Europe Air to Water Heat Pump Market Size - By Application, Growth Forecast, 2026 - 2035

Europe Air to Water Heat Pump Market Size

According to a recent study by Global Market Insights Inc., the Europe air to water heat pump market was estimated at USD 9.5 billion in 2025. The market is expected to grow from USD 10.6 billion in 2026 to USD 62.8 billion in 2035, at a CAGR of 21.8%.

• The growing demand for energy-efficient heating solutions is being driven by stricter environmental regulations and government incentives across Europe promoting renewable technologies to cut carbon emissions. Technological advancements in heat pumps technologies along with shifting focus toward enhancing efficiency and reducing operational costs, further fueling industry growth.
   
• For instance, in February 2024, Trane introduced a new lineup of air to water heat pumps powered by propane (R290) refrigerant with increased environmental protection characteristics. New units are intended for heating and cooling areas with volumetric power from 8 kW to 30 kW. The new heat pumps align with the shift toward environmentally sustainable HVAC systems owing to Trane's emphasis on lowering carbon emissions while maintaining a high level of eco efficiency.
   
• Moreover, various initiatives taken at the regional level to increase the proportion of renewable sources for heating and cooling purposes have influenced industry dynamics. Authorities are encouraging the use of renewable energy technologies by offering incentives as well as implementing measures aimed at reducing carbon emissions.
   
• For instance, effective from May 28th, 2024, the updated EPBD aims to accelerate building renovations across the EU, especially for poorly performing structures. Member States must integrate it into national law by May 29th, 2026. The directive focuses on four key areas: renovation, decarbonization, modernization, digitalization, and financing support, driving energy efficiency and reducing emissions in the building sector.
   
• Growing emphasis on adoption of enhanced technologies driven by environmental responsibility, along with stringent enforcement of clean energy policies, is driving demand for air to water heat pump solutions. Supportive government initiatives, tighter emission regulations, and expanding residential and commercial infrastructure are positively influencing industry growth.
   
• For instance, in September 2025, the EU’s REDI4HEAT project concluded after three years of collaboration with five member states to advance renewable heating and cooling. The initiative strengthened national energy plans and launched the Heat Transition Toolbox & Knowledge Sharing Centre, an ongoing resource for policy and training. Led by EHPA and funded by the EU LIFE programme, REDI4HEAT helped integrate decarbonization strategies into national frameworks, addressing buildings’ 40% share of CO2 emissions.
   
• Germany holds a dominant share in the Europe air to water heat pump market, driven by strong government support, tighter environmental policies, and growing public interest in eco-friendly heating alternatives. Technological advancements, coupled with rising electricity costs, is influencing both households and businesses to adopt heat pumps, align with nation’s broader efforts to cut carbon emissions and meet climate objectives.
   
• For instance, from January 2024, Germany mandates that new heating systems in new builds or major renovations use at least 65% renewable energy. To support this shift, the BEG program offers up to 70% subsidies for residential heat pump installations, with extra bonuses for replacing old oil or gas boilers and additional aid for low-income households.
   
• France is the fastest growing market in Europe air to water heat pump industry fueled by growing interest in energy-efficient heating and cooling technologies. Government initiatives aimed at reducing carbon emissions, along with a strong push toward adopting high-performance heat pump systems, are driving this momentum. The country’s favorable climate and financial incentives for both residential and commercial installations are further accelerating adoption, strengthening the overall market landscape.
   
• For instance, in April 2024, France unveiled a plan to produce one million heat pumps annually by 2027—tripling current output and creating 45,000 jobs, including 30,000 installers. The initiative includes tax credits for domestic manufacturing and will introduce eco-conditional subsidies from 2025, favoring environmentally responsible and locally produced models to support the country’s carbon reduction goals.
   

Europe Air to Water Heat Pump Market Trends

• The Europe air to water heat pump industry is set to witness significant growth driven by rising demand for energy efficient heat pump technologies along with introduction of supportive policies, new grant and subsidy schemes by respective governments. Various countries in this region have extreme temperature variations, along with accelerating residential and commercial sector growth will further augment industry landscape.
   
• For instance, to accelerate the adoption of heat pumps, the European Commission launched the Heat Pump Accelerator Platform in January 2025. This initiative is part of a broader support strategy aimed at strengthening national policy frameworks, collecting market data, overseeing training programs, and promoting research, innovation, and technology development. It focuses on helping member states implement effective policies and drive forward the transition to sustainable heating and cooling solutions.
   
• Growing measures to curb greenhouse gas emissions have significantly increased demand for low-carbon energy systems along with EU-driven policies are compelling member states to adopt strategies that reduce carbon footprints. Additionally, ongoing R&D efforts, new government initiatives promoting sustainable technologies, and growing environmental awareness are accelerating the deployment of clean energy solutions including heat pumps across residential and commercial sectors.
   
• For instance, effective January 2024, Germany’s updated Buildings Energy Act mandates that all newly installed heating systems in new buildings must use at least 65% renewable energy. Transitional deadlines apply for existing buildings based on municipality size, while older systems can still operate or be repaired, fossil-fuel replacements face restrictions. Incentives and subsidies support the shift, aiming to reduce emissions and accelerate the transition to sustainable heating across the country.
   
• The integration of eco-friendly refrigerants to meet stricter environmental standards along with innovations like smart control systems and ability to function well under different temperature conditions are influencing the industry landscape. Additionally, rising electricity prices and growing concerns over energy security are prompting more consumers to invest in heat pumps for long-term cost efficiency further augmenting business outlook.
   
• For instance, in May 2025, UL Solutions announced to expand its HVAC testing center located in Carugate, Italy, to complement the rising demand for advanced heat pump testing across Europe. This growth is fueled by the shift to eco-friendly refrigerants and evolving regulations. The upgraded lab offers performance and safety testing tailored to residential and commercial heat pump manufacturers, helping them adopt alternative refrigerants and meet new standards while improving product efficiency and reliability.
   
• European governments are providing multiple incentives and subsidies for the adoption of renewable energy solutions, including air-to-water heat pumps. Favorable programs comprising Renewable Heat Incentive in the UK and MaPrimeRénov’ program in France along with other programs in EU countries are encouraging product adoption.
   

Europe Air to Water Heat Pump Market Analysis

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• Based on application, the industry is segmented into residential and commercial. The residential segment dominated the market accounting for above 73% in 2025 and is anticipated to grow at a CAGR of over 21.5% through 2035.
   
• The market for residential applications has witnessed revenue of over USD 7 billion in 2025. The residential air-to-water heat pump market is anticipated to grow owing to expanding urban population and government policies aimed at saving energy, which increase the need for sophisticated and effective heating systems.
   
• For instance, in March 2024, Aira launched a new air to water domestic heat pump utilizing propane (R290) for the European market. This competitive model seeks to provide energy-efficient heating solutions and aims for lower carbon home heating options in Europe.
   
• The Europe commercial air to water heat pump market is set to surpass USD 16 billion by 2035. Increasing need for space heating and hot water across commercial applications including healthcare, educational institutions, retail outlets amongst others along with the implementation of stringent building energy regulation policies is influencing business dynamics. Ongoing development of commercial establishments, favorable policies by authorities toward adoption of heat pump technologies will augment industry landscape.
   
• For instance, in March 2025, Thermocold introduced iMEX HP R454B air-to-water pumps for residential, commercial, and industrial purposes. These units are environmentally sustainable because they utilize R454B refrigerant, which has a GWP of 466, while still being able to provide efficient heating and cooling. The system maintains up to 45°C leaving water at -15°C outdoor temperature and can produce sanitary hot water with temperatures reaching 60°C in summer conditions.
   
• Foreign investments in the service sector propelled by favorable strategic economic policies and beneficial government initiatives will further boost industry landscape. Moreover, increased public spending on construction, ongoing replacement of outdated electric heating systems with modern high efficiency units, stringent emission control policies, and renovation of old public buildings are major contributors to the Europe air to water heat pump industry growth.
  
  

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• Single family across residential application is set to witness significant momentum owing to increasing population, growing real estate sector and ongoing development of residential establishments. Rising demand for reliable hot water, colling & heating systems along with requirement of advanced technological systems driven by varying climatic conditions across the region will further accelerate product demand.
   
• For instance, in December 2024, Daikin Europe unveiled the Altherma 4 H, its first residential heat pump using R-290 refrigerant, tailored for single-family homes. It ensures efficient heating even in extreme cold down to -28°C, with water temperatures reaching 75°C. The top 14 kW unit delivers 13.3 kW output at -7°C, offering high energy ratings and low operating costs.
   
• Domestic hot water heat pump systems across residential application is set to grow owing to rising demand for efficient hot water heat pump systems for sanitary and other uses along with shifting consumer preferences toward enhanced technologies In addition, favorable financial policies such as tax rebates, grant offers, and subsidies are prompting more homeowners to abandon conventional heating methods, which is further fueling Europe residential air to water heat pump industry growth.
   
• For instance, in May 2025, Ecoforest introduced the ecoAIR+ 6-24 PRO, now featuring its exclusive high temperature recovery system. This enhancement enables simultaneous heating, cooling, and domestic hot water production using waste heat from the heat pump compressor. The unit can heat water up to 80°C while cooling spaces efficiently even in extreme temperatures, offering high performance with minimal energy cost across residential and pool heating applications.
   

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• Germany dominated the Europe air to water heat pump market with over 17% share in 2025 and generated above USD 1.6 billion in revenue. The Germany air-to-water heat pump market is supported by varying climatic conditions, high requirements for economical space heating and hot water systems and an increasing adoption of energy saving technologies.
   
• Growing environmental awareness and growing emphasis on sustainable living along with paradigm shift toward energy-efficient solutions aligned with long-term environmental and economic objectives are influencing consumer preferences toward low-emission technologies. Increasing adoption of environmentally responsible practices, particularly efforts to minimize carbon footprints, is accelerating the demand for heat pumps.
   
• For instance, in June 2024, Viessmann launched a new air to water heat pump, Vitocal 250-A Pro. This system is designed to cater for large residential and commercial buildings. The model works effectively and efficiently with the flow temperature of up to 70°C, heating output of 39.5 kW, and a cooling capacity of 21.7kW.
   
• The UK air-to-water heat pump market is anticipated to grow at a CAGR of over 23% by 2035. Supportive government policies and launch of various initiatives aimed at expanding heat pump deployment along with the advancement of integrated control technologies, enabling seamless interaction with other systems and enhancing operational reliability.
   
• For instance, the UK Government has announced a USD 2.08 billion extension to the Boiler Upgrade Scheme (2025–2028) to promote heat pump adoption. Complementary initiatives include a USD 538.15 million energy efficiency grant, USD 672.68 million for local authority retrofits, USD 1.68 billion for social housing upgrades, USD 652.50 million for the Green Heat Network Fund, USD 60.54 million for heat network improvements, and USD 20.18 million for the Heat Pump Investment Accelerator, demonstrating a strong commitment to decarbonizing domestic heating.
   
• France air to water heat pump witnessed a revenue of USD 1 billion in 2025. The industry is set to grow owing to shifting focus toward reducing carbon emissions along with rising demand for hot water, heating & cooling systems. Ongoing integration of solar energy with heat pump solutions, coupled with the gradual phase-out of conventional fossil fuel-based heating systems, is reshaping market dynamics and reinforcing the shift toward sustainable and efficient energy solutions.
   
• For instance, in January 2025, France enforced an updated RE2020 directive to significantly curb building-related carbon emissions. Key measures include banning new fossil fuel boiler installations, enforcing a 4 kg CO2/m²/year emissions cap for new constructions, mandating low-carbon heating in all new buildings, and promoting electric and hybrid systems such as heat pumps to support the country’s decarbonization goals.
   
• Furthermore, reduced costs, enhanced performance, and improved heat pump technology make these systems more favorable to businesses and consumers. In addition, the increased construction of smart cities, high-rise buildings, and modern residential complexes has increased the need for effective and reliable heating solutions further shaping the Europe heat pump industry dynamics.
   

Europe Air to Water Heat Pump Market Share

• Major 5 players operating across the Europe air to water heat pump industry include Daikin, Carrier, Panasonic, Bosch Thermotechnology, and Mitsubishi Electric Corporation contribute around 44% of the market share in 2024.
   
• The major manufacturers operating across the Europe air to water heat pump industry are aiming for advancements in technology or product, price, and customer service to gain competitive edge. Companies are introducing innovative, dependable solutions with value-added features, and suitable for high-performance needs from various sectors. Continuous and considerable spending on R&D has led manufacturers to be at forefront of developing new technologies and improving energy-efficient heating systems.
   
• For instance, in January 2024, Daikin UK acquired Robert Heath Heating Ltd to integrate residential heating services in the UK. This acquisition further strengthens Daikin’s position in the renewable heating market and reinforces the company’s commitment to leading the UK’s shift towards low-carbon heating.
   
• Over the last three years, Europe air-to-water heat pump sector observed strong growth and adaptability despite global economic challenges. By 2023 and 2024, improved supply chain conditions along with increased focus on energy security, boosted adoption rates and have influenced industry dynamics. Looking ahead to 2025, expansion of infrastructure in emerging European regions, together with rising demand for low-emission and energy-efficient technologies, is anticipated to further boost widespread deployment across various sectors.
   
• Daikin offers air-to-water low-temperature heat pumps, an ideal solution for newly constructed residential properties. When integrated with underfloor heating or low-temperature radiators, these systems deliver efficient thermal comfort while minimizing energy consumption. Engineered in Europe to meet the region’s diverse climate conditions, these heat pumps offer year-round performance and align with modern energy efficiency and sustainability standards.
   
• Carrier offers air-to-water heat pumps are engineered to comply with both current and future energy efficiency standards. Incorporating advanced proprietary technologies, these high-performance systems are ideal for applications requiring superior heating efficiency and minimal noise. Designed for resilience, they operate effectively in temperatures and can deliver water temperatures up to 60°C, ensuring year-round comfort and reliability.
   
• Panasonic offers Aquarea air source heat pumps harness ambient air to efficiently deliver heating, cooling, and domestic hot water, optimizing energy use. These systems can reduce energy consumption by up to 80% compared to traditional boilers, maintain high comfort levels even in extreme cold, and significantly lower carbon emissions—making them a smart, sustainable choice for modern homes.
   
• Mitsubishi offers Ecodan heat pumps and offer a sustainable, low-carbon alternative to conventional high-emission heating systems. This dependable renewable technology delivers efficient space heating and domestic hot water throughout the year. Engineered for consistent performance, Ecodan systems support environmentally responsible living by significantly reducing carbon output while maintaining high energy efficiency across all seasons.
   

Europe Air to Water Heat Pump Market Companies

Major players operating in the Europe air to water heat pump industry are:
 

• Aermec S.p.A
• Baxi – part of BDR Thermea Group BV
• Bosch Thermotechnology Ltd.
• Carrier
• Clade Engineering Systems Ltd.
• Daikin
• FUJITSU GENERAL
• Glen Dimplex
• Intuis Group
• LG Electronics
• Master Therm tepelná cerpadla s. r. o.
• Mitsubishi Electric Europe B.V.
• NIBE Industrier AB
• OCHSNER
• Panasonic Corporation
• STIEBEL ELTRON GmbH & Co. KG
• SAMSUNG
• Systemair AB
• Trane Technologies International Limited
• Vaillant
• WOLF
  
   
• In 2024, Daikin recorded a total revenue of USD 33.14 billion, representing a 9% year-over-year decrease. Daikin is widely acknowledged for its innovative air-to-water heat pump solutions, which align with Europe’s long-term sustainability objectives. The company’s advanced technologies support energy-efficient and environmentally responsible heating.
   
• During the first half of 2025, Carrier reported net sales of USD 11.33 billion, indicating a strong start to the year. For the entire fiscal year of 2024, the company achieved USD 22.48 billion in revenue, showcasing its robust market position. Carrier’s air-to-water heat pumps combine advanced technology with high energy efficiency, offering reliable heating performance even in sub-zero conditions. Designed for quiet operation and sustainability, they are ideal for residential and commercial applications seeking low-carbon, cost-effective climate control solutions.
   
• Mitsubishi Electric posted annual revenue of USD 34.93 billion for the fiscal year ending in 2024. In Q1 of 2025, the company generated USD 8.72 billion, reflecting its ongoing financial stability. Mitsubishi Electric Corporation delivers a broad spectrum of automation and energy management solutions across multiple industries. Its diverse heat pump portfolio is engineered to provide robust, intelligent, and energy-efficient climate control systems.
   
• Panasonic’s Aquarea air-to-water heat pump delivers efficient heating, cooling, and domestic hot water while supporting lower carbon emissions. Designed for both new constructions and retrofit projects, the T-CAP model maintains full heating capacity even in extremely low outdoor temperatures. This system ensures consistent indoor comfort and energy savings, making it a reliable solution for sustainable home climate control. The company’s sales revenue was reported at USD 57.87 billion in 2024.
   

Europe Air to Water Heat Pump Industry News

• In September 2025, Panasonic has expanded its heat pump production in Europe by reopening its upgraded giga factory in Pilsen, Czech Republic. With an investment of EUR 373.10 million, the facility’s capacity has increased by 250%, enabling annual output of 1.4 million units by 2030. The expansion shifts production and R&D from Asia to Europe, aligning with the company’s GREEN IMPACT vision. Operating as a net zero factory, this facility utilizes green energy and rooftop solar power to reduce its carbon footprint.
   
• In September 2025, Trane introduced the Cube CXC, a compact air-to-water heat pump series using R454B refrigerant and an advanced inverter scroll compressor. Designed for replacing fossil fuel systems, it offers heating capacities from 23 kW to 59 kW. The units deliver up to 45⁰ C leaving water at -15⁰ C and can produce domestic hot water up to 60⁰ C, ensuring efficient performance across a wide range of outdoor temperatures.
   
• In March 2025, Daikin launched its new modular air-to-water inverter heat pump designed for commercial buildings. The system integrates the use of propane (R290), refrigerant, providing effective and environmentally friendly heating, cooling and domestic hot water (DHW) services. EWYK-QZ units are capable of modular performance and volumetric output ranging from 100 kW to 2000 kW, thus could replace traditional style boiler heating with ease.
   
• In March 2025, at the ISH, Vaillant expanded air to water heat pump lineup designed for both new and retrofit buildings. Featuring quiet operation, easy installation, and natural R290 refrigerant, the range includes air-water and geothermal models. The aroTHERM perform (15–20 kW) suits larger homes, while the compact aroTHERM pro (5–11 kW) fits smaller spaces. The upgraded aroTHERM plus offers improved efficiency and reduced operating costs, reinforcing Vaillant’s commitment to sustainable heating solutions.
   
• In January 2025, Carrier launched the AquaSnap 30 AWH-P, a propane-based air-to-water heat pump range for residential and commercial use. Available in eight models (4–14 kW), the units offer a high COP of up to 4.90 and operate efficiently in temperatures from -20⁰ C to 46⁰ C. Capable of delivering leaving water temperatures up to 75⁰ C, the system supports both heating and cooling with minimal environmental impact.
   

The Europe air to water heat pump market research report includes in-depth coverage of the industry with estimates & forecast in terms of volume (000 Units) and revenue (USD Million) from 2026 to 2035, for the following segments:

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Market, By Application

• Residential
  • Single Family
  • Multi Family
  • By Product
    • Domestic Hot Water Heat Pump
    • Room Heat Pump 
• Commercial
  • Education
  • Healthcare
  • Retail
  • Logistics & transportation
  • Offices
  • Hospitality
  • Others

The above information has been provided for the following countries:

• Austria
• Norway
• Denmark
• Finland
• France
• Germany
• Italy
• Switzerland
• Spain
• Sweden
• UK
• Netherlands
• Poland
• Belgium
• Slovakia
• Ireland
• Czech Republic