Heat Pump Market Overview Analysis By Fortune Business Insights Analysis
Market Summary
According to Fortune Business Insights: The global heat pump market was valued at USD 93.52 billion in 2025 and is projected to grow from USD 100.18 billion in 2026 to USD 211.93 billion by 2034, exhibiting a CAGR of 9.82% during the forecast period. A heat pump extracts heat from outdoor air and transfers it indoors, and can also provide cooling by moving indoor heat outside. Asia Pacific led the market with a 49.71% share in 2025.
Key Market Trends
Growing use of renewable energy, supported by government subsidies, is helping the market expand. Heat pumps are increasingly being integrated with renewable energy sources, strengthening their role in decarbonized heating and cooling.
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Key Market Drivers
Demand for energy-efficient technologies, government support and incentives, the need to reduce carbon emissions, stricter energy-efficiency regulations, and technological advances all drive growth. The U.S. EPA says modern heat pumps can cut energy use by 30% to 60% compared with older heating systems, and the U.S. Inflation Reduction Act offers up to USD 2,000 in tax credits. European heat pump installations have reportedly risen about 10% annually, and the installed base is projected to grow from 18 million units in 2023 to 27 million in 2027.
Market Restraints
Low public awareness of heat pump technology is described as a major hurdle, and the source notes that sales are slowing in some areas. COVID-19 also hurt the market through manufacturing pauses, supply shortages, and border closures, with China's air-source sales falling 25.78% year over year in the first half of 2020.
Market Opportunities
Commercial applications such as hotels, gyms, malls, and offices offer clear growth potential, as does industrial use. Europe also has a long runway, with about 45 million heat pumps expected to be installed by 2030, according to the European Heat Pump Association.
Segmentation Analysis
By source, air-source heat pumps hold a 70.26% share in 2026 and have been the most widely sold type for five consecutive years, while water-source units are one of the fastest-growing segments and geothermal holds a major share and is expected to grow. By capacity, units up to 10 kW are dominant at 66.56% in 2026 due to residential use, while the 10-20 kW range is among the fastest-growing, driven by commercial buildings, and units above 20 kW are used mainly in industrial settings. By end user, residential holds a 72.10% share in 2026, while commercial is one of the fastest-growing segments and industrial is expected to grow.
Regional Outlook
Asia Pacific led the market with a 49.71% share in 2025 (USD 46.49 billion, projected at USD 50.48 billion in 2026), with China at USD 24.34 billion, Japan at USD 9.71 billion, and India at USD 3.42 billion in 2026.
In North America, the U.S. is projected at USD 18.94 billion in 2026.
Europe is described as the fastest-growing region, with Germany at USD 4.17 billion and the U.K. at USD 1.24 billion in 2026, and France and Italy named as major shareholders.
Latin America and the Middle East & Africa are described as growing.
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Competitive Landscape
Key players include Danfoss (Denmark), Daikin Industries (Japan), Robert Bosch GmbH (Germany), Johnson Controls (Ireland), LG Electronics (South Korea), Hitachi (Japan), Ingersoll Rand (U.S.), Haier (China), Panasonic (Japan), Carrier (U.S.), Fujitsu (Japan), and Samsung (South Korea).
In May 2026, Daikin Europe opened a heat pump plant in Poland with an investment of about €300 million, and in March 2026, Carrier's heat pump units passed U.S. DOE Commercial Building HVAC Technology Challenge lab evaluations in the 10-25 ton range.
In September 2025, Mitsubishi Electric developed its Compact DIPIPM power module series, cutting footprint to about 53% of conventional products, and Vaillant launched its redesigned aroTHERM plus air-to-water heat pump in Germany and Austria using R290 refrigerant.
In September 2024, Samsung introduced its Bespoke AI Laundry Combo with heat pump technology in Europe, and in August 2024, LG launched two residential air-to-water heat pumps using propane refrigerant with an SCOP above 5.
In May 2024, British Gas introduced a 14p/kWh heat pump rate in the U.K., and in April 2024, YORK launched a 575-volt air-to-water heat pump for the Canadian market.
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