The Growth in Heat Pump Adoption Globally

Heat pump adoption is experiencing significant global growth, with Europe leading the charge as part of its broader decarbonization and energy security goals. In 2023, Europe installed over 3 million new heat pump systems, an all-time high, driven largely by government incentives, fossil fuel heating bans in new buildings, and public awareness of energy efficiency. Countries such as France, Germany, Italy, and the Nordic states are seeing particularly strong uptake. France leads in total installations, while Sweden and Norway have the highest per-capita ownership rates, thanks to long-standing support and well-insulated housing stock.

Germany, which is rapidly phasing out oil and gas heating, is investing heavily in heat pump rollout through generous subsidies and regulatory reforms. The European Union as a whole has set ambitious targets to reach around 60 million heat pumps by 2030. This has created strong demand not only in new builds but also in retrofitting older homes, which remain the most significant growth segment.

"Beyond Europe, the United States is also expanding heat pump adoption, helped by the Inflation Reduction Act, which provides tax credits and rebates for homeowners. Cold-climate heat pump models are becoming more common in northern states and Canada, where electrification of heating is central to national decarbonization plans."

In Asia, China is the world’s largest manufacturer and exporter of heat pumps. The country has leveraged its industrial capacity to drive global price competitiveness and dominates the supply chain for compressors, refrigerants, and electronic control systems. Japan and South Korea, while smaller in manufacturing volume, are known for their advanced designs, particularly CO₂-based systems, and remain strong in research and development.

The cost of manufacturing heat pumps is generally decreasing due to reduced economies of scale, improved manufacturing processes, and a growing global supply chain. Prices have dropped significantly over the past decade, particularly for air-to-air and small air-to-water systems. However, the installed cost remains relatively high in many regions due to labour, system design, and refurbishment needs, especially in retrofit scenarios. Reducing these soft costs is a key focus for many.

Ireland is also ramping up heat pump adoption as part of its Climate Action Plan, with grant support from theSustainable Energy Authority of Ireland (SEAI) and a focus on replacing oil boilers in rural homes. Uptake is growing steadily, particularly in new homes developments, where heat pumps are now the standard in most residential developments.

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