Heat Pump Water Heater Market by Application, Type, and Geography - Forecast and Analysis 2023-2027

Heat Pump Water Heater Market Forecast 2023-2027

The heat pump water heater market is estimated to increase by USD 7.22 billion and grow at a CAGR of 24.07% between 2022 and 2027. Market expansion relies on various factors, such as the benefits of renewable energy, increasing efforts to promote its use, and the escalating global energy demand. Challenges encompass a lack of awareness about renewable energy sources, substantial initial investments required for infrastructure development, and competition from reconditioned pumps. The advantages of renewable energy, including sustainability and environmental benefits, drive market growth. However, overcoming challenges such as high initial costs and competition from reconditioned pumps is crucial for the widespread adoption of renewable energy solutions. These factors collectively shape the market landscape, highlighting the importance of renewable energy in meeting growing energy demands sustainably.

What will be the size of the Heat Pump Water Heater Market During the Forecast Period?

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Segmentation

This report extensively covers market segmentation by application (residential and commercial), type (air source heat pump and geothermal heat pump), and geography (Europe, North America, APAC, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

By Application

The market share growth by the residential segment will be significant during the forecast period. The residential segment is the largest segment of the market in focus in 2022 and will continue to be the largest segment of the market in focus during the forecast period. They are used for water heating applications in residential buildings. Owing to the various benefits, such as high efficiency and renewable alternatives to traditional heating systems, they are experiencing high demand in residential buildings. Development in the construction of residential buildings has a direct impact on the demand as they are gaining importance in residential buildings.

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The residential segment was valued at USD 454.25 million in 2017 and continue to grow by 2021. The increasing need for energy-efficient products that are specifically designed for hot water generation applications in houses and apartments is propelling the demand. The demand in the residential sector is expected to increase due to favorable government initiatives and tax rebates offered on the installation of energy-saving products. Such factors will boost the growth of the residential segment of the global heat pump water heater market during the forecast period.

By Region

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Europe is projected to contribute 54% by 2027. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. 

The market in Europe in 2022 was mainly driven by the increasing demand for energy-efficient products as governments geared up to achieve their target of reducing greenhouse gas (GHG) emissions. Furthermore, Europe has set minimum energy performance requirements for new buildings, a major renovation of buildings, and replacement or retrofit of building elements (heating and cooling systems, roofs, and walls). The growth of the market in Europe is attributed to the cold climatic conditions prevalent in European countries. This increases the demand in residential and commercial buildings, which in turn will lead to the growth of the regional market in focus during the forecast period.

Market Dynamics and Customer Landscape

The market is witnessing significant growth driven by several key factors. One of the primary drivers is the increasing demand for energy-efficient water heating solutions amid rising concerns over environmental sustainability and energy conservation. Favorable regulatory environments and incentives for renewable energy sources, such as solar panels, contribute to the adoption of cleaner and more sustainable energy solutions like HPWHs, reducing reliance on fossil fuels.

As populations continue to grow and urbanize, there is a heightened expectation for comfort and convenience, driving the demand for residential and commercial water heating solutions. This demographic shift acts as a transformative force, spurring innovation in product development and market strategies to meet evolving consumer needs. Additionally, the trend toward incorporating security and safety procedures in water heating systems further enhances consumer confidence in HPWHs.

Furthermore, the market is witnessing a surge in the adoption of aerothermal, air source, geothermal, and ground source heat pumps, along with high-density polyethylene pipes, to harness surrounding air and geothermal heat for efficient water heating solutions. These technologies, combined with the growing emphasis on reducing residential energy consumption and electricity usage, are driving the widespread adoption of HPWHs as a sustainable alternative to traditional electric heaters.

Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

The global market is primarily driven by the multitude of advantages they offer over traditional water heating solutions. HPWHs are recognized for their energy-efficient water heating capabilities, leveraging renewable energy sources such as air, water, and geothermal heat. This aligns with the growing demand for cleaner and more sustainable energy solutions, especially amid concerns over climate change and the depletion of fossil fuels. Favorable regulatory environments further support the adoption of HPWHs, encouraging residential and commercial establishments to transition towards environmentally friendly water heating solutions.

Population growth and urbanization have heightened expectations for comfort and convenience, driving the demand for efficient water heating systems like HPWHs. As product development and market strategies continue to evolve, HPWHs emerge as a transformative force in the heating industry, offering reliable and cost-effective solutions for both residential and commercial applications. The superior efficiency of HPWHs, coupled with rising electricity prices globally, contributes to their increasing adoption, positioning them as the preferred choice for energy-conscious consumers and businesses alike. Therefore, the market for HPWHs is expected to witness substantial growth driven by these advantageous factors in the coming years.

Significant Market Trend

New product launches are the primary trend in the global market. There has been a significant increase in demand for smart, sustainable water heater systems in residential and commercial buildings. Office buildings and high-rise buildings are adopting these instead of other water heaters, which include gas water heaters. Thus, owing to the increasing demand, companies are launching new products.

For instance, in September 2022, A. O. Smith launched the Voltex AL (anti-leak) hybrid products to its portfolio of residential products. This comes with integrated leak detection, smart connectivity, and updated water connections for homeowners. Such factors will increase the market growth during the forecast period.

Major Market Challenge

The lack of awareness is a major challenge to the global market growth. Heat pumps water heaters are efficient and renewable alternatives for water heaters. Industries such as food and beverage extensively use heat. They are an ideal choice for operations such as the concentration of waste beer in breweries and process water heating in the pharmaceutical industry. However, the challenge that is faced by the global market is the lack of awareness among potential consumers.

It has been observed that numerous end-users are not aware of the fact that heat pumps and water heaters make use of renewable energy and are significantly more efficient than other traditional equipment. This has led to a lower adoption rate of heat pumps. It is therefore required that academia and governments globally spread more awareness about the positive environmental impacts of heat pumps and water heaters. Hence, the lack of awareness will limit the growth of the market in focus during the forecast period.

Key Market Customer Landscape

The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Market Customer Landscape

Who are the Major Heat Pump Water Heater Market Companies?

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.

A. O. Smith Corp. - The company offers heat pump water heaters such as HPW 60, HPI 40, and HPA 80. 

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• Ariston Holding NV
• Bradford White Corp.
• Carrier Global Corp.
• Daikin Industries Ltd.
• Fujitsu General Ltd.
• Glen Dimplex Group
• Guangdong PHNIX Eco energy Solution Ltd.
• Haier Smart Home Co. Ltd.
• LG Corp.
• MIDEA Group Co. Ltd.
• Mitsubishi Heavy Industries Ltd.
• NIBE Industrier AB
• Nyle Systems LLC
• Panasonic Holdings Corp.
• Rheem Manufacturing Co.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Segment Overview

The 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. The market has been segmented by Application (Residential and Commercial), Type (Air source heat pump and Geothermal heat pump), and Geography (Europe, North America, APAC, Middle East and Africa, and South America).

• Application Outlook (USD Million, 2017 - 2027)
  • Residential
  • Commercial

• Type Outlook (USD Million, 2017 - 2027)
  • Air source heat pump
  • Geothermal heat pump

• Region Outlook (USD Million, 2017 - 2027)
  • 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 experiencing significant growth driven by the demand for energy-efficient water heating solutions amidst the global push towards cleaner and more sustainable energy sources. Favorable regulatory environments and incentives for renewable energy sources like solar panels further propel market expansion. Residential and commercial sectors increasingly adopt HPWHs as a transformative force, addressing heightened expectations for comfort and convenience. Product development and strategic collaborations drive advancements in eco-friendly technologies, smart control systems, and compressor designs. However, variability in performance due to climate conditions and maintenance requirements poses challenges, highlighting the importance of system efficiency and durability in meeting broader energy efficiency goals.

Moreover, the market witnesses robust growth driven by various factors, including surplus renewable energy and the increasing demand for cleaner and more sustainable energy solutions. HPWHs cater to both residential and commercial water heating needs, especially in densely populated urban areas experiencing rapid urbanization. Governments and regulatory bodies play a crucial role in setting energy efficiency standards and providing subsidies to promote HPWH adoption. Technological advancements in smart technologies, compressor designs, and heat exchanger systems enhance operational efficiency and extend equipment lifespan. Strategic partnerships between energy providers and construction companies facilitate the usability and control of water heating systems, ensuring energy savings and contributing to CO2 emission targets in moderate to warm climates.

Heat Pump Water Heater Market Scope
Report Coverage	Details
Page number	166
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 24.07%
Market growth 2023-2027	USD 7.22 billion
Market structure	Fragmented
YoY growth (%)	20.5
Regional analysis	Europe, North America, APAC, Middle East and Africa, and South America
Performing market contribution	Europe at 54%
Key countries	US, China, France, Germany, and UK
Competitive landscape	Leading companies, Market Positioning of companies, Competitive Strategies, and Industry Risks
Key companies profiled	A. O. Smith Corp., Ariston Holding NV, Bradford White Corp., Carrier Global Corp., Daikin Industries Ltd., Fujitsu General Ltd., Glen Dimplex Group, Guangdong PHNIX Eco energy Solution Ltd., Haier Smart Home Co. Ltd., LG Corp., MIDEA Group Co. Ltd., Mitsubishi Heavy Industries Ltd., NIBE Industrier AB, Nyle Systems LLC, Panasonic Holdings Corp., Rheem Manufacturing Co., Rinnai Corp., STIEBEL ELTRON GmbH and Co. KG, V Guard Industries Ltd., and Vaillant Group
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, Market condition analysis for the forecast period.
Customization purview	If our market research 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 Report?

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

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