Geothermal Heat Pump Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Open Loop, Closed Loop), By Application (Residential, Commercial, Industrial), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 13.02 Billion
CAGR (2026-2031)	8.93%
Fastest Growing Segment	Open Loop
Largest Market	North America
Market Size (2031)	USD 21.75 Billion

Market Overview

The Global Geothermal Heat Pump Market will grow from USD 13.02 Billion in 2025 to USD 21.75 Billion by 2031 at a 8.93% CAGR. Geothermal heat pumps are high-efficiency renewable energy systems that leverage the relatively constant subsurface temperature of the earth to transfer thermal energy for heating and cooling applications. The primary drivers fueling the global expansion of this market include rigorous government decarbonization mandates aimed at reducing greenhouse gas emissions and the superior operational efficiency of ground source technology compared to conventional fossil fuel or air source alternatives. Furthermore, the increasing implementation of financial incentives and regulatory frameworks that promote sustainable thermal technologies is critically supporting the adoption of these systems in both residential and commercial sectors.

Despite these drivers, the market faces a significant challenge regarding the high initial capital expenditure and installation complexity associated with underground loop infrastructure. This financial barrier makes the sector highly sensitive to economic fluctuations and the consistency of public funding mechanisms. According to the European Heat Pump Association, in 2024, heat pump sales across thirteen leading European markets declined by approximately 22 percent largely due to policy instability and changing support schemes. Such volatility in the broader market highlights the ongoing difficulty in sustaining growth for capital-intensive geothermal projects without stable regulatory environments.

Key Market Drivers

Supportive government policies and financial incentives are the primary catalyst for market growth, effectively counteracting the high upfront capital expenditures that have historically hindered adoption. By implementing robust subsidy frameworks and tax credits, regulatory bodies are de-risking installation costs for both residential and commercial property owners. For instance, according to Renewable Energy Installer, February 2025, in the 'More figures support 2024 as a record year for heat pumps' article, the UK Boiler Upgrade Scheme witnessed a significant surge in activity, with 78 percent more vouchers issued in December 2024 compared to the previous year. This sustained fiscal support provides the market stability necessary for installers to scale operations and encourages consumer confidence in renewable thermal technologies.

Rising demand for energy-efficient HVAC solutions is further accelerating sector expansion as end-users increasingly prioritize long-term operational savings and decarbonization. This trend is driving large-scale strategic partnerships and infrastructure development aimed at mainstreaming ground-source technology in new construction and district heating. A notable example is the collaboration between developers and technology providers; according to Dandelion Energy, April 2025, in the 'Dandelion Energy and Lennar Announce One of the Largest Residential Geothermal Deployments in US History' press release, the company secured a deal to integrate geothermal systems into over 1,500 new homes in Colorado. Such projects contribute to a broader strengthening of the global installed base. According to the European Geothermal Energy Council, September 2025, in the 'EGEC Geothermal Market Report 2024', ten new geothermal district heating and cooling systems were commissioned in 2024, bringing the total number of operational systems in Europe to 412.

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Key Market Challenges

The high initial capital expenditure and installation complexity associated with underground loop infrastructure constitute a substantial impediment to the expansion of the Global Geothermal Heat Pump Market. Unlike air-source systems, geothermal installations require invasive and costly civil engineering tasks, such as vertical drilling or extensive horizontal excavation, to establish the necessary heat exchange network. This requirement significantly elevates the upfront financial commitment, extending the return on investment period and restricting adoption to well-capitalized commercial entities or homeowners with access to substantial liquidity. Consequently, this heavy capital burden creates a market environment that is exceptionally sensitive to economic volatility and the consistency of fiscal support.

When financial incentives are reduced or delayed, the viability of these capital-intensive projects deteriorates rapidly, leading to immediate market contraction. This correlation between financial risk and market performance is evident in recent industry figures. According to the German Heat Pump Association (BWP), in 2024, the sales volume of heat pumps in Germany fell by 46 percent to approximately 193,000 units, a decline driven largely by uncertainty surrounding funding frameworks which deterred investment in high-cost heating solutions. This data underscores how the challenge of high initial costs, when coupled with regulatory instability, directly hampers the sustained growth of the market.

Key Market Trends

The adoption of next-generation drilling technologies is reshaping the market by addressing the logistical challenges of underground loop installation. Innovations such as compact, autonomous rigs enable borefield construction in dense urban environments where traditional machinery is impractical, directly combating the high capital expenditure barrier. This technological evolution streamlines the most labor-intensive phase of deployment, making ground-source solutions viable for a broader range of properties. According to The Driller, February 2025, in the 'Bedrock Energy Secures $12M to Expand Geothermal in the Mountain West' article, Bedrock Energy raised $12 million in Series A funding to scale its novel drilling technology, which aims to reduce heating and cooling costs for real estate properties by up to 50 percent.

Simultaneously, the emergence of Energy-as-a-Service business models, specifically through utility-owned thermal energy networks, is decoupling upfront infrastructure costs from end-users. This approach transfers asset ownership to utility providers who recover investments through rate structures, effectively democratizing access to ground-source efficiency by treating loops as shared public infrastructure. This trend is gaining traction as utilities seek to decarbonize their grids; according to Engineering News-Record, April 2025, in the 'Northeast US Geothermal Energy Projects Forge Ahead as States See Value' article, Eversource received a $7.8 million Department of Energy grant to support the second phase of its networked geothermal pilot, which will expand the system's capacity to serve additional residential and commercial customers.

Segmental Insights

The Open Loop segment is projected to emerge as the fastest-growing category within the Global Geothermal Heat Pump Market. This accelerated expansion is primarily driven by superior cost-efficiency, as open-loop systems typically require significantly less excavation and trenching than closed-loop alternatives, thereby lowering upfront capital expenditure. Furthermore, these configurations leverage steady groundwater temperatures to deliver high thermodynamic efficiency, making them particularly attractive for large-scale commercial applications where aquifer access is available. Consequently, stakeholders are increasingly prioritizing open-loop installations to maximize return on investment while adhering to rigorous energy-efficiency standards.

Regional Insights

North America maintains a dominant position in the global geothermal heat pump market, driven by favorable government policies and high adoption rates in the United States and Canada. The United States Department of Energy actively promotes these systems through funding and efficiency standards, aiming to decarbonize the building sector. Furthermore, federal incentives reduce the financial burden of installation, encouraging widespread usage in residential and commercial properties. This regulatory support, paired with a focus on energy independence and sustainable infrastructure, establishes the region as the principal hub for geothermal heat pump deployment globally.

Recent Developments

• In June 2025, Carrier announced the relaunch of its geothermal heat pump product line, introducing updated models featuring advanced refrigerants and improved serviceability. The new units incorporated Puron Advance, a refrigerant with a lower global warming potential, to comply with evolving environmental regulations. Key enhancements included a redesigned chassis for easier access to components like blower and evaporator coils, as well as significant weight reductions to facilitate installation. The company highlighted that these systems could reduce annual heating and cooling costs by up to 65% compared to traditional HVAC systems, reinforcing their commitment to providing sustainable and efficient building solutions.
• In April 2025, Dandelion Energy and Enertech Global announced a strategic collaboration to execute one of the largest residential geothermal HVAC deployments in the history of the United States. The partnership planned to install geothermal heat pumps in over 1,500 homes across fourteen communities in Colorado over a two-year period. By combining Dandelion’s specialized drilling capabilities with Enertech’s manufacturing expertise, the project aimed to demonstrate the scalability of geothermal energy in the residential sector. The companies projected that this initiative would generate significant energy cost savings for homeowners and reduce the need for new grid transmission infrastructure.
• In September 2024, Dandelion Energy announced the national launch of its proprietary geothermal heat pump, the Dandelion Geo. The company described this unit as having the highest heating efficiency of any heat pump on the market, verified by industry standards. Designed to address adoption barriers, the system featured high-temperature air output compatible with existing ductwork in older homes and a simplified electrical design to avoid costly panel upgrades. This launch coincided with the company securing $40 million in Series C funding, intended to accelerate the distribution of this technology to installers and homeowners nationwide, thereby expanding access to sustainable heating solutions.
• In January 2024, WaterFurnace International announced the launch of the 7 Series with OptiDry, a new geothermal heat pump system designed to enhance residential climate control. This product uniquely integrated a dedicated dehumidification system directly into the unit, aiming to replace the need for separate whole-house dehumidifiers. The company stated that this innovation established a new standard for comfort by effectively managing humidity levels, particularly in regions with high moisture. Designed to be easier to install than traditional add-on solutions, the system leveraged the efficiency of ground-source technology to provide comprehensive indoor climate control, offering a streamlined solution for residential applications.

Key Market Players

• Carrier Global Corporation
• Trane Technologies plc
• WaterFurnace Renewable Energy, Inc.
• ClimateMaster, Inc.
• Bosch Thermotechnology Corp.
• Viessmann Group
• Stiebel Eltron, Inc.
• Dandelion Energy Inc.

By Type	By Application	By Region
Open Loop Closed Loop	Residential Commercial Industrial	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Geothermal Heat Pump Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Geothermal Heat Pump Market, By Type:

• Open Loop
• Closed Loop

• Geothermal Heat Pump Market, By Application:

• Residential
• Commercial
• Industrial

• Geothermal Heat Pump 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