Heat Pump Market

Heat Pump Market Outlook - 2026

The global heat pump market size was valued at $55.2 billion in 2018 and is projected to reach $99.6 billion by 2026, growing at a CAGR of 7.74% from 2019 to 2026. 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 CO2emission and also complies with regulatory norms. As a result, growing environmental concerns and favorable regulatory policies further fuel the global heat pump market growth. On the other hand, high maintenance cost associated with heat pump is anticipated to hamper its adoption, which is expected to pose as a growth barrier across the globe. 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.

Furthermore, increasing demand for heat pumps in residential buildings, particularly driven by the growing demand for HVAC (Heating, Ventilation, and Air Conditioning) systems. According to the International Energy Agency, the number of households purchasing heat pumps rose from 14 million in 2014 to 18 million in 2018. China, the U.S., and Japan accounted for 35% of the global market in 2018, indicating their strong adoption of heat pump technology.

Among the different types of heat pumps, air-to-air heat pumping technologies dominate the global sales for residential buildings. This technology utilizes the surrounding air as a heat source or heat sink to provide heating or cooling to indoor spaces. Air-to-air heat pumps have gained popularity due to their cost-effectiveness and their ability to minimize reliance on geothermal and water resources. The use of these heat pumps contributes to the overall growth of the market.

However, the demand for heat pumps in residential buildings is increasing due to their effectiveness in HVAC systems, cost-effectiveness, and the minimal use of geothermal and water resources. This trend is observed globally, with significant adoption in China, the U.S., and Japan.
Heat pumps, including geothermal heat pumps, are considered renewable technologies that contribute to reducing carbon emissions and promoting environmental sustainability. Favorable environmental regulations, such as Greenhouse Gas (GHG) Emission Reduction Regulations, play a crucial role in supporting the adoption of renewable energy resources, including geothermal heat pumps.

Geothermal heat pumps utilize the stable temperature of the ground or groundwater as a heat source or heat sink, making them highly efficient and environmentally friendly. These heat pumps have witnessed significant adoption in residential, commercial, and industrial sectors due to their renewable nature and the potential for reducing carbon emissions.

The implementation of favorable environmental regulations and the growing awareness of the environmental impact of traditional heating and cooling systems have created lucrative growth opportunities for the expansion of the geothermal heat pump market. As a result, the market is expected to experience substantial growth in the forecast period.

In Addition, one of the challenges facing the adoption of heat pump technology is the higher cost associated with it. While heat pumps are considered renewable and environmentally friendly, their initial installation prices can be relatively higher compared to conventional heating methods.

The cost of a heat pump installation can vary depending on factors such as the size of the system and the area of installation. Ground source heating systems, which utilize pipes installed underground, tend to have higher costs compared to other types of heat pumps.

Furthermore, the cost of electricity, which is the primary energy source for heat pumps, is often higher than the cost of traditional heating fuels. This contributes to the overall higher cost of operating a heat pump system compared to traditional heating methods.

These higher costs associated with heat pump technology can act as a barrier to adoption, as they may make the initial investment less attractive to consumers or businesses. However, it's worth noting that the long-term energy savings and environmental benefits of heat pumps can offset these higher initial costs over time.

Efforts are being made to address this cost barrier through incentives, subsidies, and improvements in technology and manufacturing processes, which can help reduce the overall cost of heat pump systems. As advancements continue and economies of scale are achieved, it is expected that the cost of heat pump technology will become more competitive, further driving its adoption.

Heat pumps offer long-term reliability and low maintenance, making them attractive for commercial applications. Industries and businesses that require high temperatures for their processes, such as breweries or factories, as well as office complexes with a large number of employees requiring heating and comfort, are regular consumers of heat pump technology in commercial settings.

Commercial heat pumps are versatile and capable of meeting the heating and hot water demands of various types of commercial properties. They can efficiently provide heating and hot water for large spaces, making them well-suited for commercial applications.

The United Kingdom, in particular, has witnessed significant adoption of heat pump technology in commercial applications due to the increasing need for heating both residential and commercial spaces. This rise in demand has contributed to the popularity of heat pumps in the commercial sector in the UK.

As a result, the commercial sector is expected to offer substantial growth opportunities for the heat pump market during the forecast period. The benefits of reliability, low maintenance, and the ability to meet the heating and hot water demands of commercial properties make heat pumps an attractive choice for businesses and industries.

The global heat pump market is segmented on the basis of type, application, and region. Based on type, the market is divided into air-to-air, water source, and geothermal. By application, the market is classified into residential, industrial, and commercial. Residential is the largest segment among all due to significant adoption of heat pumps or space heating, cooling, and other applications. Based on the region, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Players analyzed and profiled in the global heat pump market are Daikin Industries Ltd., Glen Dimplex Group, Ingersoll Rand Plc, Melrose Industries PLC, Mitsubishi Electric Corporation, NIBE Industrier AB, StiebelEltron, Vaillant Group, ViessmannWerke GmbH & Co. KG, Panasonic Corporation, and others. These market players have been adopting various market strategies to gain competitive edge in this highly competitive market.   

For instance, in July 2019,Mitsubishi Electric launched two MSZ/MUZ-JP model 115V heat pump. This product launch aimed at providing HVAC contractors ease of installation for 115V heat pump in most situation with minimal electrical upgrades. This is expected to enhance the product portfolio of the company.

Global Heat Pump Market, ByType

By type, the air-to-air segment accounted for the largest market share in the global heat pump market in 2018 and is expected to continue its dominance on the global market during the forecast period. Air-to air- heat pump technology absorb heat from outside environment and transfer the same into the indoor spaces including residential buildings, offices, institutions, and commercial buildings. Air-to-air heat pump is a universal technology in terms of providing heat during the cold season and air cooling during the hot days of the summer. Over other types of heating technology, air-to-air heat pumps comes with low installation cost, as there is no need to drill boreholes or use expensive equipment to install an air-to-air heat pump.

Global Heat Pump Market, By Application

By application, the residential sector accounted for the largest global heat pump market share in 2018. Climatic change is the key factor that fuels the adoption of heat pumps to provide heating solutions in cooler seasons and cooling solutions in hot days. Heat pumps are highly energy-efficient and are used for space heating, cooling, and sanitary hot water generation uses at homes. Therefore, favorable government regulations along with tax rebates offered on installing energy-saving products further fuel the adoption of a heat pump in the residential sector.

Global Heat Pump Market, By Region

By region, Asia-Pacific is the largest regional market in the global heat pump market, where Japan, China, and India are the prominent revenue contributing countries. Some of the trends observed in Japan include heat pumps are deployed not only for space heating and cooling but also for refrigerators in majority of households in the residential sector. Recently, heat pumps have additionally been utilized in water heaters, washing machines, and dryers; and their market share is increasing significantly in response to their high potential in energy savings and CO2 emissions reduction. China, one of the largest markets in Asia-Pacific as well as across the globe, is managing to generate high demand for heat pumps in all three sectors including residential, commercial, and industrial.

Key Strategies

Key Benefits For Stakeholders

• The report provides an in-depth analysis of the heat pump market forecast along with the current and future market trends

• This report highlights the key drivers, opportunities, and restraints of the market along with the impact analyses during the forecast period

• Porter’s five forces analysis helps analyze the potential of the buyers & suppliers and the competitive scenario of the global heat pump industry for strategy building

• A comprehensive heat pump market analysis covers factors that drive and restrain the market growth

• The qualitative data in this report aims on market dynamics, trends, and developments

 Heat Pump Market Report Highlights