The global heat pump industry value reached USD 46.8 billion in 2023. Over the forecast period, the value is anticipated to rise at 10.2% CAGR. The sector is predicted to increase from USD 51.6 billion in 2024 to USD 136.2 billion in 2034.
The industry is a significant segment within the HVAC industry, driven by increasing awareness of energy efficiency, environmental sustainability, and regulatory initiatives. Heat pumps utilize a compressor and circulating refrigerant fluid to transfer heat, offering heating and cooling solutions for residential, commercial, and industrial applications.
Key trends in the sector include energy efficiency, technological advancements, regulatory support, integration with renewable energy sources, and smart HVAC solutions. Environmental awareness drives demand for eco-friendly heating and cooling solutions, as heat pumps reduce greenhouse gas emissions compared to fossil fuel-based systems.
| Attributes | Description |
|---|---|
| Estimated Global Heat Pump Market Size (2024E) | USD 51.6 billion |
| Projected Global Heat Pump Market Value (2034F) | USD 136.2 billion |
| Value-based CAGR (2024 to 2034) | 10.2% |
Environmental awareness drives demand for eco-friendly heating and cooling solutions, as heat pumps reduce greenhouse gas emissions compared to fossil fuel-based systems. Rapid urbanization and infrastructure development create demand for efficient HVAC systems in residential and commercial buildings.
High-temperature pumps also reduce reliance on imported fossil fuels, enhancing energy security for countries with limited domestic energy resources. Governments prioritize energy independence and resilience, further supporting the adoption of pump technologies.
Cost savings are another factor contributing to the growth of the market. Initial costs of heat pump installations can be higher than traditional systems, but long-term operational savings through reduced energy consumption often justify the investment. Lower maintenance requirements and longer equipment lifespan contribute to cost-effectiveness.
The sector is poised for continued growth due to industry penetration, innovation, global development, policy support, and smart technology integration. Emerging markets in Asia-Pacific and Latin America present significant growth opportunities due to rapid urbanization and increasing disposable incomes.
Governments' support through favorable policies, subsidies, and regulatory frameworks will likely stimulate growth and adoption rates. The integration of smart technologies and IoT capabilities is also set to enhance the functionality and appeal of pumps, catering to evolving consumer preferences for connected and energy-efficient homes and buildings.
The market is undergoing rapid evolution driven by technological innovation, environmental considerations, and supportive policies. As global efforts to combat climate change intensify, heat pumps are poised to play a key role in providing sustainable heating and cooling solutions for a greener future.
The table below presents a comparative assessment of the variation in CAGR over six months for the base year (2023) and current year (2024) for the sector. This analysis reveals vital shifts in industry performance and indicates revenue realization patterns, thus providing stakeholders with a better vision of growth trajectory over the year.
The first half of the year, or H1, spans from January to June. The second half, H2, includes the months from July to December. In the first half (H1) of the semi-annual from 2023 to 2033, the business is predicted to surge at a CAGR of 9.5%, followed by a slightly high growth rate of 10.5% in the second half (H2) of the same decade.
| Particular | Value CAGR |
|---|---|
| H1 | 9.5% (2023 to 2033) |
| H2 | 10.5% (2023 to 2033) |
| H1 | 9.6% (2024 to 2034) |
| H2 | 10.8% (2024 to 2034) |
Moving into the subsequent period, from H1 2024 to H2 2034, the CAGR is projected to increase slightly to 9.6% in the first half and remain relatively moderate at 10.8% in the second half. In the first half (H1) the sector witnessed an increase of 10 BPS while in the second half (H2), the industry witnessed an increase of 30 BPS.
Supportive Regulatory Framework to Push Demand
The construction industry boom and stringent building regulations, particularly in China, Japan, the United States, South Korea, and Europe, are expected to drive demand for pumps for residential use.
Subsidies for rising energy consumption were set to increase demand for pumps. Countries like Japan, Australia, the United States, and Europe provide subsidies for purchasing pumps to reduce carbon footprint and increase the use of renewable energy for heating and cooling.
Economic Growth to Pave the Way for Innovation and Sustainability
Around 40% of the world's population currently lives in regions with high ambient temperatures that require space heating, primarily in the northern hemisphere. Projections indicate that this demographic distribution is set to endure over the coming decades, providing a reliable foundation for heating demand.
Production of Specialized High-temperature Pumps to Fuel Sales
Increasing global emphasis on energy efficiency and sustainability presents a significant opportunity for the innovation and production of specialized high-temperature pumps tailored for industrial applications.
The pumps, capable of operating at temperatures exceeding 100°C, are suitable for various industrial processes such as chemical manufacturing, food processing, and metal treatment.
High-temperature pumps significantly reduce energy consumption, decrease greenhouse gas emissions, and improve operational efficiency in industries by replacing traditional fossil fuel heating systems. Advanced pumps are in line with the growing demand for eco-friendly industrial solutions, providing a lucrative industry for manufacturers and technology providers.
For instance, GEA Group developed high-temperature pumps that can generate hot water up to 90°C and steam up to 160°C. These systems are set to be used in pasteurization, sterilization, and drying processes, where precise temperature control is vital.
Global Heatwave Concerns to Create New Opportunities
The looming threat of heatwaves worldwide by 2050 is propelling a surge in air conditioning usage, creating a prime opportunity for manufacturers. Heat pumps are becoming the preferred choice for new constructions and heating retrofits in regions with fluctuating temperature extremes due to dual heating and cooling capabilities.
Manufacturing Constraints and Supply Chain Vulnerabilities May Hamper Sales
Complexities in manufacturing pumps involve intricate components, often requiring specialized materials and technology. Pump production and supply are set to be disrupted by supply chain issues like material shortages, production delays, or transportation delays, leading to increased prices and scarcity.
Manufacturing bottlenecks and weaknesses in the supply chain are set to limit the ability to scale up production to meet growing demand. The bottleneck in heating and cooling is further set to hinder growth by causing scarcity, long lead times, and potentially high costs.
The industry recorded a CAGR of 4.9% during the historical period between 2019 and 2023. The demand for heat pumps was positive as it reached a value of USD 46.8 billion in 2023 from USD 38.6 billion in 2019.
From 2019 to 2023, the industry experienced significant growth and transformation due to technological advancements, regulatory changes, and increasing awareness of environmental sustainability. The pumps gained traction in regions with moderate climates due to high energy efficiency and the ability to provide heating and cooling.
Governments promoted high-temperature pumps as a greener alternative to traditional heating systems, offering incentives and subsidies. Technological advancements in 2021, such as improved efficiency, enhanced durability, and integration with smart home systems, made pumps more attractive to consumers.
Regulatory measures in 2022, such as stricter building codes and energy efficiency standards, continued to drive growth. By 2023, the industry had expanded significantly across geographies and applications, with residential installations remaining robust in Europe and parts of Asia.
As economies strive towards carbon neutrality, the pumps are set to play a pivotal role in achieving sustainable heating and cooling solutions globally. By 2034, the sector is set to surge at 10.2% CAGR.
Tier 1 companies consist of key firms with revenue exceeding USD 1,000 million, capturing a significant share of 15% to 20%. These companies are characterized by high production capacity and a wide product portfolio. They are distinguished by extensive expertise in manufacturing and reconditioning across multiple packaging formats and a broad geographical reach, underpinned by a robust consumer base.
Tier 1 companies provide a wide range of series including reconditioning, recycling, and manufacturing utilizing the latest technology meeting the regulatory standards providing the highest quality. Prominent companies within Tier 1 include Carrier Corporation, Daikin Industries Ltd, Danfoss Group Global Panasonic Corporation, Mitsubishi Electric Corporation, and Johnson Controls.
Tier 2 companies include mid-sized players with revenue of around USD 500 million, having a presence in specific regions and significantly influencing local economies. These organizations are characterized by a strong overseas presence and deep local expertise.
Tier 2 firms possess good technology and ensure regulatory compliance but are set to not have advanced technology and a broad global reach. Prominent companies in Tier 2 include Midea Group, Trane Technologies, The Bosch Group, Haier Group Corporation, Hisense Group Co., Ltd TCL Corporation, and Aux Group Co., Ltd.
Tier 3 includes most of small-scale companies operating at the local presence and serving niche markets with a revenue below USD 500 million. These companies are notably oriented towards fulfilling local demands and are consequently classified within the tier 3 share segment.
Tier 3 companies are small-scale players and have limited geographical reach. Tier 3, within this context, is recognized as an unorganized sector, denoting a sector characterized by a lack of extensive structure and formalization when compared to organized competitors.
The section below covers the industry analysis of the market for different countries. Demand analysis on key countries in several regions of the globe, including North America, South Asia Pacific, Western Europe, and others, is provided.
China is anticipated to remain at the forefront in East Asia, with a value share of 33.1% in 2034. In North America, the United States is projected to witness a CAGR of 8.9% by 2034.
| Countries | CAGR 2024 to 2034 |
|---|---|
| China | 10.7% |
| United States | 8.9% |
| Japan | 11.2% |
| Canada | 9.6% |
| Australia and New Zealand | 8% |
| Nordics | 10.9% |
| India | 8.3% |
China is set to exhibit a CAGR of 10.7%, reaching USD 47.3 billion by 2034. The government of China is implementing stringent policies to reduce carbon emissions and promote energy efficiency. For instance, the government has introduced subsidies and incentives for heat pump installations, which have significantly boosted business penetration.
According to the "Energy Efficient Buildings Program," part of China's 14th Five-Year Plan, there are substantial tax breaks and financial support available for residential pump installations.
Legislative support and significant investments by Daikin and Mitsubishi Electric in local manufacturing and distribution networks are accelerating the rapid growth of pump usage. These factors are positioning China as the dominant player in the business, ensuring sustained growth and innovation in the sector.
The United States is anticipated to rise at a CAGR of 8.9% throughout the forecast period, amounting to a value of USD 19.4 billion by 2034. Heat pump sales in the country are growing rapidly, due to environmental concerns like global warming, economic, and industrial considerations, etc.
According to Atlas Building Hub, pump sales have increased rapidly over the last decades and reached a milestone in 2022 when the sale of gas furnaces was surpassed by the sale of pumps. Advancements in pump technology, such as improved energy efficiency and integration with renewable energy sources, are making these systems more attractive to homeowners.
The Inflation Reduction Act, which provides tax breaks and rebates for pump installation, is a significant factor in pushing for electrification to achieve net-zero emissions by 2050. The United States dominates pump usage, with 80% of the nation's heat pumps located there due to lower electricity costs, warmer climates, and less natural gas infrastructure.
Strong government support and regulatory framework promoting energy efficiency and carbon reduction are set to surge demand in Japan. The Heat Pump and Thermal Storage Technology Center of Japan (HPTCJ), established by the government, plays a key role in advancing pump technologies and increasing public awareness.
Technological advancements, such as the development of CO2 refrigerant systems like the "Ecocute" for domestic water heating, have further made these pumps more appealing in Japan.
Researchers have introduced a solar-chemical pump system, which is expected to revolutionize building heating solutions by integrating solar energy with pump technology. Leading companies such as Daikin and Mitsubishi Electric are investing heavily in local manufacturing and new product development, further supporting growth.
The section contains information about the leading segments in the landscape. By product type, the air-air pump segment is estimated to hold a value share of 44.3% in 2034. Furthermore, based on refrigerant, the hydro-fluorocarbon (HFC) segment is projected to account for a 66.4% share in 2034.
| Segment | Air-air Heat Pump (Product Type) |
|---|---|
| Value Share (2034) | 44.3% |
The air-air heat pump segment dominates the business in terms of revenue, accounting for around 44.3% of the share in 2034. Air-to-air pumps, a type of air-source pump, are gaining traction globally due to the dual capability of providing both heating and cooling. These systems extract heat from the outside air in winter and transfer it indoors, while in summer, they reverse the process, extracting heat from indoor air and releasing it outside.
Flexibility of air-air pumps makes them an efficient choice for maintaining comfortable indoor temperatures year-round. Growth of the air-to-air pump sector is driven by several factors, including technological advancements, increased awareness of energy efficiency, and supportive government policies.
| Segment | Hydro-fluorocarbon [HFC] (Refrigerant) |
|---|---|
| Value Share (2034) | 66.4% |
Use of HFCs in heat pumps is driven by their superior thermal properties, safety, and efficiency. According to the International Energy Agency, heat pumps, which include air-to-air and air-to-water systems, are gaining traction due to their ability to efficiently provide heating and cooling.
Heat pumps are set to generate up to four kilowatts of thermal energy for each kilowatt of electricity consumed, achieving efficiency levels of up to 300%. This makes them a highly efficient alternative to direct heating methods, which are typically less than 100% efficient.
Performance of pumps is enhanced by advancements in design, including improved controls, compressors, heat exchangers, and fans. Despite the environmental concerns, demand for HFC-based pumps continues to grow, particularly in regions with moderate climates. According to the IEA, Europe, especially countries such as France, Germany, and Italy, has seen substantial growth in sales.
The section provides comprehensive assessments and insights that highlight current opportunities and emerging trends for companies in developed and developing countries. Furthermore, the segment analyses advancements in manufacturing and identifies the latest trends poised to drive new applications in the sector.
Leading companies and manufacturers in the industry are actively enhancing their business presence and competitiveness through different strategies. They are further incorporating advanced technologies such as variable-speed compressors, intelligent controls, and integration with renewable energy sources to improve energy efficiency and environmental sustainability.
Significant companies and energy providers are further introducing new products to address the increasing demand for cutting-edge solutions in various end-use sectors. Geographic growth is another important strategy that is being embraced by reputed companies.
Several start-ups are likely to emerge in the sector through 2034, thereby making the landscape more competitive. Leading firms prioritize product innovation, but brand consciousness and aggressive marketing strategies pose challenges for new entrants in the market.
Industry Updates
In terms of product types, the industry is divided into air-water, air-air, ground source, and hybrid heat pumps.
Based on refrigerants, the sector is segregated into hydro-fluorocarbon (HFC), ammonia, CO2, hydrocarbons, and others.
In terms of power sources, the industry is divided into electric and others (gas).
As per system types, the sector is segmented into air-source, ductless mini-split, geothermal, and absorption heat pumps.
In terms of power levels, the industry is divided into small (< 10 kW), medium (10 to 100 kW), and large (> 100 kW).
The industry is classified by end-users as residential (heating and cooling homes, water heating, radiant floor heating, and hybrid heating systems), commercial (HVAC system, commercial refrigeration, and geothermal heating and cooling), and industrial (waste heat recovery, industrial drying, industrial refrigeration, process cooling, and combined heat and power (CHP) systems).
Key countries of North America, Latin America, Western Europe, Eastern Europe, East Asia, South Asia, and the Middle East and Africa have been covered in the report.
The sector is set to witness a CAGR of 10.2% by 2034.
The sector witnessed a CAGR of 4.9% from 2019 to 2023.
In 2034, the sector is anticipated to reach USD 136.2 billion.
Carrier Corporation, Daikin Industries Ltd., and Danfoss Group Global.
The sector is set to reach USD 51.6 billion by 2024.
Air-air heat pump segment is estimated to hold a significant share in 2024.
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