The global heat pump market was valued at USD 88.7 billion in 2023, with an expected compound annual growth rate (CAGR) of 9.4% from 2024 to 2030. Government support for energy-efficient technologies and carbon reduction policies are key drivers of market expansion. Many governments offer subsidies, tax credits, and rebates for heat pump installations, which further stimulate demand for energy-efficient systems and contribute to the industry’s growth. The U.S. Department of Energy, for example, provides a 30% tax credit for homes with qualified heat pump systems, whether new or existing. In Italy, the Conto Termico scheme covers 30-35% of costs for renewable heating system installations, while Australia extends national grants for heat pump installations at the municipal level. However, the industry faces challenges from fluctuating prices of raw materials like iron, steel, adhesives, rubber, chemicals, and plastics, which affect production costs and may restrict growth.

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

In the U.S., soil temperatures are often warmer than air in winter and cooler in summer, allowing ground source heat pumps (GHPs) to use stable ground temperatures for heating and cooling. According to the Environmental Protection Agency (EPA), GHPs are among the most cost-effective, environmentally friendly, and energy-efficient systems, making them popular for residential and commercial buildings like offices, schools, and hospitals. The U.S. government supports heat pump installations with tax credits and incentives, encouraging further adoption. Additionally, rising demand for renewable energy, along with subsidies, incentives, and tax benefits, is expected to support market growth. Air source technology is projected to dominate the U.S. market, driven by rising awareness of the environmental impacts of greenhouse gases. Furthermore, population growth and increased demand for eco-friendly air conditioning in the housing sector are expected to drive demand for air-source systems in the U.S.

Rapid industrialization and population growth have led to significant energy consumption worldwide. According to the U.S. Energy Information Administration (EIA), heating, cooling, and ventilation account for half of home energy usage. In 2021, natural gas made up 44% of total U.S. fuel consumption, with fuel oil and propane comprising 9%, while electricity remained the most consumed source at 47%, primarily in households. This increasing demand for energy-efficient solutions and concerns over carbon footprints are anticipated to drive market growth.

Operation Type Insights

The electric operation type segment captured 86% of the market revenue in 2023. Electric heat pumps use electricity to transfer heat between cool and warm spaces and can be used for both heating in winter and cooling in summer. Electric heat pumps offer advantages such as improved air quality, energy efficiency, quiet operation, and safety over gas pumps, which is expected to boost demand in this segment. Hybrid heat pumps, which alternate between gas furnaces and heat pumps, provide long-term savings by reducing monthly energy costs. They also offer tax credits or rebates, making them a more attractive option for consumers and driving segment growth.

Application Insights

The residential sector led the market in 2023, with over 86% of revenue share. Rapid urbanization and increased demand for energy-efficient appliances are expected to propel the adoption of heat pumps in residential buildings. Favorable government incentives and rebates on energy-saving product installations further support this demand. In the industrial sector, heat pumps are anticipated to grow at a CAGR of approximately 8.0% due to increasing demand for waste heat recovery. Industrial applications include dehumidification, evaporation, distillation, and water heating or cooling, with key end-users in food and beverage, chemicals, and petroleum sectors driving market expansion.

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