Geothermal Heat Pump Market Size, Share & Segmentation, By Type (Closed Loop [Horizontal, Vertical], Open Loop), Application (Residential, Commercial, Industrial), and Region | Global Forecast for 2025-2032

Geothermal Heat Pump Market Report Scope & Overview:

The Geothermal Heat Pump Market size was valued at USD 11.36 billion in 2024 and is expected to reach USD 18.66 billion by 2032, growing at a CAGR of 6.40% over the forecast period of 2025-2032.

The geothermal heat pump market growth is driven by rising requirements for sustainable and energy-efficient heating and cooling solutions. Also referred to as geothermal energy heat pumps or geothermal HVAC systems, geothermal heat pumps harness the earth's relatively moderate uniformly from the ground to deliver extremely similar geothermal heating and cooling. Rising energy costs, regulatory pressure on carbon emissions, and the need to lower carbon footprints have made this technology increasingly attractive around the world. One of the most important growths in the market is the integration of smart controls and hybrid systems, which helps in the improvement of operational and user efficiency. Also emerging in the market are innovations like dual-source heat pumps and higher-performance refrigerants for extreme climate applications. The growing number of incentives offered by governments in North America,  Europe, and parts of Asia-Pacific to promote geothermal energy adoption is also propelling market growth over the forecast timeline. Both the residential and commercial and industrial sectors are taking advantage of these systems, as they offer environmental and long-term cost benefits. In summary, geothermal heat pump market trends suggest a growing interest in and movement toward greener technologies and advanced HVAC innovations, making geothermal solutions an important part of the clean energy transition on a national and global scale.

In June 2025, Bill Gates is supporting Fervo Energy's USD 2 billion geothermal project in Utah, set to become the world's largest enhanced geothermal system. The project uses advanced oil-and-gas-style drilling to deliver 24/7 clean power. Backed by Breakthrough Energy Ventures, it aims to power over 375,000 homes by 2028. However, progress hinges on maintaining clean-energy tax credits threatened by GOP-led cuts, making legislative support crucial for scaling.

Market Dynamics

Drivers

• Geothermal Heat Pumps offer efficient, low-emission heating and cooling by using the Earth’s stable underground temperatures.

Geothermal Heat Pumps (GHPs) use the temperatures underground, which are stable year-round, to provide energy-efficient, low-carbon alternatives to conventional heating and cooling systems. GHPs support the reduction of fossil fuel dependence on heating and cooling by using the relatively constant thermal energy found below the surface. This comes in line with the global shift away from fossil fuels and the aim to reduce the carbon footprint. As an example, a recent study performed by The Oak Ridge National Laboratory and The National Renewable Energy Laboratory for The U.S. Department of Energy found that large-scale use of GHPs can reduce demand for electricity from the grid by 13% as soon as 2050, while also avoiding the construction of around 24,500 miles of new grid transmission lines. Moreover, GHPs emit nothing while working on-site, providing better air quality and sustainable energy production.

Restraint

• High Upfront Installation Costs Hinder Widespread Adoption of Geothermal Heat Pump Systems Despite Long-Term Benefits

A significant barrier to the widespread utilization of geothermal heat pump (GHP) systems is their high upfront system installation costs. In Britain, for instance, the price of a ground-source heat pump is estimated to be between USD 17,000 and USD 60,000, according to the type of system that is used and how the house is structured. Whilst government initiatives such as the USD 9,000 Boiler Upgrade Scheme go some way to offsetting costs, a great deal of appeal is still related to affordability for most homeowners. Despite the long-term energy savings and environmental benefits seen from GHPs, the high upfront cost represents a large barrier to entry for prospective users. On top of this,  installation will mean significant preparation, like drilling boreholes or underground loops, which also complicates and drives up the cost. Combined, these factors restrict the market penetration of geothermal heat pump systems.

In June 2025, UK ministers proposed exempting heat pump users from "green levies" on electricity bills to encourage adoption and reduce emissions. High electricity costs have slowed uptake, with installations far below targets. The plan awaits government approval to make heat pumps more affordable and accessible.

Segmentation Analysis

By Type

Closed Loop segment dominated the market and accounted for 86% of the geothermal heat pump market share.  The reason for this dominance is the efficiency, reliability, and global applicability of hydropower within various geo-physical environments. In a closed-loop system, a refrigerant or water is circulated through an underground network of pipes, meaning that the heating and cooling are steady and extracted from nature at a minimal environmental footprint. Moreover, being low on maintenance and having a long operational lifespan, these are becoming a popular choice among both residential and commercial users. Thus, it is these benefits that lead to the most popular use of closed-loop geothermal heat pumps in the world.

The Open Loop type is the fastest growing segment in the Geothermal Heat Pump market due to its advantages in efficiency and adaptability. Open Loop also uses the groundwater itself as Closed Loop but its heat exchanger is more efficient while the installation is cheaper in a proper place. That makes it a favorite for new developments and retrofit projects, because it is likely to capture groundwater. Furthermore, rising awareness regarding sustainable energy solutions along with the government initiatives are pushing the commercial and industrial sectors towards Open Loop systems. This has led to a tremendous amount of growth in this segment, although currently Closed Loop type is dominating the market.

By Application

The residential segment leads the geothermal heat pump market, accounting for 50% of the market share in 2024. This is due to the growing penetration of geothermal heat pumps in residential applications, owing to increasing energy efficiency awareness and the need for minimizing utility costs. The long-term savings, combined with environmental benefits,  have always made geothermal a popular choice among homeowners to utilize for heating and cooling. Besides, the market penetration of residential renewable energy continues to increase due to the support of government incentives and subsidies. The trend towards increasing availability, reliability for residential geothermal systems makes this segment the clear leader in this market.

The commercial segment is expected to be the fastest-growing application in geothermal heat. The facilities sector is driven by the growth of infrastructure projects such as office buildings, hotels, and retail spaces in need of sustainable and energy-efficient HVAC solutions. Geothermal systems are among the environmentally friendly technologies that businesses are using to achieve corporate sustainability objectives, lower opex, and comply with environmental regulations. In addition, the development of large-scale geothermal technology has improved the efficiency and scalability of systems. With increasing awareness surrounding environmental impacts and the greater prevalence of green building certifications, the commercial market is expected to continue to lead rapid thermal heat pump growth over the coming years.

Regional Analysis

The Asia-Pacific region holds the dominant position in the geothermal heat pump market, accounting for 38.12% of the market share in 2024. This leadership is spurred by relentless urbanization, increasing environmental consciousness, and favorable governmental policies encouraging renewable energy adoption. Nations like China, Japan, and South Korea are pouring billions into the decarbonization of heating and cooling. This also boosts market growth as the construction industry is rising along with demand for energy-efficient systems in the residential and commercial areas. Due to its strong industrial foundation and technological development, this is the fastest-growing market in the world.

China is both the dominant and fastest-growing country in the geothermal heat pump market due to rapid urbanization and strong government support for renewable energy. High investments in clean technology and a low carbon footprint are targeted towards adoption in residential, commercial, and industrial sectors. Market growth is further fueled by advancements in manufacturing capabilities and technological innovations from China. Though Japan and South Korea also have growth, the Asia-Pacific geothermal heat pump market is spearheaded by China.

Europe ranks as the second-largest market for geothermal heat pumps, benefiting from strong environmental regulations and a long-standing commitment to renewable energy sources. In Germany, France, Sweden, and so many more, we see direct demand where it exists, and with the EU binding carbon reduction targets and even clean energy incentives, even greater deployment in the sector is underway. There is also steady growth as a result of the increasing cost of energy and the need for more energy-efficient heating solutions in residential and commercial buildings. Europe holds the most extensive share in the geothermal heat pump market due to changing consumer behavior towards sustainable livelihood, coupled with the presence of established market players.

North America holds a significant share in the geothermal heat pump market, with the United States and Canada leading the pack, owing to favorable policies in their respective countries as well as growing consumer interest in renewable energy sources. Technological breakthroughs, established industry base, and increasing concern for energy-efficient solutions in residential and commercial buildings help propel the North American photovoltaic market. Finally, geothermal system incentives and rebates also help grow the market. A significant and growing market around the world, the adoption of geothermal heat pumps is driven by a strong sustainability focus across North America, amid rising energy prices.

The U.S. geothermal heat pump market is expected to grow steadily from USD 1.55 billion in 2024 to USD 2.46 billion by 2032, with a CAGR of 5.93%. The growth is attributed to the increasing environmental regulations, growing awareness about energy efficiency, and government incentives favoring these solutions. Demand is across residential, commercial,  and industrial. The U.S. continues to be one of the most important markets for thermal heat pumps in North America.

Key players

Geothermal Heat Pump Companies are Stiebel Eltron, Daikin, Viessmann, NIBE, Ingersoll Rand (Trane), Robert Bosch LLC, Glen Dimplex, ClimateMaster, Inc., Vaillant Group, Carrier

Recent Development

• In May 2025, NIBE is driving the UK’s transition to cleaner heating, as highlighted in The Guardian’s heat pump guide. In 2024, the UK installed nearly 100,000 heat pumps, still short of the 600,000 annual targets set for 2028. Heating and cooling contribute to 26% of global emissions, with UK home heating alone at 18% in 2021. Heat pumps, up to six times more efficient than gas boilers, are supported by government incentives like grants and 0% VAT, though proper insulation remains essential for optimal efficiency.

• In September 2024, Viessmann Climate Solutions UK launched the Vitocal 250-A Pro, a 40-kW air source heat pump ideal for larger homes, public buildings, and small commercial sites. It features high efficiency with a CoP of 5.32, uses eco-friendly R-290 refrigerant, and supports both heating and cooling up to 70°C. The unit operates quietly with advanced noise-reduction technology and has earned the iF Gold Design Award for its sleek design.