The global heat pump market size is estimated to reach ~USD 180 Billion by the end of 2035 by growing at a CAGR of ~9% over the forecast period, i.e., 2023 – 2035. In addition to this, in the year 2022, the market size of the heat pump market was ~USD 70 Billion. The growth of the market can be attributed to the growing use as well as the expanding sales of energy-efficient heating products such as heat pumps worldwide for cost-effective space heating and cooling applications in residential and commercial spaces. According to the International Energy Agency (IEA), in 2021, there were around 190 million heat pump units in operation in buildings worldwide. These factors are predicted to boost the market growth in the forecast period.
Discussing further, factors that are believed to fuel the market growth of the demand for heat pumps across the globe include the soaring prices of oil & gas as well as the depleting stock of fossil fuels along with the rising need to curb dependence on fossil fuels and look for an energy-efficient alternative to furnaces and air conditioners. As per recent data, fossil fuels such as oil, & natural gas is anticipated to last just up to 50 more years. Additionally, speeding up the replacement of gas boilers by doubling heat pump installations in the industrial sector is predicted to present the potential for market expansion over the projected period.
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Base Year |
2022 |
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Forecast Year |
2023-2035 |
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CAGR |
~9% |
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Base Year Market Size (2022) |
~ USD 70 Billion |
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Forecast Year Market Size (2035) |
~ USD 180 Billion |
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Regional Scope |
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Growth Drivers
Increasing Investment in Green Energy – the rising investment in clean energy as well as an increasing step toward electrifying everything, as clean energy advocates, are anticipated to propel the market growth. For instance, it was found that the investment made by the United States in clean energy amounted to approximately USD 55 Billion in 2019. Moreover, as stated by the International Renewable Energy Agency, for every unit of electricity used by the heat pump, ~2.5 to 5.5 units of heat is generated.
Growing Efforts to Reduce Carbon Dioxide (CO2) Emission – the growing global population is leading to the increasing utilization of fossil fuels worldwide which is responsible for elevated amounts of greenhouse gas (GHG) emissions, especially CO2. This, as a result, is projected to boost market growth in the upcoming years. As per data residential buildings in the United States alone contribute to nearly 20% of U.S. carbon emissions, with 50% heated by burning fossil fuels.
Rising Installation of Heat Pumps – in the Net Zero Scenario, heat pumps are projected to represent over 50% of total heating sales by 2030. The increasing effort from policymakers to popularize the use of heat pumps through offering government incentives, subsidies, tax rebatement, and much more is propelling the sales of heat pumps globally. For instance, over 4 million heat pumps were installed in the U.S. in 2021, up from 1.7 million in 2012.
Growing Demand from End-Use Industries – as electrical resistance heating is anticipated to be ~61% to 131% more expensive than heat pumps. Moreover, oil and propane are ~10% to ~60% and ~53% to ~120% more expensive than heat pumps respectively. This as a result is propelling the deployment of heat pumps in many industries, such as paper, textile, food and beverages, chemical, metal, automotive, mechanical, wood, and many others.
Challenges
The global heat pump market is segmented and analyzed for demand and supply by application into industrial, commercial, and residential. Out of the three applications of heat pumps, the industrial segment is estimated to gain the largest market share of about ~45% in the year 2035. The growth of the segment can be attributed to the expansion of the industrial sector which is exhibited by the significantly growing volume of industrial output. For instance, the world manufacturing output in 2021 grew nearly 18.25% from 2020, amounting to ~USD 16,047 Billion. Moreover, the residential segment is projected to witness a massive CAGR during the forecast period, owing to the rising pool of the escalating global population as well as the increasing construction of residential buildings and residential spaces.
The global heat pump market is also segmented and analyzed for demand and supply by technology into the water source, air source, and ground source. Amongst these three segments, the air source segment is expected to garner a significant share of around ~46% in the year 2035. Factors such as the increasing efforts towards green energy transition as well as the adoption of technologies that are affordable and are expected to reduce the global carbon footprint worldwide are anticipated to propel the market growth.
On the other hand, the ground source segment is projected to witness a massive CAGR during the forecast period, owing to the increasing exploration & adoption of geothermal energy globally for heating, cooling, and electricity generation. This, as a result, is anticipated to create numerous opportunities for the growth of the segment in the coming years.
Our in-depth analysis of the global heat pump market includes the following segments:
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By Application |
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By Technology |
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By Operation |
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The market share of the heat pump in Asia Pacific, amongst the market in all the other regions, is projected to be the largest with a share of about ~35% by the end of 2035. The growth of the market can be attributed majorly to the rapidly growing industrialization in the region, especially with the expanding chemical, paper, textile, and automotive industries besides the increasing demand for efficient space and water heating solutions in single and multi-family residential buildings with the rising population and their disposable income. As per findings, the Asian region had the largest regional chemical market in the world. Asia accounted for a nearly 59% share of the global chemical industry's revenue in 2021.
The North American heat pump market is estimated to be the second largest, registering a share of about ~25% by the end of 2035. The growth of the market can be attributed majorly to the increasing adoption of policies to phase out fossil fuels as a means of heating backed by the climate policy revolution and government initiatives. For instance, as per the plan approved by the New York Commission, all new houses built in the state after 2025 need to use electric systems rather than those running on natural gas, oil, or propane, seeking to require homeowners to replace all fossil-fuel-burning systems with non-carbon-emitting ones after 2030.
Further, the market in European, amongst the market in all the other regions, is projected to hold a majority of the share by the end of 2035. The regional market is anticipated to grow on the back of the European Union’s strategy to curb annual emissions as well as increase investment in renewable energy besides the adoption of heat pumps in buildings for heating and cooling. As per findings, the United Kingdom plans to introduce a ban on oil and gas boilers within the next 5 years and has announced a target of selling ~600,000 heat pumps annually by 2028. Moreover, research that covered data from 21 countries unveiled that a total of over 16 million heat pump units were installed in these countries of Europe in 2021.
Daikin Industries, Ltd. decided to invest USD 320 million to establish a new factory for heat pump units at the Ksawerów Industrial Park in Lodz Province, Poland. The operations of this new production base will start in July 2024 and will meet the rapidly increasing demand for heat pumps in Europe.
Viessmann Climate Solutions SE unveils next-generation heat pumps and invisible heating systems at the world’s leading trade fair ISH in Frankfurt. Viessmann invisible is set to revolutionize heating technology in new builds and its new heat pump generation with natural refrigerant is one of the recent highlights.
Author Credits: Rushikesh, Richa Gupta
Ans: Increasing installation of heat pumps in residential as well as industrial spaces as well as rising adoption of clean energy to reduce CO2 emissions are the major factors driving the market growth.
Ans: The market size of the heat pump is anticipated to attain a CAGR of ~9% over the forecast period, i.e., 2023 – 2035.
Ans: Ban on F-gas as well as reluctance in adoption are estimated to be the growth hindering factors for the market expansion.
Ans: The market in the Asia Pacific region is projected to hold the largest market share by the end of 2035 and provide more business opportunities in the future
Ans: The major players in the market are Viessmann Climate Solutions SE, Daikin Industries, Ltd., Johnson Controls, NIBE Group, and others.
Ans: The company profiles are selected based on the revenues generated from the product segment, the geographical presence of the company which determines the revenue generating capacity as well as the new products being launched into the market by the company.
Ans: The market is segmented by application, technology, operations, and by region.
Ans: The industrial segment is anticipated to garner the largest market size by the end of 2035 and display significant growth opportunities.
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