In 2023, the market size for air-to-water heat pumps was valued at $25 billion, and it is expected to expand at a CAGR of over 15% from 2024 to 2032. Notable public and private institutions have exerted significant effort to enhance the operational performance of heat pump technologies on a global scale. Using a case study from April 2023, the IEA Heat Pumping Technologies Technical Collaboration Programme (IEA HPT TCP) published a study confirming that air-to-water (ATW) heat pump systems utilising propane (R290) significantly improve a building's energy efficiency in comparison to other systems. Air-to-water (ATH) heat pump systems are gaining popularity in residential markets throughout Europe and North America. In February 2023, for example, new home construction projects in the United States increased by nearly 6.8%, a staggering 22% increase year-over-year.The increased availability of conventional heating and cooling systems that utilise renewable energy or fossil fuels may hinder the industry's expansion. Alternatively, the availability of operational cost advantages, incentives, and tax refunds may alleviate these constraints. To offset the cost barriers for customers, administrative authorities have also created advantageous programmes, such as power bill subsidies and tax incentives, to encourage the implementation of these systems.
The residential applications subsegment of the air-to-water heat pump market is anticipated to experience substantial growth owing to rising population and urbanisation rates. Approximately 54% of the global urban population resides in Asia. In fact, it is anticipated that the region's urban population will increase by fifty percent by 2050. This growing population will lead to a rise in demand for hot water heating. As a result of varying climatic conditions, the rising demand for space cooling and heating in residential buildings is anticipated to contribute to the growth of the regional economy. In addition, the introduction of favourable measures to meet rising consumer demand has led to the widespread adoption of innovative technologies, which has further increased product adoption.
The market size of residential air-to-water heat pumps will increase as a result of the growing demand for energy-efficient systems to reduce electricity bills and green building codes and standards. Europe made the largest investment in energy efficiency technologies in 2018, totaling 76 billion U.S. dollars, according to the IEA. The number of LEED (Leadership in Energy and Environmental Design) registrations in the United States increased from 67,593 in 2018 to 69,066 in 2019, according to the U.S. Green Building Council. (USGBC).
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Due to the expansion of the construction and housing industries for single-family and multifamily dwellings, it is anticipated that demand for residential air-to-water heat pumps will rise during the forecast period. According to Advanced Energy Economy, the building industry generated 298.48 billion U.S. dollars in revenue from the advanced energy market in 2018.
Increasing urbanisation, industrialization, and discretionary income in emerging economies will further improve the industry landscape. According to the World Bank's 2019 analysis, 77.4% of Germany's population resided in urban areas and cities. Moreover, 76.6% of Malaysia's total population resided in urban areas and towns. As of May 2019, approximately 10% of the world's buildings are heated by heat pumps, per the European Heat Pump Association. This presents a lucrative opportunity for providers of residential air-to-water heat pumps to tap into the untapped market, thereby boosting market growth over the forecast period. The product's market share will increase as a result of individuals' increased adoption of innovative technologies, which will be fueled by their rising disposable income. The real disposable income of actual households in the United Kingdom is projected to increase annually between 2017 and 2023, with the smallest annual increase rate being 0.4% between 2020 and 2021.
Businesses, hospitals, homes, and schools all require energy to function on a daily basis. However, energy production contributes to greenhouse gas emissions. According to the EIA, in 2019 the United States produced approximately 5.13 billion metric tonnes of CO2 from energy consumption. About 36.6 billion metric tonnes of carbon dioxide were released into the atmosphere in 2018. Carbon dioxide (CO2), one of the greenhouse gases, is produced in large quantities when fossil fuels such as coal, oil, and natural gas are burned. Many nations aim to reduce their primary energy demand and implement policies to limit greenhouse gas emissions in response to the rise in CO2 emissions. Residential air-to-water heat pumps provide an energy-efficient means of space heating, driving market growth. When air-to-water heat pump systems are utilised as opposed to fossil-fueled methods, carbon emissions associated with energy consumption and generation can be significantly reduced. This is causing an increase in the number of residential complexes equipped with heat pumps that are energy-efficient.
In multifamily residential applications, the market for air-to-water heat pumps is anticipated to surpass USD 25 billion by 2031. Increasing private and government investments in the construction of multistory residential structures have benefited multifamily structures. Residential air-to-water heat pumps are becoming increasingly popular due, in part, to an increasing preference for energy-efficient and environmentally friendly alternatives. Increasing government support in all regions will also contribute significantly to the reduction of energy consumption.
Due to rising demand for space heating and cooling systems and the expansion of the real estate sector, the air-to-water heat pump market in North America is anticipated to expand at a rate of over 15% through 2031. To meet the rising demand for energy, the regional government is engaged in a number of substantial initiatives for the adoption of dependable technologies. In November 2023, for instance, the U.S. government announced $9 billion in funding to support the installation of energy-efficient residential systems, such as heat pumps. In addition, the presence of stringent regulatory measures to limit carbon emissions has accelerated demand for these units, creating a favourable business climate.
Trane, Bosch Thermotechnology Corp., Glen Dimplex Group, DAIKIN INDUSTRIES Ltd., Carrier Corporation, Panasonic Corporation, NIBE Industrier AB, Vaillant Group, SAMSUNG, STIEBEL ELTRON GmbH & Co. KG, Viessmann, Toshiba Air Conditioning, LG Electronics, WOLF GmbH, and Guangzhou SPRSUN New Energy Technology Development Co., Ltd. are the industry leaders in air-to-water These renowned manufacturers and suppliers are reorganising their research and development budgets in order to expand their product lines and meet the rising demand for efficient and dependable space heating technologies.Daikin, for instance, announced the expansion of its heat pump manufacturing facility in Güglingen, Germany, in October 2023. The company purchased a 22,000-square-meter plot of land in Güglingen, where its headquarters and production facilities are situated. As a result of the integration and refurbishment of facilities at its existing manufacturing site, Daikin will be able to produce over three times its current volume by 2025.
