Geothermal heat pump market to expand 7.6% CAGR by 2031.

Market expansion is fueled by rising focus on clean heating and energy security.

The global geothermal heat pump market is expected to hit $12.5b by 2031, reflecting a compound annual growth rate of 7.6% from 2022 to 2031.

According to a new report by Allied Market Research, the market’s expansion is being fuelled by the rising focus on clean and sustainable heating systems, coupled with energy security concerns.

A geothermal heat pump (GHP), also known as a ground source heat pump, is a central water heating system that utilises geothermal energy to heat or cool buildings efficiently. GHPs draw consistent thermal energy from the earth, making them one of the most reliable and eco-friendly heating solutions available.

Per region, the Asia-Pacific is expected to exhibit the highest compound annual growth rate of 8.5% during the forecast period, supported by strong growth in Japan (5.4%) and South Korea (9.1%). These nations are investing heavily in renewable energy infrastructure to meet carbon neutrality targets.

“With governments worldwide emphasising net-zero carbon goals and the adoption of renewable energy technologies, geothermal heat pumps are becoming a central component of eco-friendly infrastructure,” Allied Market Research said.

“Although high installation costs and limited awareness pose challenges, technological advancements, hybrid system integration, and supportive policies are expected to overcome these barriers,” it added.