Geothermal Heat Pump Market size was estimated at USD 12.9 billion in 2024 and is expected to surpass USD 25.3 billion by the end of 2037, rising at a CAGR of 5.8% during the forecast period, i.e., 2025-2037. In 2025, the industry size of geothermal heat pumps is evaluated at USD 13.6 billion.
The geothermal heat pump market is driven by increasing demand for efficient systems. With increasing energy costs concerns over climate change and government commands pushing for lesser carbon emissions, energy-efficient heating and cooling solutions have increased widespread attention. Governments across several regions have recognized the long-term energy-saving and environmental benefits of these systems and therefore announced tax credits, subsidies, and other incentives to encourage more adoption. By helping through decreasing the initial investment burden these incentives make geothermal systems financially viable for both commercial and residential users therefore boosting the market growth.
According to Research Nester, the 30% federal tax credit paired with electrification rebates can decrease household geothermal project costs by up to 50%, saving approx. USD 15,000 for higher-cost installations. The Investment Tax Credit can support commercial buildings, such as schools, retail outlets, and others to decrease upfront costs by 30–50% for a geothermal heat pump. Proper implementation of the new federal funding can help the geothermal market grow and decrease upfront costs even further.
Growth Drivers
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
5.8% |
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Base Year Market Size (2024) |
USD 12.9 billion |
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Forecast Year Market Size (2037) |
USD 25.3 billion |
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Regional Scope |
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Type (Closed loop, Open loop)
In geothermal heat pump market, closed-loop segment is projected to hold revenue share of more than 87.5% by 2037 due to rising demand for advanced HVAC systems, growing awareness of environmental problems, and increasing need to reduce carbon emissions. Key factors that help in increasing geothermal heat pumps consist of low energy consumption, high efficiency, and low operating and maintenance costs. The closed-loop geothermal heat pump uses various loops of interconnected pipes hidden in the ground. A water or antifreeze solution flows uninterruptedly through the pipe. Geothermal heat is engrossed into the solution flowing in a closed loop.
Some businesses are focusing on plant integration to close the gap between the demand and supply of products with manufacturer incentive plans and several government-funded schemes. For example, in September 2021, Vermont announced a growth incentive for the ground source or geothermal heat pump market. Meanwhile, it's important to achieve decarbonization targets. These incentives encourage homeowners to use the product to decrease greenhouse gas emissions.
Application (Residential, Commercial, Industrial)
The residential application segment is expected to gain a significant share in the geothermal heat pump market through 2037 owing to rising demand for energy-efficient products that are made for cooling, space heating, and hot water generation applications in apartments and homes. Favorable government initiatives and tax rebates obtained on the installation of energy-saving products are anticipated to increase demand for GHP in the residential sector. Northern countries mainly use GHP for heating purposes due to their cold temperatures.
Installation of energy-saving products boosts the demand for geothermal heat pumps in the residential sector. For example, in March 2023, Viessmann announced a new range of geothermal heat pumps, Vitocal 222-G for residential space and water heating applications. The new series of heat pumps is available in the heating output ranging from 5.8 kW to 10.4 kW with a maximum flow of 65°C temperature. This advanced product launch helped the company to raise its product portfolio and improve its business revenue.
Our in-depth analysis of the geothermal heat pump market includes the following segments:
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Type |
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Application |
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Asia Pacific Market Analysis
Asia Pacific in geothermal heat pump market is set to hold more than 39.8% revenue share by 2037 owing to rapid industrialization, commercialization, and rising economic conditions. A robust regional consumer base has led to an increase in the demand for geothermal heat pumps. Also, the major manufacturing sector with a dense population is anticipated to positively influence market growth. Moreover, the expansion of geothermal heat pumps beyond residential usage to industrial and commercial applications additionally sets Asia Pacific's position as an important player in the geothermal heat pumps market while contributing to sustainability goals and energy efficiency in the region.
Geothermal heat pumps are used by rapid urbanization in countries including China to offer effective heating and cooling in crowded settings. Technological advancements and government support have also led to market expansion. China is committing to reduce carbon emissions and improve energy efficiency. According to Heat Pumping Technologies, China is an industry leader in the heat pump for a green future. There is a “Double Carbon Policy” in China that aims for carbon neutrality by 2060. The worldwide deployment of heat pumps in China which was held in August 2024 at the Shanghai Heat Pump Forum (HPF) was brought by 1000 industry professionals globally.
India is committing to decrease greenhouse gas emissions which has led to the promotion of eco-friendly solutions with geothermal heat pumps. For instance, in January 2024, Havells announced its latest innovation of India’s first energy-efficient heat pump water heaters, to meet the demands of residential applications by cutting-edge technology offering up to 75% energy savings and setting new standards in water heating. The company specifically focuses on concerns related to energy wastage and the capability of hot water. The revolutionary Havells Heat Pump provides a solution that only consumes ¼energy cost compared to conventional water heaters.
North America Market Analysis
North America is projected to experience significant growth during the forecast period due to increasing requirements for water heating and space heating, as well as growing government initiatives and support is projected to boost the regional market growth. Moreover, developments in geothermal technology and increasing emphasis on sustainable building practices while promoting renewable energy technologies are further propelling the geothermal heat pump market to grow.
The growing demand for space heating equipment that is sustainable and eco-friendly when compared to substitutes including fossil fuel-based heating products particularly in the U.S. geothermal heat pump industry will complement the scenario. For example, in November 2022, Dandelion Energy funded USD 70 million in Series B1 to enhance and expand its geothermal heat pump operation across the U.S. The company has also tripled its commercial operation in 2022 supported by the Inflation Reduction Act by the U.S. government. This provides tax credits and some other financial incentives for house owners who are adopting geothermal technology. This strategy with financial support further enhances the transition of geothermal heat pumps in the U.S. market.
Additionally, the Canada geothermal market will grow due to the growing demand for high-quality infrastructure that provides a high standard of living in both commercial and residential sectors. All the parameters including favorable standards to encourage new zero-emission buildings will significantly boost the use of geothermal heat pumps across the nation. For instance, researchers at the Université du Québec have surveyed four Canadian cities to determine the economic feasibility of installing geothermal heating pumps in houses situated in Vancouver, Montreal, Halifax, and Toronto. Researchers found geothermal heat pumps most feasible in Halifax with less potential savings in the other cities.
Companies such as Daikin Industries Ltd., ClimateMaster, Inc., and Mitsubishi Electric Corporation are some leading companies that have taken charge by advancing the technologies and expanding their product portfolios. Also, these companies are investing in research and development to enhance their product system. Some companies also collaborate by working together to achieve a common goal.
For instance, in February 2024, Subterra Renewables and Enercare Inc. introduced a fully integrated heating and cooling solution driven by renewable geothermal energy. This initiative's goal is to support consumers and Canadian developers in transitioning from fossil-fuel-powered systems to renewable geothermal energy. Here are some leading players in the geothermal heat pump market:
Author Credits: Dhruv Bhatia
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