Global Heat Pumps - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2025 - 2030)

Global Heat Pumps Market Analysis

The heat pump market size stood at USD 83.66 billion in 2025 and is forecast to advance to USD 131.67 billion by 2030, reflecting a 9.49% CAGR driven largely by policy-backed electrification targets and cold-climate technology breakthroughs. Decarbonization mandates in Europe and North America, large federal and provincial incentive packages, and ever-larger utility-scale projects positioned the heat pump market as the leading replacement pathway for fossil-fuel-based space and water heating solutions. China’s integrated manufacturing base held costs down while inverter-driven compressor advances narrowed performance gaps in sub-zero environments, setting the stage for rapid uptake in colder regions. Supply-chain localization efforts in the United States and Poland mitigated tariff and freight risks while growing “Heat-as-a-Service” finance models addressed steep upfront installation costs that had slowed adoption in existing buildings.

Global Heat Pumps Market Trends and Insights

Government decarbonization incentives and mandates

Aggressive policy frameworks created binding demand for heat pumps by tying building codes and subsidy levels directly to renewable heat outcomes. The US Inflation Reduction Act offered combined federal tax credits and state rebates as high as USD 14,000 per household, while Germany enforced its 65% renewable-heat requirement for all new heating systems starting in 2024. Canada’s Oil to Heat Pump Affordability Program provided up to CAD 15,000 (USD 11,100) to lower-income homes, and the UK’s Boiler Upgrade Scheme paid grants of up to GBP 7,500 (USD 9,400). These measures set artificial demand floors that shielded manufacturers from macroeconomic slowdowns and accelerated market penetration.

Electrification-driven HVAC replacement cycles

Local greenhouse gas caps in large cities condensed typical 15-20 year HVAC replacement intervals into fast-tracked retrofits that replace failing boilers with high-efficiency heat pumps. New York City’s Local Law 97 triggered projects such as the retrofit of 345 Hudson Street, combining heat pumps and waste-heat recovery to hit a 70% emissions-cut target by 2030. Massachusetts Utilities launched the first US geothermal network in Framingham, connecting 135 customers in 2024 and demonstrating district-level electrification potential.

High installation and retrofitting costs in existing buildings

Total installed pricing diverged sharply by geography. Typical German row-house retrofits exceeded EUR 30,000 (USD 32,400), double France’s post-subsidy cost because of higher labor expenses and stricter permitting rules. A New York multifamily case study showed that electrical panel upgrades alone amounted to 40% of the project cost, highlighting infrastructure hurdles that incentives cannot fully offset.

Other drivers and restraints analyzed in the detailed report include:

1. Rapid cost declines in inverter-driven compressors
2. Cold-climate heat pump technology breakthroughs
3. Skilled installer shortage

For complete list of drivers and restraints, kindly check the Table Of Contents.

Segment Analysis

Air-source units held 73.5% heat pump market share in 2024 because of lower installation costs and product familiarity. However, the ground/geothermal category is forecast to post a 12.6% CAGR, the fastest within the spectrum, as utilities pilot networked loops such as the USD 14 million Framingham project that connected 135 customers in 2024. Advances in direct-expansion boreholes and shared ground loops improved COP stability above 4.0, increasing appeal in dense urban infill.

Air-source manufacturers continued to refine low-ambient algorithms, cutting performance drop-off at –20°F and unlocking northern growth. Meanwhile, utilities and large developers viewed geothermal systems as a hedge against grid-peak constraints because output is decoupled from outdoor temperature swings. These dynamics suggest gradual rebalancing, yet the heat pump market will still see air-source units dominate unit volumes through the forecast horizon.

Residential-scale systems up to 10 kW contributed 46.3% of 2024 shipments, reflecting the breadth of single-family adoption supported by consumer rebates. The above-30 kW class, however, is projected to outpace all others at a 12.4% CAGR as district heating and industrial process projects proliferate. Denmark’s 70 MW Esbjerg seawater plant and Hamburg’s 60 MW wastewater initiative highlight the momentum toward centralized mega-scale assets.

Small-capacity uptake will remain elevated because of standardized equipment and simplified permitting. Large-capacity momentum underscores the widening application perimeter that includes warehouses, food processing, and municipal networks aiming for carbon-neutral heat.

Heat Pump Market is Segmented by Source Type (Air-Source, Water-Source, and Ground/Geothermal Source), Rated Capacity (Up To 10 KW, 10-20 KW, and More), System Design (Split System, Monobloc, and Hybrid Heat Pump), End-User (Residential, Commercial, and More), Application (Space Heating and Cooling, Water Heating, and More), and Geography. The Market Forecasts are Provided in Terms of Value (USD).

Geography Analysis

Asia-Pacific retained a commanding 38.3% portion of the heat pump market in 2024, underpinned by China’s 13% domestic sales growth and its 40% share of global production capacity, which yielded 12% unit-cost declines from factory automation gains. Japan’s cautious 1% volume uptick and South Korea’s compressor technology leadership stabilized regional shipments, while India remained nascent because tropical ambient conditions limited efficiency advantages for traditional designs.

Europe is on a rebound path, with an 11.1% CAGR projected after a 50% sales dip in early 2024 when Germany’s heating-law debate dampened consumer confidence. France committed to producing 1 million units per year domestically, and Denmark showcased flagship district-scale projects, including the Esbjerg seawater plant, as part of its fossil-free-by-2030 pledge. The United Kingdom trailed installation targets despite rich GBP 7,500 grants, underscoring the role of infrastructure and skills barriers over pure economics.

North America entered a policy-assisted growth cycle after initial softness: US year-over-year sales climbed 15% by November 2024 following the Inflation Reduction Act incentives, while Canada processed more than 13,000 subsidy applications concentrated in Atlantic provinces. Supply-chain reshoring efforts, including Mitsubishi Electric’s compressor factory and the Daikin-Copeland joint venture, aim to offset projected USD 250–275 million tariff exposure by localizing critical components.

List of Companies Covered in this Report:

1. Daikin Industries, Ltd.
2. Mitsubishi Electric Corporation
3. Panasonic Holdings Corporation
4. Trane Technologies plc
5. Carrier Global Corporation
6. NIBE Industrier AB
7. Glen Dimplex Group
8. Viessmann Climate Solutions SE
9. Stiebel Eltron GmbH & Co. KG
10. Midea Group Co., Ltd.
11. Guangdong Gree Electric Appliances Inc. of Zhuhai
12. Haier Smart Home Co., Ltd.
13. Bosch Thermotechnology GmbH (Robert Bosch GmbH)
14. LG Electronics Inc.
15. Lennox International Inc.
16. Ariston Holding N.V. (Ariston Group)
17. Samsung Electronics Co., Ltd.
18. Rheem Manufacturing Company
19. Johnson Controls International plc
20. Viomi Technology Co., Ltd.
21. A. O. Smith Corporation
22. Ecoforest Geotermia S.L.
23. WaterFurnace International, Inc. (NIBE Group)
24. Danfoss A/S
25. Vaillant GmbH

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support