Europe Industrial Heat Pump Market

Europe Industrial Heat Pump Market Size

The Europe Industrial heat pump market was valued at USD 56.07 billion in 2024. The European market is projected to reach USD 95.49 billion by 2033 from USD 59.49 billion in 2025, rising at a CAGR of 6.09% from 2025 to 2033.

Industrial heat pumps are advanced systems designed to transfer thermal energy from low-temperature sources to higher-temperature applications which is enabling significant reductions in greenhouse gas emissions while enhancing operational efficiency. Europe is intensifying its commitment to achieving net-zero carbon goals by 2050 under frameworks such as the European Green Deal. Industrial heat pumps have emerged as crucial technologies for sectors like food processing, chemical manufacturing, and district heating. According to a report published by the European Heat Pump Association (EHPA), industrial heat pumps accounted for approximately 3% of total industrial heat demand across Europe in 2022, with steady growth anticipated due to increasing regulatory support and technological advancements.

The market expansion is fueled by rising energy costs, stringent environmental regulations, and growing awareness about renewable energy integration. Furthermore, data from Eurostat sheds light on industrial activities contribute nearly 25% of Europe’s total energy consumption, making energy-efficient alternatives like heat pumps indispensable. Countries such as Germany, France, and Sweden are leading in adoption rates. The market reflects a strong pipeline of investments in large-scale projects aimed at replacing conventional fossil fuel-based heating systems with cleaner, cost-effective alternatives.

These dynamics showcases the transformative potential of industrial heat pumps in reshaping Europe's industrial energy infrastructure.

MARKET DRIVERS

Stringent Regulatory Framework for Decarbonization 

The stringent regulatory framework aimed at reducing carbon emissions and promoting energy efficiency is primarily driving the growth of the European industrial heat pump market. The European Union’s Green Deal which mandates a 55% reduction in greenhouse gas emissions by 2030 compared to 1990 levels has catalyzed industries to adopt low-carbon technologies. According to the International Energy Agency (IEA), industrial processes account for approximately 20% of the EU’s total CO2 emissions which is making them a focal point for decarbonization efforts. Industrial heat pumps are increasingly viewed as a viable solution due to their ability to deliver high-temperature heat with minimal emissions. A report by the European Environment Agency shows that renewable energy integration in industrial processes grew by 12% between 2018 and 2022 and is driven by policies such as the Renewable Energy Directive. These regulations incentivize companies to transition from fossil fuels, positioning heat pumps as a key technology in achieving compliance.

Rising Costs of Conventional Energy Sources 

The rising cost of conventional energy sources has pushed industries to seek more cost-effective and sustainable heating solutions is another factor fuelling the growth of the market. Eurostat data reveals that natural gas prices in Europe surged by over 400% between 2020 and 2022, significantly impacting industrial operations reliant on fossil fuels. This economic pressure has accelerated the adoption of industrial heat pumps, which offer operational savings by utilizing waste heat recovery systems. According to the European Commission’s Joint Research Centre, industries using heat pumps have reported energy cost reductions of up to 30%, alongside improved process efficiency. Furthermore, the International Renewable Energy Agency (IRENA) states that industrial heat pumps can achieve payback periods of less than five years under favourable conditions, making them an attractive investment. Industries prioritize long-term financial sustainability amid volatile energy markets. As a result, the demand for industrial heat pumps continues to grow.

MARKET OPPORTUNITIES

Expansion of District Heating Networks 

The expansion of district heating networks which are increasingly integrating renewable energy solutions is viewed as a major opportunity for the European Industrial heat pump market. According to the European Commission’s Joint Research Centre, district heating currently supplies approximately 12% of Europe’s total heating demand, with a target to increase this share to 50% by 2050 under the EU Heating and Cooling Strategy. Industrial heat pumps are well-suited for integration into these systems because they can efficiently utilize waste heat from industries and convert it into usable energy for residential and commercial heating. The International Energy Agency (IEA) estimates that incorporating heat pumps into district heating could reduce associated carbon emissions by up to 40%. Countries like Denmark and Sweden are already demonstrating successful large-scale projects. So, the growing emphasis on decentralized energy systems presents a lucrative opportunity for market growth.

Advancements in High-Temperature Heat Pump Technology 

The ongoing advancements in high-temperature heat pump technology which are expanding their applicability across energy-intensive industries presents a potential prospect for the market. The European Patent Office reports a 25% annual increase in patent filings related to high-temperature heat pumps since 2019 which reflecting rapid technological progress. These innovations enable heat pumps to achieve temperatures exceeding 150°C, making them viable for sectors such as chemical processing and food manufacturing, which traditionally rely on fossil fuels. A study by the European Environment Agency showed that adopting high-temperature heat pumps could reduce industrial energy consumption by up to 20%, translating to significant cost savings. Furthermore, the European Technology and Innovation Platform on Renewable Heating and Cooling emphasizes that breakthroughs in refrigerants and compressor designs are enhancing system efficiency. As industries seek scalable decarbonization solutions, these technological advancements position industrial heat pumps as a transformative force in Europe’s energy transition.

MARKET CHALLENGES

Integration with Existing Industrial Infrastructure 

The difficulty of integrating these systems with existing industrial infrastructure, which often requires extensive modifications is notably challenging the rise of European industrial heat pump market. Many industrial facilities in Europe were designed decades ago and are optimized for conventional fossil fuel-based heating systems. The European Commission’s Directorate-General for Energy estimates that retrofitting older industrial plants to accommodate heat pumps can increase project costs by 30-40% which is deterring adoption. Additionally, a report by Eurostat reported that approximately 60% of industrial sites in the EU face compatibility issues due to outdated equipment or insufficient waste heat availability. This challenge is particularly pronounced in energy-intensive sectors like steel and cement production, where process temperatures exceed the current capabilities of many heat pump models. The transition to heat pumps remains complex and costly without standardized integration solutions, which limits their widespread implementation.

Competition from Alternative Decarbonization Technologies 

The competition from alternative decarbonization technologies such as hydrogen and carbon capture and storage (CCS) are the key obstructions for the market growth. These are also being heavily promoted across Europe. The International Energy Agency (IEA) notes that investments in hydrogen production reached €10 billion in 2022, overshadowing funding for industrial heat pumps in certain regions. Similarly, the European Environment Agency reports that CCS projects received over €5 billion in subsidies between 2020 and 2022 and that is positioning them as a preferred solution for industries requiring ultra-high-temperature processes. Heat pumps excel in specific applications, but their limited ability to address all industrial heating needs creates market fragmentation. Furthermore, the European Technology and Innovation Platform on Renewable Heating and Cooling emphasizes that the lack of clear policy prioritization among these technologies often leads to uneven adoption rates which is creating uncertainty for stakeholders and hindering the growth of the heat pump market.

REPORT COVERAGE

SEGMENTAL ANALYSIS

By Type Insights

The Air-to-air heat pumps segment dominatd the Europe industrial heat pump market by holding 40.8% of the market share in 2024 due to the lower installation costs and versatility in providing both heating and cooling solutions. The International Energy Agency (IEA) stated that these systems achieve a COP of up to 3.5% which is making them energy-efficient for light industrial applications. Their widespread adoption is further supported by government incentives promoting renewable heating solutions. Air-to-air heat pumps are crucial for reducing carbon emissions and particularly in temperate climates, and their compatibility with existing infrastructure ensures their continued dominance. 

The water-to-water heat pumps segment  is anticipated to witness the fastest CAGR of 8% from 2025 to 2033. This growth is propelled by their superior efficiency, achieving COP values exceeding 5.0, especially in waste heat recovery systems. Industries like food processing and district heating favor these systems due to their scalability and ability to handle high-temperature demands. The International Renewable Energy Agency (IRENA) notes their role in cutting operational costs by up to 30%, making them vital for decarbonization. Their rapid adoption underscores their importance in achieving Europe’s net-zero goals.

By Capacity Insights

The small-capacity heat pumps (less than 100 kW) segment led the Europe industrial heat pump market by capturing 45.6% of the market share in 2024 owing to their affordability, ease of installation, and suitability for small and medium-sized enterprises (SMEs), which comprise over 99% of EU businesses, as per Eurostat. These systems achieve a COP of up to 3.5 and is making them energy-efficient for light industrial applications like space heating and process cooling. Their importance lies in enabling SMEs to adopt sustainable practices without significant financial strain. Increasing regulatory pressure to reduce emissions makes small-capacity heat pumps crucial for democratizing access to renewable heating solutions across Europe.

The large-capacity heat pumps (above 500 kW) segment  is estimated to register the fastest CAGR of 10% from 2025 to 2033 because of their ability to meet high-temperature demands in energy-intensive industries like chemical processing and district heating. The International Energy Agency (IEA) stated that these systems can achieve COP values exceeding 5.0 when integrated with waste heat recovery, reducing operational costs by up to 30%. Government incentives for decarbonizing heavy industries further accelerate adoption. Their scalability and alignment with Europe’s net-zero goals make large-capacity heat pumps critical for transforming industrial energy systems and achieving long-term sustainability targets.

By Application Insights

The Industrial process heating segment represented as the biggest application in the Europe industrial heat pump market by capturing 53.1% market share. The need for high-temperature solutions in energy-intensive sectors such as chemical manufacturing, food processing, and textiles are driving the segment’s market growth rate. According to the European Commission’s Joint Research Centre, industrial process heating accounts for approximately 35% of the total energy consumption in the EU’s industrial sector. Heat pumps are increasingly being adopted for this application due to their ability to deliver temperatures exceeding 100°C and particularly with advancements in high-temperature models. According to the International Energy Agency (IEA), integrating heat pumps into industrial processes can reduce energy costs by up to 25% while cutting carbon emissions significantly. This application is critical for industries aiming to meet stringent regulatory targets under frameworks like the European Green Deal, making it a cornerstone of sustainable industrial operations.

The waste heat recovery segment  is anticipated to witness the fastest CAGR of 12.3% from 2025 to 2033. This rapid growth is fueled by the increasing focus on circular economy principles and energy efficiency, as waste heat recovery systems can capture and repurpose thermal energy that would otherwise be lost. The International Renewable Energy Agency (IRENA) reports that waste heat recovery using heat pumps can achieve energy savings of up to 40% and is making it a cost-effective solution for industries. Sectors like cement, steel, and district heating are leading adopters, leveraging these systems to meet decarbonization goals. Europe prioritizes resource optimization and sustainability. Waste heat recovery is emerging as a transformative application, driving both economic and environmental benefits.

By Industry Insights

The chemical industry was the largest segment in the Europe industrial heat pump market and accounted for 25.2% of the market share in 2024. This position in the market is propelled by the sector's high energy demand, as it consumes about 19% of the EU’s total industrial energy, as per Eurostat. Industrial heat pumps are widely adopted for process heating and cooling and particularly in applications like distillation and evaporation where they achieve energy savings of up to 35%, as reported by the International Energy Agency (IEA). Their importance lies in enabling compliance with stringent emissions regulations while reducing operational costs. As the chemical industry transitions toward sustainable practices, heat pumps play a pivotal role in achieving energy efficiency and decarbonization targets.

The food and beverage industry is on the rise and is expected to be the fastest growing segment in the global market by witnessing a CAGR of 9% over the forecast period. The increasing demand for energy-efficient solutions in processes like pasteurization, sterilization, and refrigeration is rapidly fuelling the progress of this segment. The European Heat Pump Association (EHPA) notes that heat pumps in this sector achieve COP values of up to 4.5 and is significantly lowering energy consumption. Additionally, consumer preferences for sustainably produced food have driven manufacturers to adopt eco-friendly technologies. With the food and beverage industry contributing over 15% of Europe’s industrial output, the adoption of heat pumps supports regulatory compliance, reduces costs, and enhances sustainability which is making it a transformative force in the market.

REGIONAL ANALYSIS

Germany commanded the Europe industrial heat pump market by holding a 25.7% market share and exhibited a CAGR of 8.5% from 2025 to 2033. The country’s progress is due to its robust industrial base, strong regulatory framework, and significant investments in renewable energy under the Renewable Energy Sources Act (EEG). According to Eurostat, Germany accounts for over 20% of Europe’s total industrial energy consumption which is creating a high demand for energy-efficient solutions like heat pumps. The European Heat Pump Association (EHPA) highlights that Germany’s emphasis on decarbonizing industries through waste heat recovery and process heating has accelerated adoption. With extensive government subsidies and technological advancements, Germany remains a frontrunner in driving innovation and sustainability in the industrial heat pump sector.

France is another top performer and  is likely to experience the fastest CAGR of 7.8%. It is driven by its commitment to achieving carbon neutrality by 2050, supported by initiatives like the National Low-Carbon Strategy. France’s industrial sector, particularly in food processing and district heating, has widely adopted heat pumps due to their high efficiency and cost savings. The International Energy Agency (IEA) notes that France’s integration of heat pumps into district heating networks has reduced emissions by 30% in targeted regions. Additionally, favorable policies such as tax incentives and low-interest loans have encouraged industrial players to invest in sustainable technologies. France’s proactive approach to renewable energy adoption solidifies its position as a key market leader.

Sweden is moving forward steadily owing attributed to its advanced industrial infrastructure and strong focus on sustainability, with over 54% of its energy mix derived from renewable sources, as stated by Eurostat. The country’s cold climate and reliance on district heating systems have spurred the adoption of industrial heat pumps for space heating and hot water applications. The European Commission’s Joint Research Centre stated that Sweden’s investment in high-temperature heat pumps for heavy industries has resulted in energy savings of up to 40%. Furthermore, Sweden’s innovative policies such as carbon pricing and green technology grants have fostered rapid market growth which is positioning it as a pioneer in decarbonizing industrial processes across Europe.

KEY MARKET PLAYERS

The major players in the Europe industrial heat pump market include Thermia, Daikin Industries, Johnson Controls, Samsung Electronics, Hitachi, ATESY, Carrier Global,Panasonic, Aermec, Toshiba, Mitsubishi Heavy Industries, Midea Group, LG Electronics, Spirotherm, and Danfoss.

MARKET SEGMENTATION

This research report on the Europe industrial heat pump market is segmented and sub-segmented into the following categories.

By Type

• Air-to-Air Heat Pumps
• Air-to-Water Heat Pumps
• Water-to-Water Heat Pumps
• Water-to-Air Heat Pumps

By Capacity

• Small Capacity (less than 100 kW)
• Medium Capacity (100-500 kW)
• Large Capacity (above 500 kW)

By Application

• Industrial Process Heating
• Space Heating Cooling  
• Hot Water Heating
• Waste Heat Recovery

By Industry

• Automotive
• Chemical
• Food Beverage  
• Textile
• Pharmaceutical

By Country

• UK
• France
• Spain
• Germany
• Italy
• Russia
• Sweden
• Denmark
• Switzerland
• Netherlands
• Turkey
• Czech Republic
• Rest of Europe