Heat Pump Market
Report ID: SQMIG20I2399
Report ID: SQMIG20I2399
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Report ID:
SQMIG20I2399 |
Region:
Global |
Published Date: December, 2025
Pages:
194
|Tables:
227
|Figures:
81
Global Heat Pump Market size was valued at USD 98.63 Billion in 2024 and is poised to grow from USD 109.28 Billion in 2025 to USD 248.24 Billion by 2033, growing at a CAGR of 10.8% during the forecast period (2026–2033).
The global heat pump market is experiencing robust growth driven by rising demand for energy-efficient and low-emission heating and cooling solutions. One of the key drivers is the global push toward sustainability and decarbonization, with heat pumps offering a cleaner alternative to conventional fossil-fuel-based systems. Government policies, including subsidies, rebates, and tax credits in countries like North America and Europe, are further fueling uptake. Also, technical improvements, such as smart controls, hybrid systems, and cold-climate models, have broadened the applicability of heat pumps across many residential, commercial, and industrial applications, driving increased market growth.
On the restraint side, high initial investment remains a major barrier, particularly in cost-sensitive and low-income markets. Even with government incentives, the upfront cost of heat pump systems, along with installation and retrofitting in older buildings, poses affordability challenges. Another key restraint is performance limitations in extremely cold climates, which can affect efficiency and discourage adoption. The lack of skilled labor and trained technicians also hampers large-scale deployment, especially in emerging markets where technical know-how and infrastructure support are still developing. These factors collectively hinder the pace of market penetration despite the strong long-term potential.
In the future, the market is expected to expand at a robust through 2030, boosted by policy support and technological advancement. Air-to-air and air-to-water heat pumps continue to dominate, though ground-source systems are increasingly popular because of their long-term efficiency advantage. To fully capitalize on the market potential, manufacturers and policymakers must focus on cost reduction strategies, enhancing installer networks, and ensuring regulatory stability. With growing awareness of climate change and the shift toward renewable energy, the heat pump market is well-positioned for sustained growth, provided key challenges are addressed effectively.
How AI is Transforming Heat Pump Market?
AI is transforming the heat pump market by allowing more intelligent, more responsive systems that maximize efficiency, comfort, and lifespan. With predictive control from AI and real-time learning, heat pumps shift from fixed operation to dynamic response according to environmental factors, occupancy patterns, and user behavior. These systems leverage sensor data and neural networks to continuously refine operational parameters, boosting Coefficient of Performance (COP) and reducing energy consumption. They can also detect faults early, prompting predictive maintenance to minimize downtime and extend equipment life.
One of the newer developments showing this influence is the AI4HP project by Fraunhofer ISE with its partners Stiebel Eltron, EDF R&D, and French research collaborators. Their AI-driven heat pump realized 5–13% savings in simulated operations and an impressive 25% COP improvement in field tests on real-world buildings with a transformer-based neural network for real-time optimization of flow temperature and heating curves. This achievement represents an important step towards bringing adaptive, high-efficiency heat pump systems to widespread use.
Market snapshot - 2026-2033
Global Market Size
USD 89.02 billion
Largest Segment
Air-to-Air Heat Pumps
Fastest Growth
Air-to-Air Heat Pumps
Growth Rate
10.8% CAGR
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Global Heat Pump Market is segmented by Technology, Heat Pump Type, Rated Capacity, Refrigerant, Operation Type, Installation Type, Application, End User and region. Based on Technology, the market is segmented into Air-to-Air Heat Pumps, Air-to-Water Heat Pumps, Water Source Heat Pumps, Ground-source (Geothermal) Heat Pumps, Hybrid Heat Pumps and Photovoltaic-thermal (PVT) heat pumps. Based on Heat Pump Type, the market is segmented into Reversible Heat Pumps and Non-Reversible Heat Pumps. Based on Rated Capacity, the market is segmented into Up to 10 kW, 10-20 kW, 20-30 kW and ABOVE 30 kW. Based on Refrigerant, the market is segmented into R410A, R407C, R744 and R290. Based on Operation Type, the market is segmented into Electric and Hybrid. Based on Installation Type, the market is segmented into New Installation and Retrofit. Based on Application, the market is segmented into Heating and Heating And Cooling. Based on End User, the market is segmented into Residential, Commercial and Industrial. Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & Africa.
Air-to-air heat pumps are at the forefront of the market because they are cheaper to install, have dual heating/cold functionality, and are highly efficient. According to the IEA, they accounted for over 60% of global heat pump sales in 2023. Government schemes like the UK’s £7,500 Boiler Upgrade and EU REPowerEU are boosting rapid adoption.
Ground-source heat pumps (GSHPs) are the most rapidly expanding technology segment, driven by carbon targets and lucrative government incentives. The U.S. Inflation Reduction Act provides a 30 % investment tax credit, whereas the EU's Renewable Energy Directive and national schemes in Germany and the UK enhance GSHP adoption
The Residential application segment led the world heat pump market with a share of 80.5% of the total sales revenue. This is because of the increasing population and demand for affordable and easy air conditioning methods for hot water, space heating, and cooling in domestic areas. Heat pumps are also used in commercial buildings like office buildings, hotels, schools, religious institutions, and monuments.
Heat pumps find applications in a number of industries, such as paper and pulp, food and beverage, chemical, auto, and others, due to the emphasis on low energy and maintenance costs, along with environmental impacts from greenhouse gas emissions. The rising infrastructure development to suit the escalating population and improved standards of living have played a key role in fueling the rising demand in the commercial and residential markets, as heat pumps allow for regular temperature management for space heating and cooling needs, and also enable problem-free operation and cost-effectiveness.
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Europe leads, capturing over 40% of global installations in 2023, driven by strict energy mandates, the EU’s REPowerEU, and robust subsidy programs. The EU’s Heat Pump Accelerator (launched Nov 2024) and VAT-free installations in the UK until 2027 further bolster adoption
Germany installed ~180,000 heat pumps in 2023, securing ~25% of Europe’s ducted segment. Its Building Energy Act mandates ≥65% renewable heating, while the BEG subsidy covers up to 40%, fueling widespread adoption and integration with solar/geothermal systems.
France accounts for ~19% of Europe’s heat pump market supported by MaPrimeRenov and €5 billion under the National Low Carbon Strategy. President Macron’s plan targets 1 million annual heat pump outputs by 2027, with factory tax credits up to €200 M.
UK heat pump sales surged +63% in 2024, rebounding from a dip due to Boiler Upgrade Scheme subsidies and Relaxed installation rules (1 m boundary gap). From 2027, new homes must have heat pumps and solar under Future Homes Standard
Asia-Pacific is expanding at an impressive 12–12.5% CAGR (2025–2033), now comprising ~53% of the market. National policies in China and Japan—coupled with investment in green technology—are accelerating uptake. China’s heat pump installations rose ~12% in 2023, supported by rural coal-to-heat initiatives
China remains dominant, accounting for over 35 % of global heat pump production and ~12 % growth in 2023, fueled by national classification of water and ground-source pumps as renewable, inclusion of air-source units in green building standards, and substantial rural coal-to-heat replacement subsidies.
India is rapidly deploying heat pumps through schemes like the National Mission on Use of Biomass and subsidies for solar-thermal integrating with heat pumps in rural electrification, supporting pilot projects and greenhouse initiatives aligned with energy transition goals.
South Korea’s heat pump market is forecasted to grow by (2025–30), driven by carbon-neutral goals, expansion in industrial deployments (e.g. 3.5 MW systems), renewable targets (35 % by 2030), and smart-grid integration.
North America holds about 30% of the global market, with the U.S. making up ~84% of that share. The Inflation Reduction Act offers tax credits of up to $8,000 per heat pump, while DOE-backed cold-climate models saw a 25% installation increase in five years.
Canada has seen 240,000+ installations since 2020 under the Greener Homes and Oil-to-Heat-Pump Affordability (OHPA) programs. Provinces like British Columbia ($104M invested) and PEI now offer up to $30,000 in combined federal-provincial grants for low-income households.
Canada’s Heat Pump market is expanding, driven by its Clean Fuel Regulations (CFR), which mandate increasing biofuel content. BIOX operates facilities in Ontario and Quebec. In 2024, Canada launched a national Bioeconomy Strategy, aiming for 15% low-carbon fuel blend by 2030 and supporting regional Heat Pump infrastructure with $200M in federal funding.
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Contribution of Heat Pump Technology to Reduce Carbon Footprint:
Rising Focus towards Sustainability:
Less Awareness Regarding Advantages Associated with Heat Pumps in Emerging Economies:
Less Awareness in Developing Nations:
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The global heat pump market is highly competitive, with a large number of players operating at regional and global levels. The companies operating in the market are primarily focused on product innovation, mergers and acquisitions, and partnerships to gain a competitive edge. In recent years, many companies have launched new and innovative products to stay competitive in the market. The competitive landscape of the global heat pump market is highly fragmented, with several players competing for market share. The market is expected to witness increased competition over the forecast period, as companies strive to develop innovative products and expand their global presence through strategic partnerships and mergers and acquisitions.
Increasing Adoption of Renewable Energy
Integration of IoT and Smart Technology
SkyQuest’s ABIRAW (Advanced Business Intelligence, Research & Analysis Wing) is our Business Information Services team that Collects, Collates, Correlates, and Analyses the Data collected using Primary Exploratory Research backed by robust Secondary Desk research.
According to our global heat pump market analysis, the market is expected to experience significant growth in the coming years, driven by increasing demand for energy-efficient heating solutions and government initiatives to reduce greenhouse gas emissions. The market is categorized into three segments based on technology: air source, water source, and ground source. The residential application segment is the largest, followed by commercial and industrial applications. The market is highly competitive, with several large players vying for market share. The heat pump market is expected to experience significant growth in the coming years, driven by increasing demand for energy-efficient heating solutions and government initiatives to reduce greenhouse gas emissions. The market is highly competitive, with several large players vying for market share.
| Report Metric | Details |
|---|---|
| Market size value in 2024 | USD 98.63 Billion |
| Market size value in 2033 | USD 248.24 Billion |
| Growth Rate | 10.8% |
| Base year | 2024 |
| Forecast period | 2026-2033 |
| Forecast Unit (Value) | USD Billion |
| Segments covered |
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| Regions covered | North America (US, Canada), Europe (Germany, France, United Kingdom, Italy, Spain, Rest of Europe), Asia Pacific (China, India, Japan, Rest of Asia-Pacific), Latin America (Brazil, Rest of Latin America), Middle East & Africa (South Africa, GCC Countries, Rest of MEA) |
| Companies covered |
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Table Of Content
Executive Summary
Market overview
Parent Market Analysis
Market overview
Market size
KEY MARKET INSIGHTS
COVID IMPACT
MARKET DYNAMICS & OUTLOOK
Market Size by Region
KEY COMPANY PROFILES
Methodology
For the Heat Pump Market, our research methodology involved a mixture of primary and secondary data sources. Key steps involved in the research process are listed below:
1. Information Procurement: This stage involved the procurement of Market data or related information via primary and secondary sources. The various secondary sources used included various company websites, annual reports, trade databases, and paid databases such as Hoover's, Bloomberg Business, Factiva, and Avention. Our team did 45 primary interactions Globally which included several stakeholders such as manufacturers, customers, key opinion leaders, etc. Overall, information procurement was one of the most extensive stages in our research process.
2. Information Analysis: This step involved triangulation of data through bottom-up and top-down approaches to estimate and validate the total size and future estimate of the Heat Pump Market.
3. Report Formulation: The final step entailed the placement of data points in appropriate Market spaces in an attempt to deduce viable conclusions.
4. Validation & Publishing: Validation is the most important step in the process. Validation & re-validation via an intricately designed process helped us finalize data points to be used for final calculations. The final Market estimates and forecasts were then aligned and sent to our panel of industry experts for validation of data. Once the validation was done the report was sent to our Quality Assurance team to ensure adherence to style guides, consistency & design.
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Customization Options
With the given market data, our dedicated team of analysts can offer you the following customization options are available for the Heat Pump Market:
Product Analysis: Product matrix, which offers a detailed comparison of the product portfolio of companies.
Regional Analysis: Further analysis of the Heat Pump Market for additional countries.
Competitive Analysis: Detailed analysis and profiling of additional Market players & comparative analysis of competitive products.
Go to Market Strategy: Find the high-growth channels to invest your marketing efforts and increase your customer base.
Innovation Mapping: Identify racial solutions and innovation, connected to deep ecosystems of innovators, start-ups, academics, and strategic partners.
Category Intelligence: Customized intelligence that is relevant to their supply Markets will enable them to make smarter sourcing decisions and improve their category management.
Public Company Transcript Analysis: To improve the investment performance by generating new alpha and making better-informed decisions.
Social Media Listening: To analyze the conversations and trends happening not just around your brand, but around your industry as a whole, and use those insights to make better Marketing decisions.
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