Industrial Heat Pump Market Size & Share 2026-2035

Industrial Heat Pump Market Size

The global industrial heat pump market was estimated at USD 1.48 billion in 2025. The market is expected to grow from USD 1.56 billion in 2026 to USD 2.79 billion in 2035, at a CAGR of 6.6% according to latest report published by Global Insights Inc.

Growing emphasis on reducing carbon emissions in industrial operations, coupled with the increasing utilization of waste heat from manufacturing processes, is significantly complementing the business landscape. Industrial heat pumps offer a highly efficient solution for converting low-grade waste heat into usable thermal energy, thereby lowering fossil fuel dependency. Shifting focus toward adoption of energy efficient systems along with support sustainability goals and enhance operational efficiency, reduce energy costs, further augment industrial heat pump market outlook.
 

For instance, in March 2024, GEA Group Aktiengesellschaft have provided to large industrial heat pump units to Neukölln district heating plant across Berlin, Germany. These 8.5 tonnes of heat pumps are the vital component of district heating system and research project across the nation. In addition, large industrial heat pumps would be installed and tested in real operation across Mannheim, Stuttgart and Rosenheim until March 2026.
 

Rising heating & cooling demand across industrial operations along with growing inclination toward replacing traditional technologies from industrial processes will positively influence the industry outlook. Strong emphasis toward energy-efficiency coupled with favorable regulatory norms by respective authorities will positively influence the business dynamics. Moreover, stringent initiatives to curb carbon emissions and rising adoption of energy efficient systems will augment the industrial heat pump market dynamics.
 

For instance, in March 2025, the European Commission’s Clean Industrial Deal and Industrial Decarbonisation Accelerator Act aim to create strong markets for clean technologies and support their growth, with industrial heat pumps playing a central role. These systems, made in Europe, help industries become more efficient and reduce emissions, aligning with EU climate goals. The Energy Affordability Action Plan also supports this shift by lowering electricity costs. According to the JRC, widespread adoption of heat pumps will enhance industrial efficiency, reduce emissions, and decrease reliance on fossil fuel imports.
 

Strict regulations promoting energy conservation, along with a growing consumer preference for integrating renewable energy sources, will drive product adoption. Moreover, rapid development and industrial growth in emerging markets, together with increasing investments in reliable and intelligent infrastructure, will enhance the industry scenario.
 

For instance, in June 2025, the IEA’s Energy Efficiency Policy Toolkit, updated for the 2025 Global Conference in Brussels, offers strategic guidance and practical examples to help policymakers strengthen energy efficiency initiatives across sectors. Now available as an interactive online resource, the toolkit integrates the Policy Package for Energy Efficiency and serves as a comprehensive tool to support the expansion and improvement of energy-saving policies and programs.
 

Europe holds a dominant share in the industrial heat pump market driven by efforts to lower carbon emissions which further elevated the adoption of energy efficient systems. Government-backed programs and investments are actively encouraging the shift toward sustainable heating technologies along with continuous industrial development and the modernization of outdated infrastructure, are playing a vital role in shaping the industry growth.
 

Supportive government policies aimed at cutting carbon emissions, along with initiatives to upgrade and modernize existing buildings, are expected to positively influence the growth and transformation of the industry landscape.
 

For instance, In November 2024, European authorities, in collaboration with the European Heat Pump Association, announced increased financial funding for industrial heat pumps. This support includes grants, low-interest loans, and tax incentives, aiming to accelerate industrial decarbonization. The initiative highlights the EU’s commitment to expand clean energy technologies and unlocking significant funding opportunities to drive sustainable transformation across industrial sectors.
 

Asia Pacific is fastest growing market in industrial heat pump market owing to strong industrial expansion, infrastructure upgrades, and varying climate conditions. The region’s focus on developing energy-efficient technologies to meet growing heating and cooling demands, along with supportive regulatory frameworks, has significantly boosted industry growth. Energy efficiency mandates and the ongoing modernization of industrial buildings have accelerated the adoption of advanced heat pump solutions.
 

For instance, in April 2025, China’s National Development and Reform Commission introduced a strategic plan to advance the heat pump industry, aiming to boost energy efficiency and support a low-carbon economy. By 2030, the country targets a 20% efficiency improvement in key products and breakthroughs in high-temperature technologies. The plan promotes heat pump use across buildings, industry, agriculture, and transport, with a focus on replacing coal systems and recovering industrial waste heat in petrochemicals, textiles, and food processing
 

Industrial Heat Pump Market Trends

The industrial heat pump industry is set to witness significant growth driven by implementation of stringent energy efficiency standards, adoption of advanced technologies, and rising environmental concerns. Favorable regulatory environment that encourages adoption of energy-efficient technologies coupled with introduction of energy efficiency targets by the authorities are encouraging industries to adopt energy efficient systems.
 

• For instance, by enabling Member States to support net-zero technologies through strategic projects with priority status, accelerated permitting timelines, and simplified procedures, the EU passed the Net-Zero Industry Act in May 2024, with a goal of improving domestic manufacturing of clean technologies.
   
• Accelerating demand for space heating and cooling technologies along with utilization of waste industrial heat from several processes & district heating will complement the industry landscape. Favorable initiatives for decarbonization along with convergence of advanced heating technologies and waste heat recovery is set to accelerate the adoption of low-carbon thermal solutions, further augmenting industrial heat pump market growth.
   
• For instance, in October 2024, Johnson Controls installed a SABROE DualPAC heat pump in Neustadt, Holstein, to supply green energy using Baltic Sea water. This modular, two-stage system delivers up to 700 kW of heat for a new harbor district via a dedicated heating network. During colder months, it extracts 500 kW from seawater, boosted by electricity. The system is supported by waste heat and thermal storage, marking Germany’s first large-scale seawater-based district heating solution.
   
• Rising greenhouse gas emissions and a growing preference for low-carbon technologies are reshaping market dynamics. Government and industry-led R&D efforts are intensifying to reduce emissions from industrial operations and harness waste heat. Robust development of large capacity heat pumps for various industrial processes will significantly boost the adoption of sustainable heating solutions, further augmenting the industrial heat pump market outlook.
   
• For instance, in October 2024, two large-scale heat pump systems began operating in Germany last year, supporting district heating with water temperatures up to 90°C. Friotherm’s Berlin installation uses river water from the Spree, while Johnson Controls International (JCI) employs ambient air. The systems differ in design, JCI uses ammonia with piston compressors, and Friotherm uses R1234ze with turbo compressors. These projects highlight diverse approaches to sustainable heating.
   

Industrial Heat Pump Market Analysis

Based on product, the market is segregated into closed cycle mechanical, water source, ground source, open cycle mechanical thermocompression, air source, closed cycle absorption, and open cycle mechanical vapor compression. The air source product dominated by around 28.5% revenue share in 2025 and is projected to grow at a CAGR of over 7% through 2034.
 

• The air source heat pump segment crossed over USD 420.7 million in 2024. Growing demand for efficient space heating, cooling and hot water solutions across industrial applications along with increasing inclination toward reducing emissions will positively influence the industry outlook.
   
• Ongoing advancements in technologies across components including development in heat pump compressors, refrigerants to improve overall efficiency will accelerate the product adoption. Moreover, easy installation, versatile operations and cost-effectiveness together with widespread deployment for various industrial processes will positively influence the air source heat pump industry landscape.
   
• Ground source heat pump segment is set to grow substantially on account of rising deployment of these systems across various industrial applications for industrial heating & cooling together with rising focus on reducing carbon emissions. These systems are cost-effective and clean systems that utilize low-temperature geothermal liquids (80-100°C) to heat water for circulation in building radiators and convection heaters further augmenting product adoption.
   
• Water-source heat pump systems are gaining significant momentum owing to their ability to utilize stable water temperatures, superior efficiency compared to alternatives supports large-scale applications, making them ideal for industries near water bodies like breweries, chemical plants, and district heating systems. Rising energy efficiency goals, waste heat recovery initiatives, and supportive government policies aimed at reducing operational costs and carbon emissions in industrial sectors will shape business dynamics.
   
• The open cycle mechanical vapor compression is set to grow at a CAGR of over 5% through 2034. Open cycle mechanical vapor compression heat pumps are used in industries owing to their ability to utilize processed steam efficiently and integrate with existing systems to reduce infrastructure costs and enhance energy recovery. Moreover, industries are aiming to adopt low-carbon solutions and focus toward decarbonizing high-temperature processes while improving operational efficiency and sustainability which will further accelerate product deployment.
   
• Rising demand for energy efficiency, decarbonization goals, supportive policies, and technological innovation will augment product deployment. Their adaptability and performance along with low energy losses and combined heating and cooling capability in various industrial applications seeking sustainable thermal solutions will positively influence business dynamics.
   

Based on the capacity, the industrial heat pump market is segmented into up to 500 kW, 500 kW to 2 MW, 2 MW - 5 MW and > 5 MW. The up to 500 kW segment holds 45.1% market share in 2025 with a growth rate of over 6.5% through 2035. Industries are increasingly adopting energy-efficient heating and cooling solutions to reduce operational costs and carbon emissions which has increased demand across sectors like manufacturing, chemical processing, food & beverage, and pulp & paper. The growing deployment of advanced heat pump technologies suitable for specific industrial requirements is reshaping the industry landscape.
 

• Rapid deployment of these technologies to meet the unique heating and cooling requirements across wide range of industries will further augment the business outlook. Supportive policies, sustainability goals, and the need for optimized thermal systems are some of the key factors fueling product deployment. Companies are also expanding their capacity to meet the rising energy demand by various industries, further complementing industry landscape.
   
• The 500 kW to 2 MW capacity segment is anticipated to increase in environmental concerns along with rising initiatives to curb greenhouse emissions has led to the adoption of high-capacity heat pumps in various application industries. Various industry players are actively developing high-capacity heat pump variants through research & development, collaboration, and tie-ups with other vendors to minimize the use of fossil fuel for heating requirements.
   
• 2 MW–5 MW capacity segment driven by rising demand for centralized heating in industrial establishments. These systems are engineered for high-performance applications such as paper manufacturing, food and beverage concentration, chemical compression and thermoforming, and industrial drying and boiling. Their ability to recover and utilize heat efficiently, reduce carbon emissions, energy consumption, and operational costs across large-scale, capital-intensive industries will boost product deployment.
   

Based on applications, the industrial heat pump market is segmented into industrial and district heating. The industrial segment is set to grow owing to rising investments for infrastructure development, coupled with enforcement of strict emission regulations, and adoption of energy efficient technologies. Ongoing regulatory initiatives aimed at enhancing energy efficiency within industrial facilities, inclination to meet space and water heating needs, along with converting waste heat streams into more usable temperature sources will further augment business dynamics.
 

• Growing requirement of large-scale space heating systems along with stringent regulations for rising carbon footprint has propelled the demand for heat pumps for district heating applications. The increasing need for clean systems with high energy efficiency and lower carbon footprint will significantly propel heat pumps penetration
   

North America Industrial Heat Pump Market

In 2025, the U.S. is expected to continue dominating the North American market, accounting for 75.6% of the regional share and generating an estimated USD 339.6 million in revenue. North America is forecasted to exhibit a robust CAGR of 7.2% from 2026 to 2035.
 

• The Inflation Reduction Act (IRA) and specialized Department of Energy (DOE) grants are significantly lowering the capital expenditure (CAPEX) hurdle for industrial electrification.
   
• Energy-intensive sectors, particularly food & beverage and pulp & paper, are prioritizing heat pumps to replace aging gas-fired boilers to meet corporate ESG goals.
   
• Technological advancements in 2026 have produced high-efficiency units capable of operating in the extreme temperatures of Canada and the Northern U.S., expanding the addressable market.
   
• As industrial production returns to North America, new "smart factories" are integrating water-source and ground-source heat pumps into their baseline infrastructure to ensure long-term energy stability.
   

Europe Industrial Heat Pump Market

The Europe market is projected to hold a 19.4% share in 2026 and is expected to grow at a CAGR of 5.7% from 2026 to 2035.
 

• The "Fit for 55" package and REPowerEU plan are driving mandatory shifts toward energy-efficient heating to reduce reliance on imported natural gas.
   
• European manufacturers are leading the market in specialized pumps that exceed 140°C, making them viable for chemical and pharmaceutical applications.
   
• Germany and Scandinavia are increasingly using large-scale industrial heat pumps (above 5 MW) to capture industrial waste heat for urban district heating networks.
   
• Strict F-gas regulations are pushing the European market toward CO2, ammonia, and water-based refrigerants faster than any other region
   

Asia Pacific Industrial Heat Pump Market

The Asia Pacific is the largest segment of the global industrial heat pump industry China is the dominant country with a market share of 33.5% in the region in 2026 and is anticipated to grow with a regional CAGR of 7.5% from 2022 to 2035.
 

• Massive infrastructure and manufacturing growth in India and China are creating a baseline demand for energy-efficient process heating.
   
• China’s aggressive policy to reduce air pollution in industrial clusters has made it the global leader in high-volume air-source heat pump deployment.
   
• Rising investments in EV battery manufacturing plants across Japan, South Korea, and China require precise thermal management, driving demand for mid-to-large capacity heat pumps.
   
• The presence of major global OEMs in the region allows for lower production costs, making IHPs more price-competitive for smaller industrial facilities
   

Latin America Industrial Heat Pump Market

Latin America's markets are growing at a regional CAGR of 4.7% during the forecast period 2026 to 2035.
 

• Brazil accounts for nearly 48.4% of the regional market in 2026, supported by its strong industrial base in food processing and beverage production.
   
• The surge of manufacturing facilities moving to Mexico to serve the North American market is driving a new wave of HVAC and process heating upgrades.
   
• Rising electricity costs and a growing focus on energy security are prompting industries to look beyond traditional fuel-oil boilers.
   
• The use of heat pumps for drying and temperature control in the massive agricultural exports sector of Brazil and Argentina is emerging as a key growth niche.
   

Industrial Heat Pump Market Share

Carrier is leading with 6% market share, Atlas Copco AB, Carrier, Daikin, Johnson Controls and GEA Group Aktiengesellschaft collectively hold around 26%, indicating moderately fragmented market concentration. These prominent players are proactively involved in strategic endeavors, such as mergers & acquisitions, facility expansions & collaborations, to expand their product portfolios, extend their reach to a broad customer base, and strengthen their market position.
 

• Carrier offers new range of CO2-based industrial heat pumps offers a sustainable and versatile solution for various applications. Designed with a compact and modular structure, these systems are safe, easy to install, and simple to maintain. They utilize CO2 as a natural refrigerant, supporting environmentally responsible operations.
   
• ATLAS COPCO AB offers heat pumps that are engineered to deliver dependable performance, high energy efficiency, and user-friendly operation with minimal maintenance requirements. They can be seamlessly integrated with complementary systems such as air compressors, chillers, and energy recovery units to create a unified, low-emission utility setup.
   

Industrial Heat Pump Market Companies

Major players operating in the industrial heat pump industry are:

• Atlas Copco
• Baker Hughes
• Crane Pump & Systems
• Ebara America Corporation
• Flowserve Corporation
• Franklin Electric Co., Inc.
• Gorman-Rupp Company
• Grundfos Holding A/S
• ITT Inc.
• KSB SE & Co. KGaA
• Pentair plc
• Sulzer Ltd.
• Tsurumi America, Inc.
• Weir Group PLC
• Wilo USA LLC
• Xylem Inc.
• Zoeller Pump Company
   

Johnson Controls offers Sabroe HeatPAC units which are compact and efficient heat pumps built around robust high-pressure reciprocating compressors (HPO/HPC/HPX), capable of handling differential pressures up to 40 bar and design pressures up to 60 bar. Utilizing ammonia as a refrigerant, these systems deliver cost-effective hot water up to 90°C, making them ideal for applications like pasteurization, sterilization, and other industrial heating processes.
 

Industrial Heat Pump Industry News

• In June 2025, Armstrong International has begun developing a new facility in Herstal, Belgium, to manufacture high-temperature industrial heat pumps. Following the acquisition of a nearby 5,000m² building, the site expansion aims to double production capacity. In partnership with Germany’s Combitherm, the new modular plant will produce up to 50MW of Circular Thermal heat pumps by early 2027. These pumps generate superheated water or low-pressure steam up to 120°C and reuse waste heat, cutting primary energy use by up to 70%.
   
• In June 2025, Johnson Controls introduced several advanced heat pump models, including the YORK CYK centrifugal water-to-water unit, offering up to four times the efficiency of traditional systems and delivering temperatures up to 82°C. The YORK YMAE modular air-to-water model ensures reliable performance in cold climates. A notable project in Spain saw a food company cut CO2 emissions by 2,000 tons and save USD 1.76 million annually, showcasing the real-world impact of company’s sustainable heating technologies.
   
• In June 2025, Hien unveiled two advanced heat pump models at InstallerShow 2025 in Birmingham, UK. Designed for industrial use, the ultra-high temperature steam-generating units reach up to 125°C, ideal for sectors like food, pharma, and chemicals. They offer high efficiency, smart grid connectivity, and use low-GWP refrigerant R1233zd(E) along with modular variants including water/water, water/steam, and steam/steam. With flexible waste heat recovery and CO2-free steam generation using green power, these units support industrial decarbonization and energy savings.
   
• In April 2025, Enerin has successfully installed a 400 kW HoegTemp industrial heat pump at the Pelagia Måløy fish processing facility in Norway. Replacing traditional boilers, it generates steam using recycled heat from cooling systems or ambient air, powered by renewable electricity. Unlike conventional systems, it handles variable temperatures efficiently and integrates easily with existing infrastructure, reducing both CAPEX and OPEX. Its wide operating range and flexibility make it ideal for sustainable, high-efficiency industrial heating applications.
   
• In March 2025, PILLER and GIG Karasek signed a contract to deliver the world’s most powerful industrial heat pump system for BASF’s Ludwigshafen site. GIG Karasek, as EPC contractor, will integrate 11 PILLER compressors using its CompriVAP technology. The project aims to decarbonize formic acid production by generating CO2-free steam and cutting emissions by 98%. This collaboration highlights both companies’ commitment to sustainable industrial transformation through advanced heat recovery and vapor compression technologies.
   

The industrial heat pump market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Million) and volume (Thousand Units) from 2021 to 2034, for the following segments:

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Market, By Product

• Air source
• Ground source
• Water source
• Closed cycle mechanical heat pump
• Open cycle mechanical vapor compression heat pump
• Open cycle mechanical thermocompression heat pump
• Closed cycle absorption heat pump

Market, By Capacity

• Up to 500 kW
• > 500 kW to 2 MW
• 2 MW - 5 MW
• > 5 MW

Market, By Temperature

• 80 – 100 °C
• 100 – 150 °C
• 150 – 200 °C
• > 200 °C

Market, By Application

• Industrial
• Paper
• Food & beverages
• Chemical
• Iron & Steel
• Machinery
• Non-Metallic minerals
• Other industries
• District heating

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
• Asia Pacific
  • China
  • India
  • Japan
  • Australia
  • South Korea
• Latin America
  • Brazil
  • Mexico
  • Argentina
• Middle East and Africa
  • South Africa
  • Saudi Arabia
  • UAE