Authors:
Ankit Gupta, Divyendu Sharma
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Europe Residential Heat Pump Market Size & Share 2026-2035
Report ID: GMI8912
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Published Date: June 2026
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Europe Residential Heat Pump Market
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Europe Residential Heat Pump Market Size
The Europe residential heat pump market was valued at USD 11.2 billion in 2025 and is estimated to grow from USD 13.4 billion in 2026 to USD 71.2 billion by 2035, at a CAGR of 20.3%, according to a recent study by Global Market Insights Inc.
Europe Residential Heat Pump Market Key Takeaways
Market Leader: Daikin led with over 10.5% market share in 2025.
Leading Players: Top 5 players in this market include Daikin, Carrier, Bosch, Mitsubishi Electric, Panasonic, which collectively held a market share of 36% in 2025.
Rising demand for space heating, cooling and domestic hot water across residential establishments along with increasing replacement of fossil-fuel-based systems from advanced technologies is contributing to industry growth. Governments authorities are introducing favorable regulatory frameworks, subsidy programs, tax benefit schemes and financial rebates to accelerate transition toward low-carbon heating & cooling solutions will complement industry landscape.
For instance, in January 2026, the UK government introduced Warm Homes Plan, committed to accelerating funding in heat pump systems across households in the country. This plan worth USD 19.8 billion (GBP 15 billion) will manage the installation of heat pumps, solar panels and other technologies, deploy upgrades to around 5 million households.
Stringent energy efficiency mandates and decarbonization targets along with growing emphasis on reducing carbon emissions from residential establishments and reducing dependency on natural gas will shape industry dynamics. Growing inclination toward improving energy efficiency of residential establishments along with implementation of strict building efficiency codes are driving adoption of advanced heat pump systems further augmenting industry outlook.
For instance, in May 2026, the European Union imposed new set of rules to enhance the energy performance of building infrastructure. These mandates focused on supporting countries toward modernizing their building infrastructure, reducing energy bills, achieving zero-emission and fully decarbonized building stock by 2050. It also helps to reduce carbon emissions, enable long-term cost savings and improve energy security for building occupants and owners.
Rising residential energy costs and shifting focus on reducing long-term energy consumption coupled with consumer inclination toward ambient indoor environment, while improving thermal comfort will positively influence business dynamics. Moreover, ongoing technological advancements in compressor efficiency, smart controls, cold-climate performance and adoption of natural refrigerants to enhance product reliability and economic viability, will accelerate product deployment.
For instance, in July 2025, Panasonic introduced Aquarea domestic hot water heat pump systems equipped with R290 natural refrigerant and DHW Tank, further expanded its residential heating technology, designed for efficient water heating. This system is available as a wall-mounted or floor standing unit and considered to be an efficient and sustainable solution for European households. This heat pump is designed to meet rising demand for high-performance and eco-friendly heating solutions, offering an A+ energy classification and efficiently operates across wide range of temperatures between -7ºC to 43ºC.
Germany is the largest market across the Europe residential heat pump industry owing to increasing renovation and retrofitting of aging building infrastructure along with growing inclination toward adoption of advanced technologies. Shifting consumer focus toward low-carbon alternatives capable of improving thermal efficiency and reducing energy consumption coupled with replacement of conventional gas boilers with advanced electric heating systems will augment Germany heat pump industry outlook.
For instance, in June 2025, the German government authorities adopted a drafted law to accelerate construction of residential establishments and secure housing to implement 100-day target of coalition agreement. The planned amendments made to the German Building Code, intended to reduce the shortage of affordable housing, across urban areas, made changes in use of permitted buildings and accelerate renovation of existing buildings.
Europe Residential Heat Pump Market Trends
The Europe residential heat pump industry is set to grow driven by increasing replacement of conventional gas and oil-based boilers with electric heating systems and rising demand for heating, cooling & hot water systems. Stringent carbon reduction mandates, rising household energy consumption, and favorable programs to accelerate the transition toward adoption of energy-efficient technologies further shaping industry outlook.
For example, NIBE launched NIBE Home in May 2026, entering the direct-to-customer installation services for heat pumps as a way of enhancing its competitive standing within the UK residential heating industry. This project helps the company offer complete heat pump solutions at home through consultation, installation, and after-sale services. This initiative highlighted company’s focus on vertically integrated service models to accelerate residential heat pump deployment across Europe.
Government authorities are introducing beneficial subsidies, programs and regulatory support for decarbonizing residential buildings and encouraging heat pump adoption to improve energy efficiency of building infrastructure, further accelerating product deployment. Introduction of stringent building efficiency codes to improve performance of buildings along with net zero targets set by regulatory authorities, accelerated the deployment of heat pump technologies, contributing to industry growth.
For example, in October 2025, the Dutch government authorities renewed the subsidy for Sustainable Energy and Energy Saving program for 2025 and 2026 This initiative will support homeowners to choose renewable and energy-efficient heating systems including air-source, ground-source and water-source heat pumps. This program offers direct financial support for A++ and higher efficiency systems and encourages adoption of sustainable technologies, reduces energy costs of households, and contributes to achieve a climate-neutral economy target by 2050.
Europe Residential Heat Pump Market Analysis
Based on product, the industry is classified into air source, water source, and ground source. The air source heat pump segment dominated the market accounting for around 95.2% market share in 2025 and is anticipated to grow at a CAGR of 20.8% through 2035.
The air source heat pump market is set to grow owing to rising adoption of cost-effective and energy-efficient heating systems along with growing replacement of conventional technologies and residential electrification initiatives. Shifting preference for advanced technologies that are compatible with underfloor heating systems, offering low installation complexity and reduced upfront costs will augment Europe air source heat pump industry outlook.
For instance, in September 2025, Vaillant launched the new aroTHERM Plus air-to-water heat pump, featuring improved energy efficiency, quieter operation, and enhanced installation flexibility for residential applications. The system is designed to support efficient space heating and domestic hot water generation while simplifying retrofit installations and ensures lower operational costs.
Ground source heat pump segment was evaluated at over USD 502.5 million in 2025. Rising integration of renewable energy technologies across existing and new residential building projects along with improved living standards of people accelerating adoption of clean energy technologies further contributing to industry growth. The ability to deliver reliable space heating and domestic hot water across diverse climatic conditions along with rising investments toward advancements in heat pump technologies will complement Europe ground source heat pump industry landscape.
For instance, in August 2025, Kensa and Octopus Energy introduced the first ground source heat pump network for more than 100 new households in South Wales, UK. This first investor-funded programme started a new USD 132.4 billion (GBP 100 billion) clean energy asset class across clean energy infrastructure. This network model created a new, subsidy-free approach, making easier to install clean heating technologies, for millions of households and benefit from reliability and high-efficiency of ground source heat pump technologies.
Based on the application, the industry is classified into single family and multi family. The single family segment leads the Europe residential heat pump market, valued at over USD 6.6 billion in 2025 and is set to grow at a CAGR of 19.8% by 2035.
The single family segment is set to grow owing to ongoing construction of residential establishments along with increasing replacement of conventional gas and oil-based heating systems with energy-efficient electric heating solutions. Growing inclination to adopt advanced heat pump systems that help to reduce long-term energy costs, improve household energy efficiency coupled with rising renovation and retrofit activities across aging housing infrastructure are contributing to industry growth.
For example, in May 2026, Viessmann introduced Vitocal 200-A, a monoblock air-to-water heat pump system, that was built for the European market suitable for single and two-family household applications. The heat pump has been made using natural refrigerant R290, providing higher efficiency, long-term operation with optimum cost-efficiency. The unit with an output range of 4 kW to 12 kW has flow temperature up to 75°C and works in conjunction with existing radiators.
Germany dominated the residential heat pump market in Europe with around 17.3% market share in 2025 and generated over USD 1.9 billion in revenue. Rising demand for low-carbon heating, cooling and hot water systems, increasing replacement of conventional heating technologies, and rising retrofit activities across aging housing infrastructure is contributing to industry growth. Favorable subsidy programs, stringent building decarbonization regulations, growing consumer focus on reducing long-term energy costs and flourishing investments in electrified home heating systems are augmenting industry landscape.
For instance, in March 2026, Berlin-based ecoworks, focusing on cost-efficient decarbonization of residential building infrastructure across Europe, received USD 26.3 million (EUR 23 million) to deliver largest cooperative serial renovation across Germany. Twelve residential buildings will experience energy-efficiency upgrades through renovation in the Hagen city located in Westfalia, to bring 192 apartments with KfW Efficiency House 55 standard and achieve carbon-neutral operations.
Europe Residential Heat Pump Market Share
The top five companies including Daikin, Carrier, Bosch, Mitsubishi Electric, and Panasonic operating in the Europe residential heat pump industry contribute to around 36% of the market share in 2025.
Manufacturers operating across the industry are focusing on introducing advanced technologies, integrating better controls, smart connectivity, and energy optimization capabilities into residential heat pump systems. Key players are aiming for strategic mergers and acquisitions, collaborations, joint ventures and partnerships to expand their industry presence. Companies are making R&D investments and aiming for expanding their manufacturing capacities to gain a competitive edge over the others and capture larger market share.
Europe Residential Heat Pump Market Companies
Major players operating in the Europe residential heat pump industry include.
Aira
Ariston
BDR Thermea
Blue Star
Bosch
Carrier
Clivet
Daikin
GENERAL
Glen Dimplex
GREE Electric
Haier
Midea
Mitsubishi Electric
NIBE
OCHSNER
Panasonic
Samsung
Stiebel Eltron
Thermia
Vaillant
Viessmann
10.5% Market Share
Collective Market Share of 36%
Europe Residential Heat Pump Industry News
In June 2026, LG Electronics introduced wide portfolio of heat pump solutions suitable for residential applications in Europe. The company launched an outdoor unit for Therma V R290 Monobloc air-source heat pump that utilizes R290 natural refrigerant with a very low Global Warming Potential. This unit is designed to provide reliable heating in outdoor temperatures even in minus 28°C and can deliver domestic hot water of up to 75 degrees Celsius.
In May 2026, Daikin Europe inaugurated its new heat pump manufacturing facility with an investment of approximately USD 343.9 million (EUR 300 million), located in Łódź, Poland. This plant will produce heat pump systems for residential applications, to meet rising demand for sustainable heating solutions across the European region. This facility also reinforced company’s local for local approach through enabling faster response to customer requirements and ensuring stable supply of energy-efficient solutions.
In April 2026, Samsung Electronics participated and demonstrated its latest technologies in Mostra Convegno Expocomfort 2026, an international trade fair for HVACR, water and renewable energy solutions, held in Milan, Italy. The company's EHS ClimateHub was showcased, that offers air heating with water-based space heating, air cooling with water cooling, or hot water delivery in conjunction with air heating, providing comfort throughout the year.
In August 2025, Panasonic invested USD 366.8 million (EUR 320 million) toward refurbishment and expansion of its manufacturing facility located in Pilsen, Czech Republic, by increasing production capacity up to 250%. This expansion project transfers R&D and production from South-East Asia to Europe to increase the capacity of local manufactured heat pumps. This new manufacturing plant will have the capacity to produce up to 1.4 million internal and external heat pump units annually from 2030 onwards for residential and commercial applications, for supply across Europe.
The Europe residential heat pump market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) and volume (’000 Units) from 2022 to 2035 for the following segments:
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Market, By Product
Air source
Ground source
Water source
Market, By Application
Single family
Multi family
The above information has been provided for the following countries:
Austria
Norway
Denmark
Finland
France
Germany
Italy
Switzerland
Spain
Sweden
UK
Netherlands
Table of Contents
Chapter 1 Methodology & Scope
Chapter 2 Executive Summary
Chapter 3 Industry Insights
Chapter 4 Competitive Landscape, 2026
Chapter 5 Market Size and Forecast, By Product, 2022 - 2035 (USD Million, '000 Units)
Chapter 6 Market Size and Forecast, By Application, 2022 - 2035 (USD Million, '000 Units)
Chapter 7 Market Size and Forecast, By Country, 2022 - 2035 (USD Million, '000 Units)
Chapter 8 Company Profiles
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Research methodology, data sources & validation process
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3. Data mining & market analysis
Data mining is a key part of our research process, contributing nearly 20% to the overall methodology. It involves analysing market structure, identifying industry trends, and assessing macroeconomic factors through revenue share analysis of major players. Relevant data is collected from both paid and unpaid sources to build a reliable database. This information is then integrated to support primary research and market sizing, with validation from key stakeholders such as distributors, manufacturers, and associations.
4. Market sizing
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5. Forecast model & key assumptions
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