Cooling and Heating as a Service Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Service Model (Subscription-Based, Pay-per-Use, Hybrid Models, Others), By Service Type (Cooling as a Service, Heating as a Service), By End User (Residential, Commercial, Industrial, Others), By Region, By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 85.09 Billion
CAGR (2026-2031)	10.41%
Fastest Growing Segment	Hybrid Models
Largest Market	Asia Pacific
Market Size (2031)	USD 154.14 Billion

Market Overview

The Global Cooling and Heating as a Service Market will grow from USD 85.09 Billion in 2025 to USD 154.14 Billion by 2031 at a 10.41% CAGR. Global Cooling and Heating as a Service constitutes a business model where thermal comfort is delivered as a paid service, allowing customers to utilize heating and cooling systems without capital investment while the provider retains asset ownership and maintenance responsibilities. The expansion of this market is fundamentally driven by the escalating financial burden of acquiring high-efficiency equipment, which necessitates a shift from capital expenditure to operational expenditure, alongside stringent government mandates requiring significant reductions in carbon emissions from the built environment.

However, a substantial impediment to broader market scalability involves the complexity of structuring long-term performance contracts and the difficulty in assessing counterparty credit risk for extended service tenures. Underscoring the critical necessity for such efficient delivery models, according to the International Energy Agency, in 2024, space cooling was recognized as the fastest-growing energy use in buildings globally, with demand projected to increase by approximately 4% annually through 2035.

Key Market Drivers

The transition from capital expenditure (CAPEX) to operational expenditure (OPEX) financial models serves as a primary catalyst for market adoption. By eliminating the substantial upfront investment required for high-efficiency thermal assets, this pay-per-service approach transfers performance risks and maintenance costs from the client to the provider. This shift is particularly attractive for commercial entities seeking to optimize balance sheets while ensuring reliable thermal comfort without asset ownership liabilities. Underscoring the rapid uptake of this model, according to The Edge Singapore, April 2025, in the 'Patrizia, Mitsui invest US$350 mil in Singapore cooling-as-a-service firm Kaer' article, the provider Kaer recorded a 30% growth in 2024, driven largely by the escalating demand for outsourced cooling solutions in the Asian market.

Strict environmental regulations and decarbonization mandates further propel the deployment of service-based solutions, compelling industries to replace obsolete systems with sustainable alternatives. As governments enforce stringent emissions targets, this model ensures continuous compliance through the integration of energy-efficient technologies without placing the technical burden on the end-user. According to Trane Technologies, May 2025, in the '2024 Sustainability Report', the company reduced customers' carbon emissions by 237 million metric tons since 2019, validating the efficacy of service-based efficiency upgrades. Reflecting the broader sector's momentum, according to Tabreed, in 2025, the company raised USD 700 million via a Green Sukuk to fund the expansion of sustainable cooling infrastructure.

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Key Market Challenges

The complexity of structuring long-term performance contracts and the difficulty in assessing counterparty credit risk constitute a significant barrier to the scalability of the cooling and heating as a service market. Providers must absorb the upfront capital expenditure for high-value assets while recovering costs through periodic payments over extended tenures, often spanning a decade or more. This long-term horizon creates substantial uncertainty regarding the future solvency of clients, compelling providers to restrict services to only the most creditworthy entities. Consequently, this stringent risk aversion prevents a vast segment of the commercial and industrial market from accessing these service models, thereby stalling broader market penetration.

This challenge is exacerbated by the prevailing economic environment, where the cost of financing directly influences the viability of such contracts. High capital costs force providers to embed higher risk premiums into their service fees, making the model less attractive to potential customers. According to the International Energy Agency, in 2024, the cost of capital for clean energy and efficiency projects in emerging and developing economies remained up to two times higher than in advanced economies. This disparity in financing costs complicates the credit assessment process, as providers must account for elevated default risks in markets where thermal management needs are often the most critical.

Key Market Trends

The integration of AI-driven predictive maintenance and optimization is fundamentally reshaping the profitability structure of the cooling and heating as a service model. As service providers assume the full financial risk of equipment performance and downtime, the deployment of artificial intelligence allows for a transition from reactive repairs to preemptive asset management, ensuring maximum uptime and efficiency. These AI algorithms analyze vast streams of real-time operational data to identify anomalies and predict component failures before they disrupt service, thereby protecting the provider's margins from unexpected operational expenditure. Demonstrating the tangible impact of this technology, according to Johnson Controls, April 2025, in the 'Total Economic Impact of OpenBlue' study, the implementation of AI-enabled fault detection and diagnostics reduced chiller maintenance efforts by 67%, significantly lowering the labor and replacement costs associated with managing thermal assets.

Simultaneously, there is a decisive shift toward decentralized and district-level service networks, which aggregate thermal loads across multiple buildings to optimize energy consumption and capital deployment. This trend enables the scalability of the service model by utilizing industrial-grade infrastructure and shared renewable energy resources, such as waste heat recovery or large-scale heat pumps, which are often unfeasible for individual on-site systems. This approach not only provides customers with a resilient utility-grade connection but also allows providers to secure long-term revenue streams through expansive infrastructure projects. Underscoring this structural transition, according to Engie, February 2025, in the '2024 Management Report', the company's Energy Solutions division secured over €5 billion in additional order intake for district heating and cooling networks, reflecting a surging market preference for interconnected, community-scale thermal solutions over standalone equipment.

Segmental Insights

The Hybrid Models segment represents the fastest-growing category within the global cooling and heating as a service market due to its capacity to bridge traditional ownership and full service subscriptions. This segment is expanding rapidly as it provides customers with reduced financial risk by combining lower upfront costs with flexible operational payments. The demand is further amplified by strict energy efficiency guidelines from the International Energy Agency, which drive the adoption of adaptable systems that lower carbon footprints. Businesses increasingly select these models to ensure compliance while maintaining control over critical infrastructure assets.

Regional Insights

Asia Pacific leads the Global Cooling and Heating as a Service market, driven by rapid urbanization and extensive infrastructure development in emerging economies. The region experiences significant demand for thermal management due to warm climatic conditions and a growing commercial sector. Businesses increasingly adopt pay-per-use models to eliminate high upfront capital investments and transfer maintenance risks to service providers. Furthermore, adherence to international frameworks like the Kigali Amendment compels industries to transition toward energy-efficient systems. This combination of financial optimization and regulatory compliance regarding refrigerant standards secures the region’s dominant market position.

Recent Developments

• In November 2025, Ecolab Inc. launched a comprehensive Cooling-as-a-Service (CaaS) program specifically tailored for the data center industry to address rising cooling demands driven by artificial intelligence. The new offering combined the company's water management expertise with smart coolant distribution units and direct-to-chip liquid cooling technologies. This integrated solution allowed data center operators to manage cooling and power infrastructure as a service, optimizing operational performance and conserving critical resources like water and power without the burden of managing complex cooling assets internally.
• In February 2025, Energy Partners announced a partnership with Aspen Pharmacare to construct and operate a centralized ammonia cooling plant at the pharmaceutical manufacturer's Gqeberha production site in South Africa. Under the R300 million Cooling-as-a-Service (CaaS) agreement, Energy Partners assumed full responsibility for the plant's design, financing, and maintenance over a 20-year period. This utility-scale model was designed to replace independent systems with a centralized 17MW facility, projected to reduce energy consumption by 40% and significantly lower carbon emissions while shifting operational risk and balance sheet liabilities away from the client.
• In October 2024, Tata Power Trading Company Limited, a subsidiary of Tata Power, entered into a strategic partnership with Singapore-based Keppel to introduce sustainable Cooling-as-a-Service (CaaS) solutions in India. This collaboration aimed to deploy large-scale District Cooling Systems and individual building solutions across major urban hubs, including airports, IT parks, and special economic zones. The initiative was aligned with the country's Smart Cities Mission and sought to reduce energy consumption by up to 40% while cutting carbon emissions by 50%. The model enabled businesses to subscribe to long-term, energy-efficient cooling without incurring significant upfront capital investments.
• In July 2024, Kaer collaborated with Lendlease to implement a Cooling-as-a-Service (CaaS) model at The Exchange TRX, a substantial mixed-use lifestyle destination in Kuala Lumpur, Malaysia. Through this strategic partnership, the service provider assumed full operational and financial responsibility for delivering chilled water to the precinct’s shopping mall, office spaces, and hotel. This approach eliminated the need for the developer to invest in heavy capital expenditure for cooling infrastructure. The project leveraged advanced data analytics to optimize building performance, directly supporting national targets to achieve carbon neutrality by 2050 and enhancing the development's green building credentials.

Key Market Players

• Johnson Controls International plc
• Siemens AG
• Schneider Electric SE
• Trane Technologies Company, LLC
• Honeywell International Inc.
• Daikin Industries, Ltd.
• Carrier Global Corporation
• Mitsubishi Electric Corporation
• Bosch Thermotechnik GmbH
• Lennox International Inc.

By Service Model	By Service Type	By End User	By Region
Subscription-Based Pay-per-Use Hybrid Models Others	Cooling as a Service Heating as a Service	Residential Commercial Industrial Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Cooling and Heating as a Service Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Cooling and Heating as a Service Market, By Service Model:

• Subscription-Based
• Pay-per-Use
• Hybrid Models
• Others

• Cooling and Heating as a Service Market, By Service Type:

• Cooling as a Service
• Heating as a Service

• Cooling and Heating as a Service Market, By End User:

• Residential
• Commercial
• Industrial
• Others

• Cooling and Heating as a Service Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE