Top 5 Trends Shaping the Global Heat Pump Market

What if your air conditioner could heat your home in the dead of winter—and save the planet while doing it?

That’s exactly what heat pumps are doing. Once a niche technology, heat pumps are now making headlines as the go-to solution for efficient, year-round climate control. Backed by policy support and increasing global demand, they’re shaping the future of heating and cooling—cleaner, smarter, and quieter than ever before.

What Is a Heat Pump?

A heat pump is a device that transfers heat from one place to another. Rather than generating heat, it moves existing heat, making it more energy-efficient than traditional systems like furnaces or electric heaters.

There are three primary types:

• Air-source heat pumps (ASHPs): The most widely used type, drawing heat from outside air.
• Ground-source (geothermal) heat pumps: These utilize the earth's stable underground temperature.
• Water-source heat pumps: These extract heat from nearby water sources such as lakes or underground reserves.

Market Snapshot

According to BCC Research, the global heat pump market was valued at $88.4 billion in 2024. It’s expected to rise to $93.2 billion in 2025 and reach $134.8 billion by 2030, growing at a CAGR of 7.7% from 2025 to 2030.

• Asia-Pacific leads the market with rapid urban development and energy demand.
• Europe follows closely, boosted by strict emission regulations and retrofit incentives.

North America is growing steadily, driven by heat pump adoption in colder states and Canada. 

5 Key Trends Driving Growth

1. Electrification of Heating Systems

As countries move away from fossil fuels, the electrification of heating is becoming a top priority. Heat pumps lead this shift due to their high efficiency and compatibility with renewable energy sources.

• In Europe, the REPowerEU plan aims to double heat pump deployment by 2026 and reach 30 million new units by 2030.
• In the U.S., the Inflation Reduction Act (IRA) offers up to $8,000 in rebates for low-to-moderate-income households installing heat pumps, accelerating adoption across residential sectors.

This electrification push is driving demand for both new installations and replacements of traditional heating systems.

2. Surge in Renovation and Retrofit Projects

Older buildings are being modernized for energy efficiency, with heat pumps as a top upgrade. Governments are offering subsidies and programs focused on retrofitting homes and commercial spaces.

• In Germany, retrofits account for over 50% of new heat pump installations.
• France’s MaPrimeRénov’ program offers homeowners up to €5,000 to replace oil-fired systems with heat pumps.

Retrofitting is crucial for meeting energy performance standards in aging building stock across Europe, North America, and parts of Asia.

3. Integration with Smart Home and Building Tech

Modern heat pumps are intelligent, integrated with IoT and building management systems, and they can self-optimize for temperature, energy use, and occupant behavior.

• According to industry estimates, over 40% of new residential heat pump systems installed in 2024 are compatible with smart thermostats or cloud-based control.
• AI-driven systems are enhancing energy efficiency by up to 20% over standard programmable thermostats.

This trend is particularly popular in the U.S., Japan, and Scandinavian countries, where smart home technology is widely adopted.

4. Increased Financial Incentives and Government Support

Subsidies, rebates, and tax credits have made heat pumps more accessible. Many governments are making them a key tool in meeting net-zero targets and reducing building-sector emissions.

• The UK’s Boiler Upgrade Scheme provides £7,500 grants for switching to heat pumps.
• In Canada, the Greener Homes Initiative provides up to CAD $5,000 for eligible upgrades.

Global public investment in heat pump deployment exceeded $5.2 billion in 2024, helping ease upfront costs for homeowners and businesses alike.

5. Climate Commitments and Emission Targets

Buildings account for nearly 40% of global energy-related CO₂ emissions, making heat pumps crucial for achieving national and international climate goals.

• The IEA forecasts that global heat pump sales must triple by 2030 to align with net-zero by 2050 scenarios.
• China, the world’s largest heat pump market, is incorporating them into its dual carbon strategy, aiming for carbon neutrality before 2060.

As carbon regulations tighten, builders, architects, and developers are prioritizing heat pump-ready designs, driving consistent, long-term demand.