Heat Pump Market Overview: Comprehensive Study of Market Share and Future Growth

 The global heat pump market was valued at USD 88.7 billion in 2023 and is forecasted to grow at a compound annual growth rate (CAGR) of 9.4% from 2024 to 2030. Market expansion is expected to be driven by favorable government policies that promote energy-efficient solutions and reduce carbon emissions. Numerous governments offer subsidies, incentives, tax credits, and rebates for heat pump installations, further fueling the demand for energy-efficient heat pumps and boosting the industry's growth.

 

For example, the U.S. Department of Energy provides a 30% tax credit for properties with qualified heat pumps installed, whether for new or existing homes. Similarly, Italy’s Conto Termico incentive scheme covers 30-35% of costs for installing renewable heating systems in buildings, while Australia offers national grants for heat pump installations. However, the heat pump industry is also affected by the availability of raw materials such as iron, steel, adhesives, rubber, chemicals, and plastics. Fluctuations in raw material prices can directly impact manufacturing costs, potentially limiting market growth.

 

Gather more insights about the market drivers, restrains and growth of the Global Heat Pump Market

 

Ground-source heat pumps (GHPs) use the consistent temperature of the ground to cool and heat buildings. In the U.S., soil temperatures are generally warmer than air in winter and cooler in summer, making GHPs highly efficient. According to the Environmental Protection Agency (EPA), GHPs are the most cost-effective, environmentally friendly, and energy-efficient systems for heating and cooling buildings, including homes, offices, schools, and hospitals. This is expected to increase demand for heat pumps in the U.S. over the forecast period.

 

Government initiatives in the U.S., such as tax credits and direct incentives for heat pump installations, further promote their adoption. Globally, improving energy efficiency across industries is a priority for governments, leading to increased demand for renewable energy solutions. Extensive government support, including subsidies and monetary incentives, is projected to drive market growth. Air-source technology is expected to dominate the U.S. market due to rising awareness of the harmful effects of greenhouse gas emissions. Additionally, growing populations and the need for eco-friendly air conditioning in the housing sector are expected to drive demand for air-source technology in the U.S.

 

Rapid industrialization and population growth have led to massive energy consumption worldwide. According to the U.S. Energy Information Administration (EIA), heating, cooling, and ventilation accounted for half of the total home energy consumption in the U.S. in 2021. Natural gas made up 44% of total fuel consumption, while fuel oil and propane accounted for 9%. Meanwhile, electricity was the most consumed energy source, accounting for 47% of household usage. The rising demand for energy-efficient solutions and the growing concern over carbon footprints globally are expected to further drive the market's growth.

 

Technology Insights

In 2023, air-source technology dominated the market, accounting for over 84.6% of total market share. Air-source heat pumps operate using wet central heating systems to heat radiators and provide hot water. Similar to refrigerators, these pumps absorb heat and transfer it to other media. The majority of air-source heat pump systems are air-to-air, which warm or cool air. Their ability to provide both space heating/cooling and water heating is expected to drive demand. For example, in February 2023, LG introduced an air-source heat pump capable of heating 200-270 liters of residential water with a coefficient of performance (COP) of up to 3.85, using R134a refrigerant.

 

Water-source technology is expected to grow at a CAGR of 8.7% during the forecast period. This technology is particularly suited for those living near water sources and offers high efficiency with a COP of around 5, meaning it delivers five units of heat for every unit of electricity consumed. Geothermal heat pumps (GSHPs) are known for their high efficiency due to the stable temperature of geothermal subsoil, making them a highly sustainable and cost-effective solution. The increasing emphasis on GSHPs globally, owing to their high energy efficiency, is expected to drive further market growth.

 

Capacity Insights

The heat pump segment with a capacity of 10-20 kW accounted for 21.3% of market share in 2023. This capacity range is suitable for various uses, including hotels, swimming pools, factories, restaurants, and schools. Heat pumps in this range often feature quiet operation, environmental friendliness, high efficiency, and a wide range of hydraulic options and communication protocols. For example, ThermoWise’s DKRS-200SN4-M2 model, a heat pump with a 10-20 kW capacity, can maintain temperatures up to 65°C, making it ideal for settings like schools, prisons, and hotels where there is high demand for hot water.

 

Operation Type Insights

Electric heat pumps accounted for 86.0% of market revenue in 2023. These pumps use electricity to transfer heat from cooler to warmer spaces and are commonly used for both heating in winter and cooling in summer. The segment is expected to experience strong growth due to the numerous benefits of electric heat pumps, such as better air quality, higher energy efficiency, quieter operation, and being safer than gas-powered alternatives.

 

Hybrid heat pumps are gaining traction due to their ability to reduce energy costs and carbon footprints by switching between gas furnaces and heat pumps. They offer long-term savings and often qualify for tax credits or rebates, which supports their market growth.

 

Application Insights

The residential application segment dominated the market in 2023, accounting for over 86.0% of revenue share. Rapid urbanization, combined with growing demand for energy-efficient products, is expected to drive demand for heat pumps in the residential sector. Government initiatives and tax rebates on energy-saving products are also expected to boost demand in the coming years.

 

The industrial application segment is projected to grow at a CAGR of around 8.0% during the forecast period. Increasing demand for waste heat recovery heat pumps, which are used in industrial processes like dehumidification, evaporation, distillation, and water heating or cooling, is expected to drive growth. The food and beverage, chemical, and petroleum industries are major end users of heat pumps, contributing to the market's expansion.

 

A growing focus on energy efficiency and efforts to combat global warming are expected to further boost demand for heat pumps. In commercial settings, heat pumps are widely used in office buildings, hotels, schools, houses of worship, and historic buildings. Their variable refrigerant flow (VRF) systems enable the simultaneous cooling of some zones and heating of others, making them an attractive option for achieving carbon neutrality and improving comfort and energy efficiency.

 

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