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The geothermal heat pump market size is estimated to grow at a CAGR of 7.85% between 2022 and 2027 and the size of the market is forecast to increase by USD 4,831.66 million. The growth of the market depends on several factors, such as the operational benefits of geothermal heat pumps over conventional systems, the rising global energy consumption coupled with recovery in housing sector, and the increasing demand for renewable energy sources.
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.
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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 Geothermal Heat Pump Market Customer Landscape
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. Although there has been a disruption in the growth of the market during the COVID-19 pandemic, a holistic analysis of drivers, trends, and challenges will help companies refine marketing strategies to gain a competitive advantage.
One of the key factors driving growth in the geothermal heat pump 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%.
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.
The emergence of BEMS is a geothermal heat pump 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 would 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.
The high upfront cost will be a major challenge for the geothermal heat pump 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.
Vendors 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 vendors, including:
Technavio report provides an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies vendors into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Vendors are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data 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 4,641.05 million in 2017 and continued 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 geothermal heat pump 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 geothermal heat pump 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.
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 geothermal heat pump market in the region. Governments in this region are emphasizing increasing energy efficiency and reducing carbon emissions, thus adding further impetus to the geothermal heat pump 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 geothermal heat pump market during the forecast period.
In 2020, the geothermal heat pump market in Europe witnessed a significant decline in revenue owing to the lockdown restrictions imposed to curb the spread of the COVID-19 disease. However, in the first half of 2021, many countries in Europe lifted COVID-19-induced restrictions due to the initiation of large-scale vaccination drives. Vendors mandated social distancing and restricted the entry of non-essential visitors at their facilities. Such initiatives helped vendors to remain operational and allowed the market to recover in 2021. The lifting of lockdown restrictions, the initiation of large-scale COVID-19 vaccination drives, the redesigning of distribution channels, and the adoption of digital technologies in supply chain operations are expected to drive the growth of the regional geothermal heat pump market during the forecast period.
The geothermal heat pump market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Geothermal Heat Pump 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 4,831.66 million |
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 Vendors, Market Positioning of Vendors, 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 growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for 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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