Geothermal Heat Pumps Market Size, Share & Trends Analysis Report By Type (Open Loop, Closed Loop), By Application (Residential, Commercial, Industrial), By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global geothermal heat pumps market size was valued at USD 9.4 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 7.2% from 2020 to 2027. Growing demand for reliable, cost-effective, and energy-efficient solutions are projected to drive market growth over the forecast period. The geothermal heat pump (GHP) extracts heat from the ground for space heating, cooling, and hot water generation. Such a pump extracts heat by the horizontal or vertical collector. The extracted heat is commonly distributed through a hydronic distribution system. A GHP offers higher efficiency than air-source owing to the advantage of the stable temperature of its geothermal subsoil heat source. The U.S. is one of the prominent markets for a geothermal heat pump. Increasing carbon emission and fluctuating energy prices led the consumers to use renewable heat sources, which is expected to drive the product demand in the country.

The U.S. government has favorable policies encouraging the installation of heat pumps, such as personal tax credits and direct incentives on the product installation. Improving energy efficiency across industries is one of the prime objectives of governments across the world. Rising need for renewable energy sources along with extensive government support in the form of subsidies, incentives, and other monetary benefits projected to drive the market over the forecast period. Growing population coupled with rapid industrialization has resulted in massive energy consumption across the world.

Growing consumption of fossil fuels, such as coal, oil, and natural gas, to meet heating requirements has a severely harmful impact on the environment. Rising awareness about climate change and greenhouse gas emissions is expected to boost the demand for energy-efficient products and technologies. Moreover, government regulations and emission standards are projected to increase the demand for energy-saving products, such as geothermal heat pumps, in the industrial and residential sectors, thereby supporting market growth.

Geothermal Heat Pump Market Trends

Geothermal heat pumps are a popular alternative for various industrial applications in the residential, commercial, and industrial sectors as they save energy, assist to reduce air pollution, no requirement of fuel, and are more effective at cooling and heating the space. Geothermal heat pumps are expected to become more prominent over the course of the projection period as a result of rising demand for technically advanced systems and comfortable housing solutions as a result of rising disposable income.

New building fails to keep up with the rising demand while a significant portion of the older residential properties in developing countries deteriorates. As a result, the housing market has a thriving renovation, repair, and maintenance upkeep industry. In addition, it is anticipated that over the next several years, demand for geothermal heat pumps will increase due to the growing need for additional infrastructure and real estate expansions.

Geothermal heat pumps utilize less electricity than conventional systems, which lowers utility expenses. As they don’t use fossil fuels, these systems are also eco-friendlier than traditional heat pumps. Additionally, due to the earth’s constant temperature, geothermal heat pumps can operate effectively in any climate, whether it is hot or cold. The demand for geothermal heat pumps is anticipated to rise as a result of these aforementioned reasons throughout the anticipated forecast period.

The development of eco-friendly and energy-efficient products is expected to be accelerated by favorable government initiatives encouraging the deployment of energy-saving technologies. Additionally, space heating and cooling systems are a significant cause of global warming. Geothermal heat pumps are extremely energy-efficient and eco-friendly, thus demand for geothermal pumps is anticipated to increase throughout the projection period.

In the industrial and residential sectors, it is also anticipated that regulations and emission standards would lead to a greater demand for energy-saving products. A heat pump approximates a 300 % efficiency by producing 4 KW of thermal energy for every KW of energy it consumes. The IEA estimates that heat pumps contribute to an annual reduction of 9.16 million tonnes of CO2 emissions across the EU by reducing CO2 consumption. As a result, the market for geothermal heat pumps is anticipated to rise throughout the projected period due to the rising demand for energy-efficient solutions and an expanding carbon footprint globally.

The geothermal heat pump has a high initial cost for purchasing a geothermal system, and the cost of installation is accompanied by high labor expenses as well as the cost of drilling and excavation. The price of replacing the old pump also includes the expense of removing and disposing of the wiring, ductwork, and lines required for the new system to function correctly. Additionally, the geothermal system needs power to operate, which results in high utility costs and a large carbon footprint. The market for geothermal heat pumps is anticipated to see certain growth restraints during the course of the forecast period due to the aforementioned factors.

Type Insights

The closed-loop type segment accounted for the largest market share of 85% in 2019 on account of high demand for these products due to their efficiency, low maintenance cost, and high durability. Closed-loop GHP uses multiple loops of interconnected pipe buried in the ground. A water or antifreeze solution flows continuously through the pipe. Geothermal heat is absorbed into the solution flowing in the closed-loop.

Depending upon the type of land and space availability, closed-loop GHP can be installed in a horizontal or vertical configuration. Horizontal configuration requires a substantial amount of ground area. The horizontal loop pipes are buried in trenches 6 to 10 feet deep and 100 to 400 feet long. The piping of the horizontal loop is usually coiled and stacked to provide a larger area for heat transfer.

Vertical closed loop is the most common configuration due to higher efficiency and low space requirement. Vertical loop configuration is installed in holes drilled deep into the ground. U-shaped loops of pipe are inserted in the holes, which are usually placed about 20 feet apart. Vertical configuration takes advantage of renewable energy from the ground, in a “free” way and reduces the heating costs.

The open-loop GHP segment projected to witness significant growth over the forecast period. Open-loop GHP uses groundwater from wells, lakes, rivers, or ponds as a heat source. Open-loop is the simplest and cheapest type of geothermal heat pump. However, open-loop installation is not feasible in many situations owing to limited availability of groundwater source, or low-quality groundwater, or local restrictions on open-loop systems.

Application Insights

The residential application segment led the market by accounting for a revenue share of 49.7% in 2019 on account of the growing demand for energy-efficient products that are designed for space heating, cooling, and hot water generation applications in homes and apartments. Horizontal closed-loop GHPs are widely used in the residential application segment.

The residential sector is one of the booming sectors, which is expected to propel the demand for GHP. Favorable government initiatives and tax rebates offered on the installation of energy-saving products are projected to augment the demand for GHP in the residential sector. Northern countries, in particular, use GHP for heating purposes due to cold temperatures.

The commercial application segment is anticipated to witness the fastest CAGR of 7.4% over the forecast period. Increasing use of large GHPs in commercial buildings for space heating or cooling is expected to be one of the major factors influencing the market growth. Vertically closed-loop systems are typically most appropriate for large commercial buildings.

Increasing demand for cost-effective renewable heating & cooling technology solutions in the industrial sector is projected to drive the product demand over the coming years. A geothermal heat pump is used in numerous industrial processes including evaporation processes, dehumidification, and water heating or cooling applications. Chemical, petroleum, and food & beverage are the major end-use industries, which are expected to drive the geothermal heat pump market over the forecast period.

Regional Insights

The Asia Pacific accounted for the largest market share of 37.1% in terms of revenue in 2019. The geothermal heat pump market in the Asia Pacific is predicted to grow significantly in the coming years due to the rising trend of shifting production bases toward emerging economies, primarily China and India, which is expected to positively influence the market growth of geothermal heat pumps over the forecast period. Energy-saving solutions are predicted to gain significance in China, Japan, Indonesia, and India.

The Japanese government has made the decision to encourage the adoption of heat pumps and other energy-efficient products. To encourage the use of heat pumps, the Japanese government has implemented two programs, New Energy and Energy Conservation. Consumers can take advantage of tax credits, rebates, and other perks under these schemes. Over the forecast period, these initiatives are anticipated to have a beneficial impact on the market for geothermal heat pumps.

Europe is the major market for geothermal heat pumps. The need for energy-efficient goods in Europe, as well as government initiatives and laws to minimize energy consumption in the region, are likely to drive significant growth in the geothermal heat pump market in Europe. Furthermore, the reviving construction industry is anticipated to contribute to the expansion of the European geothermal heat pump market.

Technological breakthroughs, significant manufacturer’s investment in research & development capabilities, low maintenance cost, low emission rate, and technological developments are some of the important drivers driving demand for geothermal heat pumps in France. Furthermore, the French government’s various incentives are likely to encourage the adoption of geothermal heat pumps in France throughout the projection period.

Key Companies & Market Share Insights

Companies in the market have undertaken strategies, such as technology innovations, research & development, partnerships, and merger & acquisitions, to expand their product portfolio as well as to manufacture cost-effective, highly efficient, and superior products. Regional companies form strategic partnerships with major international players to promote the development of products with international standards. Major manufacturers of heat pumps are also concentrating on improving and expanding their after-sales and service network through M&A. For instance, in May 2018, Stiebel Eltron acquired Danfoss Vlrmepumpar AB, a key manufacturer and one of the biggest suppliers in the Nordic market. Some of the prominent players in the geothermal heat pumps market include:

• Stiebel Eltron

• Ingersoll Rand (Trane)

• Vaillant Group

• Viessmann

• Glen Dimplex

• Daikin

• NIBE

• Carrier

• ClimateMaster, Inc.

• Bard HVAC

• Spectrum Manufacturing

• Dandelion

• Robert Bosch LLC

• Maritime Geothermal

• OCHSNER 

Geothermal Heat Pumps Market Report Scope

Global Geothermal Heat Pump Market Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global geothermal heat pumps market report on the basis of type, application, and region:

• Type Outlook (Revenue, USD Billion, 2016 - 2027)

  • Closed Loop

    • Horizontal

    • Vertical

  • Open Loop

• Application Outlook (Revenue, USD Billion, 2016 - 2027)

  • Residential

  • Commercial

  • Industrial

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • France

    • Italy

    • Sweden

    • Finland

    • Switzerland

    • The Netherlands

  • Asia Pacific

    • China

    • Japan

    • South Korea

    • Australia

  • Central & South America

    • Brazil

    • Chile

  • Middle East & Africa

    • Saudi Arabia

    • UAE