of the key players operating in the market include Carrier and DAIKIN INDUSTRIES Ltd. among others.

• 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 2025, Carrier launched a new 4-14 kW line of heat pump water heaters that boasts a coefficient of performance (COP) of up to 4.90. This system utilizes propane as the refrigerant, offering an environmentally friendly alternative with lower global warming potential. It can reach a leaving water temperature of 75°C, making it suitable for both residential and commercial applications requiring higher water temperatures.

• In January 2025, Midea has introduced an energy-efficient heat pump water heater, a state-of-the-art solution designed to deliver efficient water heating for homes throughout North America. This innovative product highlights the transition from conventional water heating methods to advanced, energy-efficient air-source technology.

Heat Pump Water Heater Market Report Scope

Global Heat Pump Water Heater Market Report Segmentation

This report forecasts 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 this study, Grand View Research has segmented the global heat pump water heater market based on technology, capacity, application, operation type, tank capacity, and region:

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

  • Air to Water

  • Water Source

  • Geothermal

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

  • Upto 20 kW

  • 21 to 50 kW

  • 51 to 100 kW

  • Above 100 kW

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

  • Electric

  • Hybrid

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

  • Residential

  • Industrial

  • Commercial

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

  • Upto 150 L

  • 150 to 300 L

  • 300 to 500 L

  • Above 500 L

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

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • France

    • Italy

    • Sweden

    • Norway

    • Spain

    • Finland

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • UAE