Heat Pump Market

Heat Pump Market Analysis by Product Type (Air Source, Water Source Heat Pumps, Ground Source Heat Pumps), by Rated Capacity (Up to 10 kW, 10–20 kW, 20–30 kW, & Above 30 kW), by Application (Residential, Commercial, Industrial), & by Region - Global Insights 2022 to 2032

Analysis of Heat Pump market covering 30+ countries including analysis of US, Canada, UK, Germany, France, Nordics, GCC countries, Japan, Korea and many more

Heat Pump Market Growth Outlook (2022-2032)

In FY 2021, the heat pump market reached US $65.4 billion and is expected to register a CAGR of 8.0% in 2022, ending at US $71.29 billion. Moreover, the growth is expected to accelerate at a whopping CAGR of 9.0% during the assessment period 2022-2032, reaching US$ 168.76 billion.

Heat pump is a mechanical-compression cycle refrigeration system that can be reversed to either heat or cool desired space. Therefore, it is massively used in space heating and cooling applications. It is composed of two main components, which include an indoor air handler and an outdoor unit that is quite similar to the central air-conditioner but referred to as a heat pump.

The outdoor unit has a compressor that circulates refrigerant, which is known for absorbing and releasing heat that travels between indoor and outdoor units. The key difference between an air conditioner and heat pump is both technologies cool the desired space using similar mechanisms, but heat pumps can also heat residential spaces, whereas the air conditioner cannot.

Some of the factors that drive the growth of the heat pump market include replacement of conventional fuel-based heating method by heat pump technology and significant adoption of heat pump technology in residential applications as a cost-effective heating method.

Besides this, heat pump technology contributed substantially to the reduction of CO2 emissions and also complies with regulatory norms. As a result, growing environmental concerns and favorable regulatory policies further fuel the global heat pump market growth. In addition, consistent climatic changes and resulting heating and cooling needs in residential as well as industrial sector is one of the recent heat pump market trends across the globe.

Report Attribute


Market Size in 2021

US$ 65.4 Billion

Market Value in 2022

US$ 71.29 Billion

Projected Forecast Value (2032)

US$ 168.76 Billion

Global Growth Rate (2022-2032)

9.0% CAGR

Expected Growth Rate of the US Market (2022-2032)

8.8% CAGR

Anticipated Growth Rate of Chinese Market (2022-2032)

8.6% CAGR

Prominent Market Players

  • Trane Inc.
  • Midea Group
  • NIBE Group
  • Panasonic Corporation
  • Mitsubishi Electric Corporation
  • Daikin Industries, Ltd.
  • Glen Dimplex Group
  • Viessmann Werke GmbH & Co KG
  • Flamingo Heat Pumps
  • Efficiency Maine
  • Ingersoll Rand, Plc.
  • Melrose Industries Plc.

Know thy Competitors

Competitive landscape highlights only certain players
Complete list available upon request

2017-2021 Revenue Analysis of Heat Pump Market vs. Growth Outlook 2022-2032

According to market research and competitive intelligence provider Fact.MR, the Heat Pump market experienced noteworthy growth, growing at a value CAGR of 3.9% from 2017 to 2021.

The heat pumps industry remains influenced by continued improvements in electricity generation from renewable heating and cooling technology, and exploration on future heat pump implementations. Adoption of eco-friendly alternatives to conventional heating appliances for arresting CO2 emissions and growing demand for Integration of IoT with heat pumps continues to fuel the sales of heat pump systems.

Increasing implementation of stringent policies to restrict the release of greenhouse gases in the environment across the globe is likely to provide new growth opportunities for heat pump equipment & component manufacturers. Latest trends of heat pumps, growing demand for industrial heat pumps, and rising adoption of heat pump technology in residential applications are the factors driving the expansion of the market for heat pumps.

Key Market Drivers Influencing Heat Pump Industry Expansion

Increasing Integration of IoT and Other Advanced Technologies to Foster Market Growth Prospects

The IoT (Internet of Things) based heat pumps enable predictive maintenance, real-time monitoring and remote diagnostics of components. The Internet of Things based heat pumps consist of smart thermostats that help monitor environmental changes and communicate with their water heater equipment. End users from different sectors are increasingly adopting heat pumps.

However, their designs and operations have remained unchanged. Automation and remote operations have been top priorities in developing next-generation heat pumps for ease of operations. Presently, heat pumps are equipped with LCDs and warning indicators to make them understandable.

The major market players such as Panasonic and Samsung are focusing on integrating different technologies into their heat pumps to ensure ease of operations and maintenance. Research is also being conducted globally for incorporating machine learning and artificial intelligence in heat pumps to reduce electricity consumption and enhance efficiency.

For instance, the researchers at Swiss Federal Institute of Technology Lausanne (EPFL) are using AI to design a compressor, aiming to reduce electricity consumption by 25%. The team employed machine-learning methods to produce equations for heat pump design charts based on the outcome of 500,000 simulations.

The heat pumps integrated with machine learning and artificial intelligence can study consumers’ usage patterns and analyze their operational time and duration, thereby eliminating the requirement of switching them on or off physically. These factors are expected to fuel the demand for heat pumps and create lucrative opportunities for the market players.

Contribution of Heat Pump Technology to Reduce Carbon Footprint

Energy is an essential power source in homes, hospitals, and schools, among others. However, its production and usage result in the emission of greenhouse gases in significant volumes. Thus, major economies across the globe are aiming to reduce their dependency on non-renewable energy sources and are gradually inclining toward renewable energy sources to restrict the emission of greenhouse gases.

The heat pump technology is a promising solution for lowering greenhouse gas emissions. Heat pumps through geothermal and aerothermal technologies offer an energy-efficient approach to space heating. The heat pump is often regarded as a sustainable technology when used in heating, ventilation, and air conditioning (HVAC) systems. In the residential, commercial, and industrial sectors, heat pumps are widely used for space heating, cooling, and heating water. Air and land have massive reserves of thermal energy.

Heat pumps extract the ambient heat from the air and land at low temperatures and increase the temperature through energy input, mainly electricity. The heat pump is cable of extracting up to 77% of the energy from the air. Thus, the use of heat pump can bring down the fossil fuel consumption considerably when compared to alternate mediums of heat transfer, subsequently lowering the carbon footprint. This factor is increasing the number of heat pump installations across all sectors and driving market growth.

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Key Challenges encountered by the Heat Pump Industry

Less Awareness Regarding Heat Pumps’ Advantages to Impede the Market Prospects

Basically, the heat pumps are very technically complex equipment. The awareness regarding the energy efficiency, cost efficiency, and environmental benefits associated with heat pumps, as well as technical know-how, are limited among end users from developing and underdeveloped economies. This factor is anticipated to hinder the growth of the Heat Pump Market in the emerging economies, over the analysis period.

According to a report published by the United Nations Environment Program, there is a lack of awareness among contractors regarding the International Organization for Standardization (ISO) standards for heat pumps. The ISO standards play a crucial role in the quality assurance and safety of the products or services offered.

For instance, ISO 13612-2:2014 provides a calculation method under steady conditions that corresponds to one calculation step. The results of this calculation are incorporated in larger building models and take into account the influence of the external conditions. Thus, lack or limited awareness regarding the advantages of using heat pumps and related ISO standards is expected to restrain the market growth to an extent.

High Initial Installation Costs to Limit the Market Growth

Heat pumps are widely used in the residential, commercial, and industrial sectors as they help in increasing energy efficiency, reducing energy costs, and lowering carbon emissions. The demand for air-source heat pumps is high as they are less expensive and efficient to offer heating services to homes and small commercial buildings.

Geothermal heat pumps are typically costlier to install; however, they are more efficient and can cater to large buildings. High-density polyethylene pipes are needed to be installed underground for geothermal heat pumps, which takes at least 3 days for a team of specialists.

The installation cost of heat pump equipment for residential, commercial, and industrial applications depends on numerous factors. For instance, in the residential application, the installation cost of all the types of heat pumps depends on the size of the house, additional ductwork, type of equipment, and British Thermal Unit (BTU) value of the equipment. It also depends on the complexity, type, brand, and size of the heat pump.

Country-wise Analysis

How will the Growth of Heat Pump Market Escalate across the U.S?

Advancements in Heating Solutions in the Country to Enhance the Market Prospects

As per Fact.MR, the US Heat Pump Market is slated to flourish at a CAGR of 8.8% until 2032. The use of heat pumps has continuously increased in the United States, owing to a variety of factors including climatic conditions, the ease with which the equipment can be offered, government tax credit benefits, and restrictions.

The need for technologically innovative and compact heating solutions in the residential sector is expected to be driven by the rapidly recovering building industry in the United States, which will be supplemented by repair and restoration operations. Due to residential development activities and heating solutions, as well as increased demand for air-to-air heat pumps, the U.S. holds a significant share of the market.

How will China Perform in the Global Heat Pump Industry Landscape?

Introduction of New Tire Types in China to Boost the Market Growth

According to Fact.MR’s projections, the Heat Pump Market in China is forecast to expand at an impressive 8.6% value CAGR from 2022 to 2032. Increasing residential and commercial construction developments in China are likely to have a beneficial impact on market growth. Demand for heat pumps in China is expected to increase as a result of favorable government policies aimed at lowering energy usage.

Growing demand for heat pumps in residential, commercial, and industrial sectors and the prominent presence of top heat pump manufacturing companies are driving the market growth in China. Some of the trends of heat pumps observed in Japan include heat pumps being used not just for space heating and cooling, but also for refrigerators in the majority of houses in the residential sector. Hence opportunities for manufacturers of heat pumps in Japan are increasing.

Country-wise Forecast CAGRs for the Heat Pump Market

Country CAGR











Category-wise Insights

Will Air Source Heat Pumps remain Dominant in the Product Type Category?

High Demand for Air Source Heat Pumps to Enhance Growth Prospects

By product type, demand for air source heat pumps segment is likely to accelerate the fastest, documenting a value CAGR worth 8.9% from 2022 to 2032, according to Fact.MR.

The air source heat pump (ASHP) uses electricity to absorb heat from the surrounding air and provide hot water up to 90 degrees Celsius. The ambient becomes cooler as heat is extracted from the ambient air. As a result, the demand for both hot water and chilly air fuels the expansion of air source heat pumps.

In comparison with water source and ground source heat pumps, the air source variants will continue to account for higher market shares. Suitable for a broad range of applications and characterized by low capital and installation costs, air source heat pumps have been witnessing strong growth in demand.

However, sensing the operational limitations of air source heat pumps in colder regions, manufacturers are concentrating on including the ‘dual-source’ offerings in their portfolios. Additionally, new heat pumps developed with variable or dual speed features to maximize efficiency and electrical savings are likely to provide an added advantage to manufacturers, thereby offering them a competitive edge.

Which is the Most Sought-after Application Category?

Residential Sector Segment to Dominate the Heat Pump Market

According to projections published by Fact.MR, by application, the residential sector segment is forecast to register a whopping 8.7% value CAGR across the 2022-2032. One of the rising industries that are expected to drive the demand for heat pumps is the residential sector. Residential sector contributes substantially, to the growth of the global heat pump industry.

Adoption of heat pumps to provide heating solutions in cooler seasons and cooling solutions on hot days is fueled by climate change. Heat pumps are energy-efficient devices that are used in homes for space heating, cooling, and sanitary hot water generating. Increasing government spending on infrastructural activities along with incentives to adopt renewable systems, especially in developing regions, remain the key aspects for market consolidation in the residential sector.

The Start-Up Ecosystem: How key Players are opening Frontiers for Future Growth?

Heat pump market players such as Dandelion Energy, BlocPower, Exergyn, dPoint Technologies, SinoGreen, SkyCool, KAD Air Conditioning, Blue Frontier, Hydronic Shell, Oxygen8, MG Cooling Solutions, Gradient, Nationwide Coils, Tado, Phononic, and ACS Klima, among others, are adopting various marketing strategies such as new product launches, geographical expansion, merger and acquisitions, partnerships and collaboration to identify the interest of potential buyers and create a larger customer base. For instance,

  • Founded in 2017, Dandelion Energy is an HVAC manufacturing startup that works with customers to create personalized geothermal installations for their homes. The Dandelion geothermal system is a smart, affordable alternative to heating or cooling your home with electricity and gas.
  • Established in 2012, BlocPower with all-electric heating and cooling is upgrading America’s buildings to be smarter, greener, and healthier for all. This is one of the fastest-growing HVAC manufacturing startups and so far it has completed energy projects in 1,200+ buildings and delivered results ahead of schedule and under budget. Moreover, BlocPower has developed proprietary software that they use for analysis, leasing, project management, and monitoring of urban clean energy projects.
  • Founded in 2012, Exergyn significantly impacts global air quality and climate change for the better by designing and developing SMA core technology so its global partners can transform their product offering to be more environmentally friendly, without compromising on cost, weight, size, or efficiencies. This HVAC manufacturing startup is a pioneer in the commercial-scale application of shape memory alloys (SMA). By developing their game-changing product applications across many industries, the team of Exergyn significantly impacts global air quality and climate change for the better.

Heat Pump Market- Competitive Landscape

Prominent players in the Heat Pump Industry are taking advantage of the rapidly increasing demand for the Heat Pump in various applications. To further their outreach, players are relying on collaborations, partnerships and acquisitions with existing small, medium and large-scale vendors. Some prominent market developments are as follows:

  • In January 2022, Johnson Controls had acquired FogHorn, a leading developer of Edge AI software for industrial and commercial Internet of Things (IoT) solutions. This development will help Johnson Controls to boost its building solutions business.
  • In October 2021, Carrier Global acquired Nlyte Software, a leader in data center infrastructure management (DCIM) software. The development is expected to add automated solutions to the HVAC business segment.
  • In September 2021, Carrier China, a part of Carrier Global, collaborated with Huadian Corporation for providing centrifugal chillers, which will be installed at Guangzhou Wanbo Central Energy Station, in China.
  • In June 2021, DENSO and NTT Data announced the completion of a joint verification test to improve mobility experiences by leveraging data on vehicle and human flows. The test aims to improve mobility experiences and services, as well as to assist businesses in attracting potential clients with the changing consumer behavior.

Key Segments Covered in the Heat Pump Industry Survey

  • By Product Type :

    • Air Source 
    • Water Source 
    • Ground Source 
  • By Rated Capacity :

    • Up to 10 kW
    • 10–20 kW 
    • 20–30 kW 
    • Above 30 kW
  • By Application :

    • Residential
    • Commercial
    • Industrial
  • By Region :

    • North America
    • Latin America
    • Europe
    • East Asia
    • South Asia
    • Oceania
    • Middle East Africa

- FAQs -

What is the expected closing market value for Heat Pump in 2032?

The Heat Pump landscape is slated to reach a valuation of US$ 168.76 Billion by 2032.

How will the U.S. Heat Pump market flourish until 2032?

As per Fact.MR’s projections, the U.S. Heat Pump market will likely expand at an 8.8% CAGR.

What will be the growth scenario for the market in China until 2032?

China is poised to yield a CAGR of 8.6% by 2032.

At what percentage will the industry expand during the 2022-2032 period of assessment?

From 2022 to 2032, the Heat Pump industry is poised to flourish at a 9.0% CAGR.

At what value will the Heat Pump market close in 2022?

As of 2022, Fact.MR expects the Heat Pump industry to be valued at US$ 71.29 Billion.

By product type, which segment is likely to experience the fastest growth rate?

Air Source Heat Pumps Segment is expected to grow the fastest, at a CAGR of 8.9%.

Which is the most preferred application category of Heat Pump?

By application, the residential sector segment is expected to dominate the market, documenting an 8.7% value CAGR.

From 2017-2021, what was the documented growth rate for the Heat Pump market?

According to Fact.MR, a CAGR of 3.9% was recorded for the Heat Pump market from 2017-2021.

What was the market worth for Heat Pump in 2021?

As of 2021, the Heat Pump market was valued at US$ 65.4 Billion.

Heat Pump Market

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