Thermally Driven Heat Pump Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented, By Product Type (Vertical Closed Loop, Horizontal Closed Loop, Open Loop), By Application (Residential Buildings and Commercial Buildings), By Technology (Absorption, Adsorption), By Region, By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 61.28 Billion
CAGR (2026-2031)	7.54%
Fastest Growing Segment	Vertical Closed Loop
Largest Market	Asia Pacific
Market Size (2031)	USD 94.78 Billion

Market Overview

The Global Thermally Driven Heat Pump Market will grow from USD 61.28 Billion in 2025 to USD 94.78 Billion by 2031 at a 7.54% CAGR. Thermally driven heat pumps are specialized heating and cooling systems that utilize thermal energy sources, such as natural gas, solar thermal energy, or industrial waste heat, to drive a sorption or engine-based cycle rather than relying primarily on electricity. The market for these systems is supported by distinct drivers, particularly the imperative to decarbonize industrial sectors through the recovery of low-grade waste heat and the necessity to alleviate strain on electrical grids during peak demand periods by diversifying energy consumption.

Despite these advantages, the market faces significant impediments related to high upfront capital costs and inconsistent policy support compared to traditional fossil fuel boilers or fully electric solutions. This challenging economic environment has impacted the broader heat pump sector, which influences investment in thermally driven technologies. According to the European Heat Pump Association, in 2024, heat pump sales across 13 major European markets declined by approximately 23%, underscoring the volatility and market contraction risks currently hindering rapid expansion.

Key Market Drivers

Growing utilization of industrial waste heat recovery serves as a primary catalyst for the thermally driven heat pump market, particularly in heavy manufacturing and processing sectors. Unlike electric counterparts, these systems utilize excess thermal energy from industrial operations to drive absorption or adsorption cycles, converting low-grade heat into useful high-temperature outputs without placing additional loads on the electrical grid. This capability is increasingly vital for expanding district heating networks that require consistent, low-carbon energy sources to decouple from volatile electricity prices. This transition is being actively funded by state initiatives; according to the UK Department for Energy Security and Net Zero, January 2024, in the 'Green Heat Network Fund Round 7' press release, the government awarded £80.6 million to sustainable heating projects, specifically prioritizing those utilizing waste heat sources to supply urban networks.

Government financial incentives for sustainable heating technologies act as a critical counterweight to the high upfront capital costs associated with advanced sorption technologies. By offering substantial grants and subsidies, policymakers aim to de-risk the adoption of non-electric thermal management systems in energy-intensive sectors, effectively bridging the gap between traditional boilers and cleaner alternatives. According to the U.S. Department of Energy, March 2024, in the 'Industrial Demonstrations Program' announcement, the administration allocated $6 billion to decarbonize energy-intensive industries, creating a favorable investment climate for adopting alternative heating solutions. These incentives are essential to address the sector's environmental impact; according to the International Energy Agency, in 2024, the industrial sector was responsible for approximately 25% of global energy-related CO2 emissions, highlighting the urgent necessity for deploying efficient thermally driven technologies.

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Key Market Challenges

High upfront capital costs and inconsistent policy support present a substantial barrier to the adoption of thermally driven heat pumps. These systems typically require a larger initial financial commitment for equipment and installation compared to conventional gas boilers or standard electric units. Consequently, the return on investment for end-users relies heavily on stable energy price differentials and reliable government incentives. When regulatory frameworks fluctuate or subsidies are withdrawn, commercial and industrial operators often postpone modernization projects, opting instead for lower-cost, established fossil fuel alternatives to minimize financial risk.

This economic uncertainty directly dampens market confidence, causing manufacturers to hesitate in scaling production which keeps unit costs elevated. The impact of such volatility is evident in major markets where policy shifts have disrupted deployment. According to the German Heat Pump Association, in the first half of 2024, sales of heat pumps declined by 54 percent compared to the same period in the previous year. This sharp contraction highlights how sensitive the broader market is to economic instability, creating an environment that impedes the niche growth of thermally driven technologies.

Key Market Trends

The expansion of gas heat pumps in retrofit applications is gaining momentum as manufacturers seek to provide high-efficiency alternatives for buildings with limited electrical infrastructure. These systems, utilizing natural gas or hydrogen blends, offer a viable decarbonization pathway for commercial facilities where full electrification is cost-prohibitive. This trend is exemplified by strategic industry consolidations aiming to accelerate product development and deployment. According to Cooling Post, August 2024, in the 'Panasonic and Yanmar to form gas heat pump JV' article, Panasonic Holdings and Yanmar Energy Systems agreed to establish a joint venture company, owned 51 percent by Panasonic and 49 percent by Yanmar, specifically to develop and manufacture next-generation gas engine heat pumps for the commercial market.

Simultaneously, the development of hybrid thermal-electric heat pump systems is accelerating to address grid stability concerns and offer fuel flexibility during peak demand. These architectures combine an electric heat pump with a thermal combustion unit, optimizing energy use based on real-time prices and ambient temperatures. The market significance of this technology has grown sufficiently to warrant dedicated industry monitoring to track its penetration alongside standard units. According to the Heat Pump Association, September 2024, in the 'Heat Pump Association reveals heat pump sales data by type' update, the organization began explicitly tracking integrated hybrid heat pumps as a distinct category in their factory-gate sales statistics, creating a new transparency layer to measure the rising adoption of these dual-fuel technologies in the UK.

Segmental Insights

The Vertical Closed Loop segment is currently recognized as the fastest-growing category within the Global Thermally Driven Heat Pump Market. This rapid expansion is primarily driven by the system's ability to operate efficiently in urban environments and commercial complexes where land availability is restricted. Unlike horizontal configurations, vertical loops penetrate deeper into the ground to access more stable temperatures, ensuring consistent thermal performance throughout the year. Furthermore, the rising implementation of stringent energy efficiency mandates by government entities globally is accelerating the adoption of these space-saving systems in both new construction and retrofit projects.

Regional Insights

Asia Pacific commands the leading position in the Global Thermally Driven Heat Pump Market, supported by rapid industrialization and stringent energy conservation mandates. Governments across the region prioritize these systems to alleviate pressure on electrical grids, particularly during peak usage periods. Notably, the Ministry of Economy, Trade and Industry (METI) in Japan actively subsidizes high-efficiency gas heat pumps to foster industrial energy savings and electrical load leveling. This targeted regulatory backing, combined with extensive natural gas infrastructure and a rising demand for low-carbon heating in dense urban centers, cements Asia Pacific's dominance in the sector.

Recent Developments

• In January 2025, the Dutch technology firm Cooll successfully demonstrated a residential heating system powered entirely by hydrogen using a proprietary adsorption heat pump. Installed in a test home in Groningen, the system utilizes a thermally driven adsorption cycle to generate heat with significantly higher efficiency than traditional hydrogen boilers. The pilot confirmed that the technology acts as a direct replacement for natural gas boilers and works effectively with existing high-temperature radiators. This development highlights the viability of hydrogen-powered thermally driven heat pumps as a sustainable solution for retrofitting existing buildings and reducing carbon emissions in the heating sector.
• In August 2024, Panasonic Holdings and Yanmar Energy Systems announced the formation of a joint venture to develop and manufacture gas engine heat pumps (GHP) for the commercial sector. The new entity, titled Panasonic Yanmar GHP Development and Manufacturing Co. Ltd., is based in Gunma Prefecture, Japan, and integrates Panasonic’s refrigerant expertise with Yanmar’s advanced gas engine technology. This collaboration is intended to streamline the development process and enhance the production capacity for high-efficiency gas-driven air conditioning units. The joint venture targets the release of its first jointly developed outdoor units by the spring of 2026, aiming to strengthen both companies' positions in the global thermally driven market.
• In July 2024, Panasonic Corporation initiated a demonstration experiment to validate the use of waste heat from pure hydrogen fuel cell generators as the primary energy source for an absorption chiller. The company developed a specialized absorption unit capable of operating with a heat source temperature of 70°C, which is lower than the standard requirement for such systems. This pilot project aims to utilize the thermal energy produced during hydrogen power generation to drive the cooling process, thereby reducing the electricity consumption of commercial air conditioners. The initiative represents a significant step in integrating thermally driven cooling technologies with hydrogen energy systems.
• In March 2024, Stone Mountain Technologies formally launched the Anesi gas absorption heat pump, a new thermally driven heating solution designed for the residential market. This product utilizes a thermodynamic cycle involving ammonia and water to capture renewable heat from the outdoor air, achieving an annual fuel utilization efficiency of approximately 140%. The system was engineered to replace standard gas furnaces and boilers while functioning effectively in cold climates without the need for backup electric resistance heating. By significantly reducing natural gas consumption compared to conventional equipment, this launch offers a practical pathway for decarbonizing home heating using existing gas infrastructure.

Key Market Players

• Bosch Thermotechnik GmbH
• Danfoss Commercial Compressors S.A.
• Cooll Sustainable Energy Solutions BV
• Aisin Tecnocasa
• Ariston Group
• BDR Thermea Group
• BoostHeat SA
• Robur S.p.A.
• Tranter Solarice
• Pink Heating Limited

By Product Type	By Application	By Technology	By Region
Vertical Closed Loop Horizontal Closed Loop Open Loop	Residential Buildings and Commercial Buildings	Absorption Adsorption	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• Thermally Driven Heat Pump Market, By Product Type:

• Vertical Closed Loop
• Horizontal Closed Loop
• Open Loop

• Thermally Driven Heat Pump Market, By Application:

• Residential Buildings and Commercial Buildings

• Thermally Driven Heat Pump Market, By Technology:

• Absorption
• Adsorption

• Thermally Driven 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