Heat Pump Market to Hit USD 150.3 Billion by 2035 as Electrification Accelerates

NEWARK, DELAWARE — The global heat pump market is on track for substantial growth as building electrification and decarbonization efforts accelerate across residential, commercial, and industrial sectors. According to a report from Future Market Insights, the industry is expected to expand from $56.9 billion in 2025 to $150.3 billion by 2035, reflecting a 10.2% compound annual growth rate.

Market momentum is driven by building owners seeking higher-efficiency heating solutions, increased regulatory pressure to reduce carbon emissions, and rising interest in technologies that support electrified building operations. Heat pumps continue to gain traction as they deliver year-round heating and cooling, integrate with existing building infrastructure, and offer efficiency gains exceeding those of conventional fossil-fuel systems.

Air-to-air heat pumps remain the leading product category with 44.3% market share, supported by advanced inverter technology, flexible installation, and growing demand for ductless mini-split systems. The residential sector accounts for 54% of total demand, with retrofit projects representing roughly 60% of installations due to equipment replacement cycles and widespread electrification incentives.

Regional growth is strongest in Asia Pacific and Europe, where government policies and boiler phase-out programs accelerate adoption. North America also shows steady expansion, with the United States projected to grow at 8.9% CAGR through 2035 as cold-climate performance improves and utility incentives expand.

Manufacturers continue to compete on system reliability, cold-weather capability, smart controls, and refrigerant compliance. Natural refrigerants such as propane (R-290) and carbon dioxide (R-744) are gaining attention as companies prepare for long-term environmental regulations. Integrated controls and IoT-enabled platforms are also emerging as key differentiators, particularly for contractors serving high-performance buildings and connected home applications.

As electrification continues to reshape heating markets, the report indicates increased opportunity for contractors in system replacements, retrofit design, residential upgrades, and building automation integration. The pace of adoption and ongoing technology advancement suggests that heat pumps will play a central role in global heating strategies through the next decade.

Key Facts Relevant to HVACR Contractors:

• Heat pumps—especially air-to-air systems (44.3% share) — are becoming mainstream replacements for fossil-fuel heating;

• Residential applications dominate (54% share), with retrofits representing ~60% of installations;

• Growth ties directly to regulatory pressures, replacement cycles, and incentives;

• Cold-climate performance, inverter technology, smart controls, and natural refrigerants (e.g., R290, CO₂) shape competition and product innovation;

• Europe and Asia Pacific lead expansion; U.S. grows steadily at 8.9% CAGR; and

• Contractors will face increased demand for retrofit expertise, electrification planning, refrigerant compliance, and smart integration.

Why It Matters for Contractors and Business Owners:

• Strong retrofit demand supports service revenue and long-term maintenance opportunities;

• Rising electrification mandates mean more fossil-fuel replacements and hydronic-to-heat-pump conversions;

• Technology evolution (inverters, natural refrigerants, cold-climate systems) requires ongoing training and workforce upskilling;

• Smart building integration and IoT-enabled controls create new service and monitoring opportunities; and

• Awareness of regional adoption trends helps contractors align offerings and prepare for market shifts.

Note: This piece was created with the help of generative AI tools and edited by our content team for clarity and accuracy.