HEAT PUMP MARKET ANALYSIS

Heat Pump Market Size and Trends

The heat pump market is estimated to be valued at USD 77.95 Bn in 2024 and is expected to reach USD 157.35 Bn by 2031, growing at a compound annual growth rate (CAGR) of 10.6% from 2024 to 2031.

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The widespread emphasis on energy efficiency and reducing carbon emissions is driving the increased adoption of heat pumps around the world. Various government incentives and subsidies for shifting to green technology have also supported the growth of this market. Additionally, innovations improving performance and lowering costs have made heat pumps an appealing alternative to traditional heating and cooling methods. The heat pump market is expected to witness steady growth over the forecast period. Stringent regulations regarding power consumption and carbon footprint reduction are compelling more commercial and residential complexes to switch to energy efficient heat pumps. Also, higher acceptance of integrating renewable energy with heating and cooling solutions will continue boosting the sales of heat pumps. However, lack of awareness about the technology and high installation expenditure may limit the adoption rate in price sensitive regions.

Climate Change Concerns

As the concerns over climate change increases, more consumers and businesses are looking for energy efficient solutions to reduce the carbon footprint. Heat pumps offer an excellent solution in this regard as they are far more efficient than traditional heating and cooling systems. While they use electricity to function, they do so in a way that transfers heat rather than generating it directly, thus reducing emissions. Studies show that heat pumps can reduce carbon emissions by up to 60% compared to standard air conditioners and furnaces. This has driven growth in sales of heat pumps as consumers look to play their part in mitigating the effects of global warming.

For instance, in November 2023, the U.S. allocated $169 million from the previous year's climate bill to fund nine projects accelerating the development of heat pumps and other systems for more efficient cooling and heating in homes and buildings. This initiative under the Defense Production Act (DPA) aims to increase spending on clean energy technologies.

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Rising energy costs and a greater focus on sustainability in the building sector has led many governments to introduce stricter energy efficiency mandates and codes. These regulations require new constructions to meet certain performance standards for heating and cooling that can be best achieved through technologies like heat pumps. For example, countries in the European Union have stipulated reduction targets for energy use from space heating through directives like the Energy Performance of Buildings Directive. Similarly, in countries like Japan and South Korea, subsidies are provided to make heat pumps a more economically viable choice that can fulfil renewable energy obligations.

For instance, in November 2023, LG Electronics is a manufacturer of  consumer electronics & home appliances, is establishing a research facility in Alaska, U.S., as part of the Consortium for Advanced Heat Pump Research (CAHR), a partnership between LG Electronics and local universities. The focus is on advancing research and development in heating, ventilation, and air conditioning (HVAC) with a goal to enhance the competitiveness of LG's HVAC products through innovations in cold climate technology.