Heat Pump Water Heater Market Report Scope & Overview:

The heat pump water heater market size was valued at USD 12.28 Billion in 2024 and is expected to reach USD 27.12 Billion by 2032, growing at a CAGR of 10.49% over the forecast period of 2025-2032.

Heat pump water heater market growth is fueled by the increasing styling need for energy-efficient solutions globally and the financial incentives along with initiatives from government sectors for energy conservation. Heat pump water heaters are garnering increased attention in many residential, commercial, and industrial applications as countries double down to accelerate progress against sustainability goals and decarbonize greenhouse gas (GHG) emissions. The growing demand for these systems is supplemented by the advances in technology that improve the overall efficiency and dependability of these systems so as to meet the rigorous requirements of consumers today.

“In December 2020 - Daikin announces new technologies in heat pump water heaters that we predict will provide some of the highest energy efficiencies, lowest CO2 emissions, and highest reliability globally for sustainably cost-effective water heating solutions.”

The U.S. heat pump water heater market size was valued at USD 3.84 Billion in 2024 and is expected to reach USD 5.82 Billion by 2032, growing at a CAGR of 11.95% over the forecast period of 2025-2032.

Increasing energy efficiency standards along with growing government incentives to provide sustainable solution are contributing toward the growth of U.S. heat pump water heater market. Company offerings also expand in terms of models available, as the potential for increasing residential installations continues to make the US one of the leading regions for heat pump water heater adoption.

Heat Pump Water Heater Market Dynamics:

Drivers:

• Rising Focus on Sustainable Water Heating Solutions to Drive the Heat Pump Water Heater Market Growth

Our water heater market growth is heading toward a sustainable solution globally. Heat pump waterheaters are environmentally friendly due to lower carbon emissions and reduced energy consumption, which makes consumers more aware of their environmental responsibilities. This trend along with the government incentives and regulatory push for energy efficient appliances is driving the market for residential as well as commercial segment. In addition, as more and more heat pump water heater companies are making investments in research and development of new and innovative solutions which will also be a cost-effective solution the market is expected to witness substantial growth over the upcoming years.

“For instance, Ariston Group introduces new breakthrough heat pump water heaters in 2024 to further energy efficiency and sustainability, maintaining global leadership in high performance, energy saving and eco-friendly heating solutions for residential and commercial applications.”

• Increasing Adoption of Commercial Heat Pump Water Heaters in Large-Scale Buildings Boosts the Market

The market is being driven by the increasing use of commercial heat pump water heaters in large buildings that receive heat energy from an external heat source, such as hotels, hospitals, and industrial properties. Demanding commercial applications require strong and energy efficient water heating solutions that can effectively satisfy large volume hot water needs at a competitive cost. Thus, this increasing consumer inclination resonates with the heat pump water heater market trends about saving energy and carbon foot print. In light of the ever-growing emphasis on sustainability, companies with plastic moulding operations need to find ways to meet their own sustainability goals while also reducing overall operational costs, further accelerating demand for and consequently, the overall market growth of commercial heat pump water heaters across the North America region.

Restraints:

• High Initial Cost and Installation Complexity Hamper the Heat Pump Water Heater Market Adoption

The heat pump water heater industry offers significant growth potential, but high upfront expenses and complicated installation can impede the progress. The initial costs associated with things, such as equipment, and retrofitting old homes to support new systems tend to drive potential buyers away. Moreover, the skilled labor requirement with specialized installation contributes to total costs, making it difficult for certain consumers and enterprise adopters to embrace these solutions. According to the heat pump water heater market analysis, the regional markets where awareness and supporting infrastructure is limited can face major challenge from this limitation and restrict market growth. Without overcoming these, the full market potential will remain untapped.

Heat Pump Water Heater Market  Segmentation Outlook:

By Technology

The heat pump water heater market was dominated by Air to water segment with the maximum revenue share of around 61.25% in 2024. Its low price, straightforward installation, and broad use for housing and non-residential, explains this dominance. It also works across North America as it is able to operate in different climate zones with ease, and is ideal to replace traditional water heaters. The strong growth of this region is also attributed to its improved energy efficiency and low operating cost.

The Water Source segment will grow with a high CAGR of approximately 11.14% over 2025-2032, as it is the most energy efficient and can even work in lower temperature conditions. Water source heat pumps, which retain performance at low ambient temperatures where air-source systems fall off, are offered in a range of sizes, making them suited for the northern U.S. and Canadian market. This recognition of long-term energy savings and lower carbon emissions is a big factor that inspires adoption which in turn gives it strong growth potential over the forecast period.

By Capacity

The heat pump water heater market was dominated by upto 20 kW, by revenue share in 2024, The primary driver is the mass adoption and usage for residential, apartment, and small hotel applications. This capacity range is very affordable and more easily placed within existing water heating systems making it the most widely used segment. In the U.S. and Canada, rebates and incentives that are designed to make low-capacity units more affordable for homeowners and small businesses also help support its dominance.

The 21 to 50 kW segment is projected to grow at a considerable CAGR on account of increasing adoption among larger residential buildings, commercial, and institutional establishments. These higher capacity units have a higher heat output and are ideal for applications with more hot water demand. Commercial buildings including hotel, hospitals and office complex adoption growing fuelling; growth. These units meet the requirements of the growing mid-sized applications plus sustainability targets, supporting them to further grow in the market.

By Operation Type

The Electric segment held the highest revenue share in the heat pump water heater market in 2024. And its dominance largely comes down to the simplicity of electric heat pumps, which require little maintenance and can plug into just about any existing power supply system north and south of the border. The electric units are dependable and widely available, making them a preferred choice of consumers. They also get a little love from incentives and energy-efficiency standards, which puts them in line to become the leading choice among the residential and commercial installations.

The hybrid segment which is also likely to witness lucrative CAGR over 2025-2032. Hybrid units are more flexible and energy-efficient, and hence very appealing to its commercial and high-demand residential customer base. They are especially popular in colder regions, where they can alternate between power sources for all-weather operation. This segment is set to grow at a solid pace over the forecast period on account of their capacity to offer reliable heating solutions along with well-optimized operating costs.

By Application

In 2024, the Heat Pump Water Heater Market was led by the Residential segment, which accounted for the largest revenue share. Demand has been further stoked by new home construction, the retrofitting of older homes and government inducements for buying appliances that consume less energy. Energy savings and reductions in carbon emissions are increasingly captured consumers in the U.S., Canada, and Mexico, thus an important driver of the residential market. The segment's presence in the regional market landscape is underscored by the widespread adoption for domestic hot water requirements.

The Industrial segment is anticipated to register notable CAGR during 2025−2032, owing to growing demand of hot water systems in industrial facilities which are energy-efficient. This is creating an enormous demand for heat pump water heaters, as industries face pressure to reduce carbon footprints and lower operating costs. They generate high quantity hot water needed for processes and washing efficiently and therefore coupled with incentives lead to quick adoption over the forecast period.

By Tank Capacity

The Above 500 L segment held highest revenue share in the heat pump water heater market in 2024, by tank capacity. The large-scale hot water storage in commercial buildings such as hotels, hospitals, and multi-family housing is one of the key factors driving this dominance. These high-capacity units provide enough water to satisfy considerable demands, making them a must-have for large facilities. These systems, combined with energy-efficient retrofit incentives, help meet hot water demand for large-scale operations, securing their place in the market.

The Upto 150 L segment is anticipated to have a high CAGR during the forecasted period fueled by rise in demand from small residential units and small-scale commercial applications. Apartment dwellers and consumers in smaller homes are looking for water heating systems that fit well in tight space with compact, efficient appliances. Furthermore, these units have lower installed costs, and are more affordable for residential retrofits. This segment is further driven by the easy installation process along with their compatibility with energy saving programs present in North America.

Heat Pump Water Heater Market Regional Analysis:

In 2024, Asia-Pacific contributed approximately 45.28% of the total revenue in the heat pump water heater market. Urbanization, increasing population, along with favorable government initiatives to promote energy efficient water heating systems are supporting the dominance of the region over the market. Strong residential and commercial construction activity in China, Japan, and Australia stimulates demand for advanced water heating systems. The strong market share in the Asia-Pacific region is ensured by an increasing consumer consciousness for sustainability as well as the weather type very favorable for heat pump technology.

Over 2025-2032, the North American region is expected to hold the highest CAGR of approximately 11.14%, primarily due to growing adoption of sustainable heating technologies and government incentives. Need for energy efficient methods to reduce energy costs and environmental impacts have increased the consumer focus on the energy efficiency of appliances such as the heat pump water heaters at home and commercial facilities in the U.S., Canada, and Mexico. In fact, the North American market will achieve strong growth throughout the forecast period, owing to favorable policy frameworks, but also to technological advancement by the heat pump water heaters front-runner corporations.

Growth in the Europe heat pump water heater market is steady due to government incentives and sustainability mandates. Germany is the frontrunner in the shift toward sustainable water heating. This is complemented by the development of new generation hybrid heat pumps further stimulating adoption whilst also supporting Europe’s ambitious carbon neutral targets.

Key Players in Heat Pump Water Heater Market  are:

The major players operating in the market are EcoTech Solutions, Ariston Group, Arctic Heat Pumps, Carrier, Daikin, Trane, Rheem Manufacturing, Zealux Electric Limited, Bosch Thermotechnology Corp, and A. O. Smith Corporate.

Recent Developments:

• February 2025 - EcoTech Solutions is revolutionizing the heat pump water heater market with sustainable innovations, enhancing energy efficiency, and supporting India’s net-zero goals through advanced solutions tailored to diverse needs.

• February 2025 - Carrier launched its first domestic hot water air-to-water heat pump at the International Builders' Show, marking its entry into the AWHP market with energy-efficient, sustainable water heating solutions.