Heating Equipment Market Size & Outlook, 2025-2033

Heating Equipment Market Overview

The global heating equipment market size was valued at USD 42.3 billion in 2024 and is projected to grow from USD 44.9 billion in 2025 to USD 68.5 billion by 2033, reflecting a CAGR of 5.4% during the forecast period (2025–2033). The growth of the market is attributed to the government subsidy framework across Europe.

Key Market Insights

• The North America region dominated the global heating equipment market with the largest revenue share of 22.7% in 2024.
• Based on Product Type, the boilers segment dominated the heating equipment industry in 2024.
  
• Based on Application, the space heating segment dominant application segment in the global market.
• Based on Distribution Channel, the online retail segment has emerged as a prominent distribution channel in the global market.
• Based on End-User, the residential segment leads the market.

The global heating equipment market is experiencing steady and sustained growth, driven by increasing demand across residential, commercial, and industrial sectors for efficient, cost-effective, and environmentally conscious heating solutions. Heating equipment is designed to provide and regulate indoor heat across residential, commercial, and industrial spaces. These systems are vital for maintaining comfort and process efficiency, especially in colder regions and temperature-sensitive environments. Rising demand for energy-efficient and eco-friendly solutions drives innovation in smart thermostats, IoT-enabled controls, and high-performance heat exchangers. In response, manufacturers focus on modular designs, remote monitoring, and integrating solar and geothermal sources to align with evolving sustainability and efficiency standards.

Heating Equipment Market Trend

Local Policy Partnerships Unlock Mass Heat Pump Deployment

The shift toward decarbonised heating is accelerating through bold public-private initiatives and regional policy collaboration, particularly in urban retrofit programmes and installer training.

• For example, in July 2025, Greater Manchester launched a landmark five-year agreement with HVAC leader Daikin to install 64,000 heat pumps by 2030, establishing the region as the UK’s emerging "heat pump capital." The deal includes retrofits for social housing, grants for homeowners, and a pilot leasing model to lower financial barriers for adoption.

This bold initiative reflects a growing trend: regional governments forging direct partnerships with manufacturers and installers to fast-track clean heating solutions. Such programmes accelerate uptake while creating skilled workforces and offering inclusive access across diverse communities.

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Heating Equipment Market Driver

Government Subsidy Framework across Europe

A key driver behind the heating equipment market’s growth is the rollout of enhanced government incentives for clean heating technologies, particularly across Europe’s most climate-ambitious economies.

• For example, in January 2025, Germany introduced revised heat pump subsidies under its updated Building Energy Act (GEG) and the Federal Funding for Efficient Buildings (BEG) program, offering homeowners up to 70% reimbursement on installation costs. The support includes a base 30% grant, a 20% “climate bonus” for replacing fossil-fuel systems, and an additional 30% for low-income households earning under €40,000 annually.

These subsidy-driven surges are creating strong momentum for manufacturers and installers of energy-efficient systems, especially heat pumps and hybrid units, positioning them at the center of the transition toward carbon-neutral residential infrastructure.

Market Restraint

High Upfront Costs and Installation Complexity

The high initial cost and installation complexity associated with advanced systems such as heat pumps, electric boilers, and hybrid units restrict market growth. While these technologies offer long-term energy savings and environmental benefits, their upfront price point, including equipment, labour, and retrofit needs, remains a barrier for many households and small businesses, particularly in regions without robust incentive programs.

Additionally, many older buildings require additional insulation, electrical upgrades, or floor heating compatibility, adding further to total project costs. Space constraints and regulatory hurdles complicate installation in dense urban areas or multi-unit dwellings. Without broader access to affordable financing, streamlined retrofit solutions, and workforce development, the pace of heating equipment adoption, particularly for sustainable alternatives, may fall short of climate and energy efficiency targets.

Market Opportunity

High Deployment on An Industrial Scale

A significant opportunity emerging in the heating equipment market centers on industrial-scale, high-temperature heat pump applications, opening fresh pathways for deployment beyond traditional residential and commercial space heating.

• For instance, in June 2025, Hepworth Brewery in West Sussex became the first business in the UK to adopt an ultra-high-temperature heat pump (capable of generating steam at 130 °C) for its brewing process. Developed by the London-based tech start-up Futraheat, the system recycles waste vapour from brewing and repurposes it as process steam, reducing carbon emissions by up to 90% and cutting fuel costs by around 40%.

Heat pump technology can meet high-temperature needs traditionally reserved for gas or oil systems, a breakthrough particularly relevant to sectors like food and beverage, chemical processing, and pharmaceuticals. This opens opportunities for manufacturers and service providers to expand product portfolios beyond residential and commercial applications into heavy-duty industrial and process heat sectors.

Regional Analysis

North America remains the leading region in the global heating equipment market, supported by its mature infrastructure, established HVAC industry, and strong consumer preference for energy-efficient technologies. The region's extreme seasonal temperature variations create consistent demand for reliable residential and commercial heating systems. Regulatory bodies and energy-efficiency standards drive innovation, pushing manufacturers to deliver compact, quiet, and environmentally responsible solutions. The strong presence of global and domestic heating equipment brands and robust after-sales service networks reinforces North America’s position as the primary driver of market demand and product innovation.

• The United States continues to lead the global market, propelled by strong demand across residential, commercial, and industrial sectors. Homebuilders and property developers increasingly favour hybrid heating systems that combine gas and electric sources, particularly in colder regions like the Midwest and Northeast. Meanwhile, industrial plants and data centres drive orders for custom-designed heating systems with smart monitoring features and low-emission profiles. U.S.-based manufacturers are also capitalising on federal “Buy American” clauses, prioritising domestic production of high-efficiency heating units with IoT-integrated diagnostics.
• Canada's heating equipment industry is evolving in response to stricter environmental regulations and the country’s net-zero carbon goals. In February 2024, the federal government rolled out new rebates under the Canada Greener Homes Initiative, encouraging residential retrofits with energy-efficient heat pumps and low-NOx gas furnaces. This has led to a surge in demand across provinces like Ontario and British Columbia, where homeowners are replacing outdated oil and electric baseboard heaters. Commercial buildings, particularly those in cold-weather cities such as Calgary and Winnipeg, are adopting advanced radiant heating systems and programmable boiler controls to reduce operating costs.

Asia-Pacific Heating Equipment Market Trends

Asia-Pacific is emerging as the fastest-growing region in the heating equipment market, thanks to rapid urban development, expanding construction sectors, and increasing adoption of modern home and building infrastructure. As more countries invest in housing, healthcare, education, and commercial facilities, the demand for affordable, scalable, and efficient heating systems is rising. The region is also experiencing a shift in consumer expectations, with growing interest in automated climate control, energy-saving appliances, and compact systems suited to high-density living environments. With a broad mix of climates and heating needs, manufacturers are tailoring their offerings to suit tropical and cold-weather applications.

• China’s market for heating equipment is expanding rapidly, driven by urbanisation, climate-control modernisation, and industrial automation. Residential demand is shifting toward smart electric heaters and inverter-based heat pumps, especially in northern provinces where district heating reforms are underway. The industrial segment is also seeing robust growth, particularly in chemical processing, textile, and electronics manufacturing, where precision-controlled thermal systems are essential. Domestic manufacturers are ramping up production of low-emission, sensor-driven heating units aligned with China’s dual-carbon goals and export regulations.
• Indiais witnessing a notable rise in heating equipment adoption, particularly in commercial, healthcare, and high-altitude residential zones. While heating demand is relatively low in much of the country, colder regions such as Himachal Pradesh, Uttarakhand, and North India are seeing higher uptake of radiant floor heaters, oil-filled radiators, and biomass stoves. The hospitality industry, especially eco-resorts and hill-station hotels, invests in aesthetic heating solutions like electric fireplaces and wall-mounted infrared panels. Indian manufacturers are also innovating with portable and solar-assisted heating units tailored to semi-urban and off-grid consumers.

Europe Heating Equipment Market Trends

Europe is witnessing steady growth in the heating equipment market, largely fueled by the continent’s strong environmental policies, ageing infrastructure needing retrofitting, and ongoing transition toward renewable energy integration. With a high emphasis on carbon neutrality, many European regions favour low-emission alternatives like electric heat pumps and condensing boilers. This transition creates consistent demand for advanced heating technologies that align with building codes and long-term energy goals. A well-informed customer base, high adoption of smart home technologies, and the influence of green building certifications all contribute to a stable, innovation-driven heating market across Europe.

• Germany remains a front-runner in the European market, bolstered by its ambitious energy transition policy (Energiewende). Starting January 2024, the German Federal Ministry for Economic Affairs and Climate Action tightened regulations on oil-fired boilers, prompting residential and municipal users to shift toward low-emission alternatives such as biomass boilers and hydrogen-ready heat pumps. The country’s robust manufacturing base is also a key driver, with factories and research labs requiring process heating equipment that meets high efficiency and emissions compliance standards under EU norms.
• France is witnessing steady growth in its heating equipment industry, driven by urban housing developments and energy-efficiency mandates. In March 2020, the French government launched a subsidy program under the “France Relance” recovery plan to accelerate the adoption of low-carbon heating technologies in public housing and commercial buildings. This initiative has led to rising installations of gas absorption heat pumps, electric thermal storage heaters, and advanced boiler systems in cities like Lyon and Marseille. The country’s ongoing phase-out of coal and heavy oil heaters has also benefited producers of district heating solutions and modular CHP (combined heat and power) units.

Market Segmentation

Product Type Insights

Boilers continue to lead the market due to their reliability, efficiency, and widespread compatibility across residential, commercial, and industrial settings. These systems work by heating water or producing steam that can be distributed through radiators or underfloor heating systems to provide consistent warmth. With the growing emphasis on energy-efficient building systems, modern boilers now come with condensing technology, smart thermostats, and modulating burners to optimise fuel usage and reduce emissions. Their quiet operation and long service life further contribute to their preference across multifamily housing, schools, hospitals, and manufacturing plants where uninterrupted heating is essential.

Application Insights

Space heating remains the most dominant application segment in the heating equipment market because it directly addresses occupant comfort in residential, institutional, and office settings. This segment covers the use of heating systems to maintain desired indoor temperatures across living spaces, work environments, and public buildings, especially during cold seasons. Central heating systems such as furnaces, radiators, heat pumps, and localised solutions like wall-mounted units and portable heaters all fall within this category. The emphasis on user comfort, indoor air quality, and smart temperature regulation has increased the adoption of programmable controls and zoned heating systems.

Distribution Channel Insights

Online retail has emerged as a prominent distribution channel in the global market, especially among residential buyers seeking convenience, competitive pricing, and product variety. E-commerce platforms such as Amazon, Home Depot, and Lowe’s have expanded their HVAC categories to include detailed specifications, customer reviews, and remote troubleshooting guides, factors that increasingly influence purchase decisions. The shift toward digital buying is partly driven by the availability of bundled installation services and the ease of comparing different brands and technologies from home. Additionally, manufacturers launch direct-to-consumer (DTC) portals, offering incentives like extended warranties or free shipping.

End-User Insights

The residential sector leads the market, largely due to the essential need for temperature regulation in homes across temperate and cold regions. Homeowners prioritise systems that combine cost-efficiency, ease of use, and consistent indoor comfort, attributes well-delivered by modern heating solutions like condensing boilers, gas furnaces, electric heaters, and ductless mini-split systems. Renovations, new housing developments, and government incentives for energy-efficient upgrades are further expanding the footprint of residential heating equipment. From single-family dwellings to high-rise apartments, the demand continues to evolve in favour of solutions that offer low noise, compact installation, and reduced environmental impact.

Company Market Share

The global heating equipment market is moderately consolidated, with a few dominant players capturing a significant portion of the value chain, particularly in the residential and commercial heating system segments. Companies supply a wide range of heating solutions to residential buildings, industrial complexes, hospitals, educational institutions, and climate-sensitive commercial infrastructures across North America, Europe, and Asia-Pacific.

Daikin Industries Ltd.: Daikin Industries Ltd., headquartered in Japan, is a global leader in HVAC systems with over 98,000 employees and annual revenues exceeding €28 billion. Its European arm, Daikin Europe, operates 14 factories and 59 subsidiaries across the continent. The company is a major player in the heat pump market and is investing over €1.2 billion in local production through its FUSION 25 strategy.

• In March 2025, Daikin Europe launched its new Altherma 4 air-to-water heat pumps at the ISH trade fair in Frankfurt, featuring low-GWP refrigerants like R-290 and R-454C for greater efficiency in colder climates. Manufactured across Poland, Germany, and the Czech Republic, the system supports EU climate goals while reinforcing Daikin’s push to localise production and expand its share in the European heat pump market.

List of key players in Heating Equipment Market

1. Carrier Global Corporation
2. Daikin Industries, Ltd.
3. Trane Technologies plc
4. Lennox International Inc.
5. Bosch Thermotechnology (Robert Bosch GmbH)
6. Mitsubishi Electric Corporation
7. Rheem Manufacturing Company
8. Johnson Controls International plc
9. Viessmann Climate Solutions SE
10. Nortek Global HVAC LLC
11. Buderus (a Bosch brand)
12. Fujitsu General Ltd.
13. Goodman Manufacturing (a Daikin company)

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Recent Developments

• March 2025-Panasonic Heating and Ventilation announced its first capital and business alliance with tado° GmbH, a European smart home energy management leader. Through a €30 million equity investment, Panasonic will deepen operational collaboration with tado° and gain a seat on its board. Panasonic brings over six decades of heat-pump expertise, while tado° contributes its IoT-enabled platform, creating a combined solution tailored for energy-conscious residential customers across Europe.
• May 2025- The UK government introduced a public consultation exploring the expansion of its Boiler Upgrade Scheme to include air-to-air heat pumps, which provide heating and cooling. If approved, these systems would become eligible for the existing £7,500 grant, broadening support for all-season climate control. The consultation also explores innovative financing models, such as leasing and heat battery incentives, signalling a shift toward more inclusive and adaptable home energy solutions.
• March 2025- E.ON UK unveiled its pioneering ectogrid system in the Silvertown redevelopment of London’s Royal Docks district. This innovative low-carbon energy network uses heat pump technology to capture surplus heat from buildings and industrial sources, such as water and data centres, and redistribute it to connected homes and businesses. Serving thousands of residential and commercial units, the system is estimated to cut local CO₂ emissions by nearly 88%, enhancing energy resilience and affordability.