Geothermal Heat Pump Market by End-user, Type, and Geography - Forecast and Analysis 2023-2027

Geothermal Heat Pump Market Forecast 2023-2027

The geothermal heat pump market size is forecast to increase by USD 4.83 billion at a CAGR of 7.85% between 2022 and 2027. The market's expansion hinges on various factors, including the operational advantages offered by geothermal heat pumps compared to traditional systems, a surge in global energy consumption combined with a rebound in the housing sector, and escalating demand for renewable energy sources. Geothermal heat pumps stand out for their energy efficiency, reduced environmental impact, and long-term cost savings. As worldwide energy needs continue to grow, particularly with the recovery in the housing market driving construction activity, the focus on sustainable and renewable energy solutions like geothermal heat pumps is intensifying, driving the growth trajectory of the market.

What will be the Size of the Market During the Forecast Period?

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Market Segmentation

This report extensively covers market segmentation by end-user (residential and non-residential), type (closed loop system and open loop system), and geography (Europe, North America, APAC, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

Technavio’s Exclusive Market Customer Landscape

Our analysis of the adoption life cycle of the market indicates its movement between the innovator’s stage and the laggard’s stage. The report illustrates the lifecycle of the market, focusing on the adoption rates of the major countries. Technavio has included key purchase criteria, adoption rates, adoption lifecycles, and drivers of price sensitivity to help companies evaluate and develop growth strategies from 2022 to 2027. 

Global Market Customer Landscape

Market Dynamics

The market is driven by several key factors. Low maintenance cost and high durability are significant drivers attracting consumers seeking cost-effective and long-term solutions. The closed-loop GHP systems, with their loops and interconnected pipes, utilize ground and water resources efficiently, bolstered by antifreeze solutions for optimal performance. However, challenges such as the limited availability of suitable groundwater sources and heating costs remain, driving the need for continuous innovation and advancements in geothermal heat technology. Our researchers studied the data for years, with 2022 as the base year and 2023 as the estimated year, and presented the key drivers, trends, and challenges for the market.    

Key Market Driver

One of the key factors driving growth in the market is the operational benefits of GHPs over conventional systems. The GHPs offer several benefits when compared with conventional heating and cooling systems like boilers, furnaces, air conditioners, and room heaters. One major advantage is that the same or single device, i.e., the heat pump, provides the benefits of both heating and cooling throughout the year. Every HVAC system operates differently under varying climatic conditions. Conversion from an electric furnace to an air-source heat pump enables cost savings of up to 50%.

Moreover, in an HVAC system, proper maintenance is crucial to ensuring efficient operation and longer service life. When different types of heat pumps are compared, geothermal pumps have a service life of 20-25 years, while air source pumps only have a service life of 10-15 years. This is because the compressors in geothermal pumps are exposed to less mechanical and thermal stress and are not prone to external environmental conditions. These advantages are expected to drive the momentum of the GHP market and provide a boost to demand during the forecast period and beyond.  Thus, such benefits associated with the installation of GHP will propel the growth of the global GHP market.

Significant Market Trends

The emergence of BEMS is a market trend that is expected to have a positive impact in the coming years. A heat pump is a term that is more commonly applied to HVAC systems. In both residential and commercial applications, heat pumps are widely utilized for space heating and cooling. Building energy management systems (BEMS) is a new idea that can result in large energy savings because the focus is on energy efficiency and emissions reduction. The global BEMS industry is projected to grow at a steady rate during the forecast period; the industry is mainly driven by the need for energy efficiency and cost reduction in buildings. 

Countries such as the US and China have introduced energy labels such as the Energy Star and Three-Star that rate buildings based on energy consumption and other parameters. These ratings have further spurred the demand for BEMS. The growing use of BEMS will reinforce the market for HVAC as these systems will become more energy-efficient and have a lower impact on the environment. Thus, the emergence of such technologies will boost the growth of the global GHP market.

Major Market Challenge

The high upfront cost will be a major challenge for the market during the forecast period. GHPs are used primarily for space heating and cooling; therefore, they find large applications in residential buildings. The deployment of GHPs and their retrofitting also depend on consumer preferences and disposable incomes. An important factor hindering small businesses and enterprises, as well as many households, from using GHPs is the high installation costs and price of heat pumps. In the long term, the savings realized from the use of GHPs can offset the high initial costs.

However, the market faces significant challenges because of the capital-intensive nature of these products. Considering the uncertainty in the global economic scenario, where businesses are looking for cost-saving measures, it becomes difficult for small and medium-sized enterprises (SMEs) to procure heat pumps. Hence, the high upfront cost for GHP installation may hamper the growth of the global GHP market.

Who are the Major Market Players?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Bard HVAC: The company offers geothermal heat pumps such as Q-TEC-STEP CAPACITY DEHUM Series.

Carrier Global Corp.: The company offers geothermal heat pumps such as Infinity, Performance, and Comfort.

We also have detailed analyses of the market’s competitive landscape and offer information on 20 market companies, including:

• Daikin Industries Ltd.
• Dandelion Energy Inc.
• Danfoss AS
• EnergySmart Alternatives LLC
• GeoSmart Energy
• Glen Dimplex Europe Holdings Ltd.
• Griffiths Air Conditioning and Electrical Contractors
• Johnson Controls International Plc
• Kensa Group
• Mitsubishi Corp.
• NIBE Industrier AB
• REMKO GmbH and Co. KG
• Robert Bosch GmbH
• Sirac Air Conditioning Equipments Co. Ltd.
• Stiebel Eltron GmbH and Co. KG
• Trane Technologies Plc
• Vaillant GmbH
• Viessmann Climate Solutions SE

Technavio report provides an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies companies into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. companies are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.  

Market Segmentation by End-user, Type, and Geography 

The geothermal heat pump (GHP) market can be segmented based on various key factors. Firstly, low maintenance cost and high durability are critical attributes that appeal to consumers looking for cost-effective and long-lasting solutions. The closed-loop GHP system, characterized by loops and interconnected pipes, is a popular choice due to its reliability and efficiency in utilizing ground and water resources. The use of antifreeze solution in these systems further enhances their performance and longevity. Geothermal heat is harnessed through lengthy and well-designed piping, ensuring optimal heat transfer for effective heating and cooling. The vertical closed loop configuration maximizes efficiency while minimizing space requirements and environmental impact, making it suitable for various applications. Holes drilled for pipe installation are strategically placed to optimize heat exchange with the ground.

End-user Segment Analysis: 

The residential segment will account for a major share of the market's growth during the forecast period. The residential segment was the largest segment of the market in 2022 and will continue to be the same during the forecast period. Development in the construction of residential buildings directly impacts the demand for geothermal heat pumps, as they are an essential part of any residential building.

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The residential segment was valued at USD 4.64 billion in 2017 and will continue to grow until 2021. The construction industry is recovering following a long period of slowdown in the wake of the financial crisis in the past decade. A significant portion of the global market relies on residential end-users. The residential construction or housing market accounts for a substantial share of the global construction market. Significant growth of the global housing market is expected to drive the demand for geothermal heat pumps across the world.

Type Segment Analysis:

Based on type, the market has been segmented into closed loop system and open loop system. The closed loop system segment will account for the largest share of this segment. The closed-loop segment of the global market has been growing steadily in recent years as more consumers are looking for energy-efficient and eco-friendly heating and cooling solutions. Hence, the closed-loop system segment in the market is expected to grow during the forecast period as more countries adopt renewable energy targets and regulations. Such factors will increase segment growth during the forecast period.

Regional Analysis

Europe is estimated to contribute 49% to the growth by 2027. Technavio’s analysts have elaborately explained the regional trends, drivers, and challenges that are expected to shape the market during the forecast period.  

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Since the mid-2000s, geothermal heat pumps have found major acceptability in heating technologies related to renewable energy. The growth of construction activities, especially in the residential sector, along with easy credit facilities and changing consumer preferences, has added momentum to the market in the region. Governments in this region are emphasizing increasing energy efficiency and reducing carbon emissions, thus adding further impetus to the market, which can ensure greater savings when compared with conventional heating, ventilation, and air conditioning (HVAC) units. Therefore, the need to replace such traditional systems with advanced and sustainable systems is expected to fuel the growth of the regional market during the forecast period.

Segment Overview

The market report forecasts market growth by revenue at global, regional & country levels and provides a market growth analysis of the latest trends and growth opportunities from 2017 to 2027. 

• End-User Outlook
  • Residential
  • Non-residential

• Type Outlook 
  • Closed loop system
  • Open loop system

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • South America
    • Chile
    • Argentina
    • Brazil
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Market Analyst Overview

The market is characterized by its low maintenance cost and high durability, making it an attractive option for sustainable heating and cooling solutions. One of the key technologies in this market is the closed-loop GHP, which utilizes interconnected pipes buried in the ground to transfer heat using an antifreeze solution. This system benefits from limited space availability and can be configured horizontally or vertically depending on the ground area and space requirement. Another important aspect is the hot water generation capability of horizontal closed-loop GHPs, which are well-suited for large GHPs and commercial applications. Vertically closed-loop systems offer benefits such as evaporation processes and dehumidification, making them efficient for water heating needs.

Moreover, the horizontal configuration of closed-loop GHPs involves horizontal loop pipes buried in trenches at a certain depth and length to maximize heat transfer. On the other hand, vertical closed-loop systems use U-shaped loops installed in holes drilled into the ground. However, challenges such as heating costs, feasibility in areas with low-quality groundwater, and local restrictions for open-loop systems persist. The market is witnessing significant growth driven by several key factors. One of the notable technologies is the vertical closed loop system, which involves burying pipes vertically into the ground to tap into the earth's relatively constant temperatures as a heat source. This system is favored for its limited availability of open-loop GHP alternatives, especially in areas lacking access to wells, lakes, rivers, or ponds.

Furthermore, despite these challenges, the market is witnessing growth due to the increasing demand for energy-efficient products and cost-effective renewable heating & cooling technology solutions. Tax rebates and incentives for adopting geothermal heat pumps also contribute to market expansion, especially in commercial and industrial sectors. As environmental concerns escalate, the market continues to gain traction as an environmentally friendly alternative to conventional water heater systems, reducing greenhouse gas (GHG) emissions and promoting energy-smart alternatives for new building systems and retrofit applications.

Market Scope
Report Coverage	Details
Page number	170
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 7.85%
Market growth 2023-2027	USD 4.83 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	7.28
Regional analysis	Europe, North America, APAC, South America, and Middle East and Africa
Performing market contribution	Europe at 49%
Key countries	US, China, Germany, France, and UK
Competitive landscape	Leading companies, Market Positioning of companies, Competitive Strategies, and Industry Risks
Key companies profiled	Bard HVAC, Carrier Global Corp., Daikin Industries Ltd., Dandelion Energy Inc., Danfoss AS, EnergySmart Alternatives LLC, GeoSmart Energy, Glen Dimplex Europe Holdings Ltd., Griffiths Air Conditioning and Electrical Contractors, Johnson Controls International Plc, Kensa Group, Mitsubishi Corp., NIBE Industrier AB, REMKO GmbH and Co. KG, Robert Bosch GmbH, Sirac Air Conditioning Equipments Co. Ltd., Stiebel Eltron GmbH and Co. KG, Trane Technologies Plc, Vaillant GmbH, and Viessmann Climate Solutions SE
Market dynamics	Parent market analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2023 and 2027
• Precise estimation of the market size and its contribution to the market in focus on the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market across Europe, North America, APAC, South America, and Middle East and Africa
• A thorough market research and growth analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive market growth and forecasting analysis of factors that will challenge the growth of market companies

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