Estonia Heat Pump Market Size and Share
Market Overview
| Study Period | 2019 - 2030 |
|---|---|
| Base Year For Estimation | 2024 |
| Forecast Data Period | 2025 - 2030 |
| Market Size (2025) | USD 21.30 Million |
| Market Size (2030) | USD 26.40 Million |
| Growth Rate (2025 - 2030) | 4.43% CAGR |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order Image © Mordor Intelligence. Reuse requires attribution under CC BY 4.0. |
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Estonia Heat Pump Market Analysis by Mordor Intelligence
The Estonia heat pump market size stood at USD 21.30 million in 2025 and is projected to expand to USD 26.40 million by 2030, advancing at a 4.43% CAGR between 2025 and 2030. The country’s pledge to secure 100% renewable electricity by 2030 and economy-wide carbon neutrality by 2050 is keeping policy support robust and predictable, which sustains strong demand for high-efficiency electric heating. Estonia’s grid operators are piloting smart-grid integration schemes that reward flexible loads, while installers are broadening their portfolios with hybrid and large-scale units suited to district-heating retrofits. E-commerce is lowering search and transaction frictions, making DIY-friendly mono-bloc air-source units more accessible to homeowners. Meanwhile, technology shifts toward low-GWP refrigerants and SG-Ready control interfaces are positioning heat pumps as a core asset class for demand-side management. These forces underpin steady volume growth even as upfront cost differentials against legacy biomass boilers remain a headwind.
Key Report Takeaways
- By type: Air-source units led with 70% of Estonia heat pump market share in 2024; hybrid/exhaust-air systems show the fastest 5.8% CAGR through 2030.
- By rated capacity: Sub-10 kW units captured 52% revenue in 2024, while 10–20 kW systems are set to rise at a 5.3% CAGR to 2030.
- By application: Space heating commanded 60% share of the Estonia heat pump market size in 2024; domestic hot-water systems are progressing at a 5.5% CAGR to 2030.
- By end-user vertical: Residential users held 75% of Estonia heat pump market share in 2024, whereas commercial sites post the quickest 5.2% CAGR through 2030.
- By installation type: retrofits held 67% of Estonia heat pump market share in 2024, whereas new build activity post the quickest 5% CAGR through 2030.
- By sales channel: Distributor / installer networks controlled 65% revenue in 2024; e-commerce volume is climbing at a 5.9% CAGR on the back of mono-bloc offerings.
Estonia Heat Pump Market Trends and Insights
Drivers Impact Analysis
| Driver | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Supportive government incentives & EU climate funding | +1.2% | National – urban concentration | Medium term (2–4 years) |
| Rapidly rising electricity prices vs gas | +0.8% | National – gas-connected zones | Short term (≤ 2 years) |
| EU Fit-for-55 decarbonization mandates | +1.0% | National – commercial stock | Long term (≥ 4 years) |
| Smart-grid-ready heat pumps in district-heating pilots | +0.6% | Tallinn metropolitan area | Medium term (2–4 years) |
| Prefab modular housing demand | +0.5% | Suburban growth corridors | Short term (≤ 2 years) |
| Low-GWP refrigerant availability | +0.3% | National | Medium term (2–4 years) |
| Source: Mordor Intelligence | |||
Supportive government incentives & EU climate funding for roll-out
Targeted subsidies, low-interest loans and “heat as a service” contracts are offsetting initial capital outlays. Estonia’s electricity-price compensation above EUR 80/MWh (USD 90.4/MWh) further shortens simple payback periods for households. [1]European Commission, “Draft Update of Estonia’s National Energy and Climate Plan 2030,” European Commission, commission.europa.eu Twenty percent of consumers selecting service-based contracts in 2024 removed the upfront barrier entirely, enlarging the addressable pool of retrofit candidates. [2]Energy and Climate Intelligence Unit, “Poland, Estonia among States Beating UK at Heat Pumps,” Energy and Climate Intelligence Unit, eciu.net Both national and EU-level initiatives, including government incentives and funding from the Social Climate Fund and Modernisation Fund, are set to bolster the roll-out of heat pumps in Estonia.
Rapidly rising electricity prices vs gas in Estonia
Despite heightened power tariffs, gas prices have spiked even more sharply, improving lifetime economics for high-COP heat pumps. February 2025 grid data showed power at EUR 151.8/MWh (USD 171.5/MWh) yet a Tallinn commercial site still cut heating bills 35% after switching to a ground-source system in 2023. As power costs surge across the Baltic region, Estonian electricity prices have taken a sharp upward turn. February 2024 saw prices at EUR 126 per MWh, but they have now jumped to an average of EUR 191 per MWh, marking a notable 50% increase and setting a peak for 2025. Government officials attribute this price surge primarily to market dynamics and weather conditions, citing heightened electricity demand from colder temperatures and a modest uptick in gas prices
EU Fit-for-55 decarbonization targets accelerating retrofits
Stricter EPBD rules embed forward-looking energy-use ceilings and mandatory summer-comfort metrics. Reversible heat pumps satisfy both heating and cooling within the same footprint, improving asset utilization while future-proofing building compliance. The EU's Fit-for-55 package is pushing for faster decarbonization, spotlighting heat pumps as a key tool to cut fossil fuel dependence. Central to this drive, the REPowerEU plan sets an ambitious goal: double heat pump installations by 2026 and reach 50-60 million new setups by 2030.
Smart-grid-ready heat pumps linked to district-heating pilots
SG-Ready interfaces allow aggregated residential fleets to respond to dynamic tariffs, shaving peaks by 22% in a Tallinn pilot and boosting grid flexibility. For utility-scale players, large heat pumps could account for up to 54% of district-heating supply by 2050. [3]European Court of Auditors, “Review 01/2025: Making the EU Electricity Grid Fit for Net-Zero Emissions,” European Court of Auditors, eca.europa.eu In Estonia, pilot projects are exploring the integration of smart-grid-ready heat pumps with district heating systems. These new initiatives aim to boost energy efficiency and lessen dependence on fossil fuels. By linking to real-time electricity prices and grid conditions, these heat pumps not only optimize energy consumption but also enhance grid stability and reduce costs.
Restraints Impact Analysis
| Restraint | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Stringent regulatory compliance & safety standards | –0.5% | National – urban clusters | Medium term (2–4 years) |
| Grid capacity constraints in rural networks | –0.7% | Eastern & southern countryside | Long term (≥ 4 years) |
| Shortage of certified geothermal drillers | –0.4% | National – ground-source sites | Short term (≤ 2 years) |
| High upfront cost vs biomass boilers | –0.8% | SMEs & remote areas | Medium term (2–4 years) |
| Source: Mordor Intelligence | |||
Stringent regulatory compliance and safety standards
Only 430 professionals hold valid F-Gas credentials, with tiny shares trained on emerging refrigerants, creating scheduling bottlenecks. One Pärnu multi-family retrofit was delayed three months in 2024 because certified technicians were unavailable. Estonia, in line with its EU counterparts, enforces rigorous compliance and safety standards for heat pumps. These measures, largely influenced by EU directives and harmonized benchmarks, guarantee the safety, energy efficiency, and eco-friendliness of heat pumps in the Estonian market.
Grid capacity constraints in rural distribution networks
Legacy low-voltage feeders cannot host multiple 10 kW+ units without reinforcement. A 75 kW rural hotel project faced EUR 45,000 (USD 50,850) in grid-upgrade fees, eroding its return on investment (ROI). Grid operators are adapting to evolving demands for enhanced grid performance and efficiency. A significant challenge lies in integrating and managing new controllable consumption devices. These devices, including various forms of heat pumps, play a pivotal role in demand-side management (DSM). DSM, a key component of smart grid frameworks, aims to significantly increase the adoption of several renewable energy systems and optimize the efficient use of grid assets.
Segment Analysis
By Type: Air-source dominance with hybrid innovation
Air-source units accounted for 70% of Estonia heat pump market in 2024 and remain the default choice thanks to moderate up-front cost and plug-and-play installation. Hybrid/exhaust-air units, although niche, are growing at 5.8% CAGR as apartment blocks retrofit mechanical ventilation systems for heat recovery. Ground-source systems appeal where land is available and deep winter performance is critical, while seawater projects in Tallinn harbor confirm year-round COP above 3.5. [4]Elken et al., “Oceanographic Preconditions for Seawater Heat Pumps,” Copernicus Ocean State Report, copernicus.eu
The pace of hybrid R&D is blurring boundaries among segments. Manufacturers are introducing packaged solutions that toggle between refrigerant circuits and waste-heat loops to flatten peak loads. Such flexibility strengthens the Estonia heat pump market proposition for district heating operators that must manage hourly demand volatility without fossil backup.
Note: Segment shares of all individual segments available upon report purchase
By Rated Capacity: Residential units lead volume growth
Sub-10 kW machines supplied 52% of revenue in 2024, aligning perfectly with single-family energy codes and façade space. Estonia heat pump market size for this cohort is forecast to expand steadily as e-commerce improves homeowner access. The 10–20 kW band shows the fastest 5.3% CAGR, fed by larger villas and small offices replacing oil or gas boilers. Commercial properties are migrating toward 20–50 kW cascaded arrays, yet remain constrained by connection-fee uncertainty. At the high end, district heating projects installed multi-megawatt modules in Tartu during 2024, setting a blueprint for municipal operators seeking low-carbon baseload assets.
By Application: Space-heating foundations with hot-water upside
Space heating supplied 60% of 2024 sales, underscoring the country’s cold-climate fundamentals. Reversible units delivering cooling now differentiate premium offerings and support summer comfort rules under revised EPBD benchmarks. Domestic hot-water systems will expand 5.5% each year as low-GWP blends enable higher water-leaving temperatures without efficiency loss.
Industrial users are piloting process-heat recovery. A brewery retrofit in 2024 delivered 42% energy savings by repurposing condenser waste-heat into the mashing process, illustrating how the Estonia heat pump market extends beyond buildings into manufactories.
Note: Segment shares of all individual segments available upon report purchase
By End-User Vertical: Residential still dominant, commercial accelerates
Residential customers retained 75% volume in 2024, reflecting a penetration rate near 34% of households. Estonia heat pump market share in homes benefits from roof-mounted PV trends that lower running costs through self-consumption. Commercial demand advances 5.2% CAGR on the back of ESG reporting obligations, green-lease clauses, and mandatory energy labels.
Industrial and institutional applications remain sub-scale but strategic. Heat pumps paired with data-center waste-heat capture provide district-heating feedstock while mitigating server cooling loads, creating dual revenue streams that improve payback.
By Installation Type: Retrofits dominate while new builds accelerate
Two-thirds of 2024 installs were retrofits and retrofits generated a market share of 67% in 2024 echoing the vast legacy building stock. Operators focus on hydronic temperature optimization and PV self-use strategies to squeeze maximum efficiency from existing radiators. New builds, at 33% share, see faster 5% CAGR because stricter codes push developers toward low-carbon HVAC from project inception.
Prefab-modular construction is amplifying this trend: factory-integrated heat-pump modules arrive tested, shortening construction schedules and reducing call-backs. Estonia heat pump market participants supplying turnkey prefab packages gain a cost-lead over site-assembled competitors.
By Sales Channel: Installer networks face e-commerce disruption
Installer-centric distribution commanded 65% revenue in 2024 and remains critical for specifying multi-zone, ground-source, or high-capacity projects. Yet Estonia heat pump market momentum is tilting toward online portals offering curated, mono-bloc portfolios. Homeowners appreciate transparent pricing and AR-based site-survey tools; however, after-sales servicing capacity lags behind order growth.
OEM-to-client direct sales persist in large commercial contracts where bespoke engineering drives long lead times and dedicated warranties. Hybrid channel models are emerging, manufacturers ship equipment directly while accredited installers perform commissioning, blending cost efficiency with quality assurance.
Geography Analysis
Tallinn and its commuter belt dominate adoption due to dense housing stock, strong purchasing power, and robust grid infrastructure. Urban planners promote SG-Ready fleets that absorb excess offshore-wind output at night, stabilizing the distribution network. Coastal districts such as Pirita investigate seawater sourcing that further decarbonizes heating loops, leveraging year-round halocline temperatures in Tallinn Bay.
Central and western counties follow, aided by district-heating grids where large-scale heat pumps displace fuel oil boilers. Estonia heat pump market size in these regions grows steadily as utilities integrate megawatt-scale units with biomass plants to shave peak fossil fuel demand. Shared borehole fields also spread capital costs across terrace-house clusters, demonstrating collaborative ownership structures.
Rural eastern and southern territories face grid bottlenecks, driving interest in hybrid biomass plus small air-source packages that minimize amperage draw. Mobile demonstration units and EU-funded installer-training caravans raise consumer awareness, gradually lifting penetration. Cross-border initiatives with Latvia harmonize standards and widen the talent pool for certified technicians, smoothing regional disparities.
Competitive Landscape
The Estonia Heat Pump market competition remains moderate, with global brands, NIBE, Thermia, Daikin, leveraging R&D scale, while local champions tailor offerings to Estonia’s climate. Air-source catalogues saturate consumer channels, driving price pressure. In contrast, ground-source specialists command premium margins due to drilling know-how and limited certified workforce. Partnerships between equipment makers and installer cooperatives yield seamless warranty coverage, enhancing customer confidence.
Technological differentiation is sharpening. Companies integrate SG-Ready functions, AI-driven predictive controls, and low-GWP refrigerants to meet upcoming legislative thresholds. GEA’s bespoke high-temperature pumps for Tallinn’s district system exemplify localization strategies. Heat-as-a-service models, now embraced by 20% of households, are shrinking payback barriers and intensifying subscription-style competition.
White-space lies in industrial process heat and district-scale assets. Soojuskeskus OU’s data-center waste-heat capture for municipal grids showcases double-value propositions that established HVAC incumbents are beginning to replicate. E-commerce entrants such as domestic retailer Kliimaseade OÜ capture first-time buyers with transparent pricing, but must expand nationwide service networks to retain market share.
Estonia Heat Pump Industry Leaders
-
Viessmann Climate Solutions SE
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Ariston Holding N.V.
-
Nilan A/S
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Trane Technologies Plc
-
Systemair AB
- *Disclaimer: Major Players sorted in no particular order
Recent Industry Developments
- June 2025: GEA and Utilitas have installed four high-efficiency heat pumps at Tallinn's Vao energy complex in a significant move towards a greener future. Among these is the pioneering GEA Grasso L XHP screw compressor-based heat pump. This initiative aligns with Tallinn's ambitious target of achieving net-zero emissions by 2050. By harnessing waste heat from biomass CHP, the system not only curtails fossil fuel consumption and CO₂ emissions but also ensures dependable heating for 8,000 homes and businesses.
- May 2025: Trane has introduced its latest compact air-to-water heat pumps, the Cube CXC models. These models come equipped with inverter scroll compressors and utilize the low-GWP R454B refrigerant. Tailored for commercial and public building applications, the CXC units boast heating capacities ranging from 23 to 59 kW (or 6.5 to 16.8 tons) and promise enhanced efficiency alongside flexible installation options. Positioned as an A2L refrigerant alternative, the new models stand in contrast to Trane’s existing R290-based Leaf range.
- January 2025: Ariston Holding N.V. revealed that its Nimbus range of heating heat pumps secured a notable 25% innovation measurement uplift under the ECO4 scheme. This achievement highlights Ariston Holding N.V.'s dedication to promoting sustainable comfort for all.
- July 2024: Utilitas is erecting its inaugural large-scale heat pump facility in Paljassaare, Tallinn, harnessing treated wastewater and seawater to generate clean thermal energy. Set to commence operations in 2026, the Paljassaare heat pump plant boasts a total capacity of 110 MW and will integrate into the district heating network.
Research Methodology Framework and Report Scope
Market Definitions and Key Coverage
Our study defines the Estonian heat pump market as the annual revenue generated from the sale and installation of electrically-driven air-source, water-source, ground-source, hybrid, and exhaust-air heat pumps sized below 1 MW for space heating, space cooling, sanitary hot water, and selected low-temperature industrial loads. According to Mordor Intelligence, this market was worth USD 21.3 million in 2025.
We exclude pure chillers, air-conditioning splits, and second-hand units that are re-imported into Estonia.
Segmentation Overview
- By Type
- Air-Source
- Water-Source
- Ground-Source (Geothermal)
- Others (Hybrid, Exhaust-Air)
- By Rated Capacity (kW)
- < 10 kW
- 10-20 kW
- 20-50 kW
- 50-100 kW
- > 100 kW
- By Application
- Space Heating
- Space Cooling
- Domestic / Sanitary Hot Water
- Others (Pool Heating, Process Heating, and Cooling)
- By End-User Vertical
- Residential
- Commercial
- Industrial
- Institutional
- By Installation Type
- New Build
- Retrofit / Replacement
- By Sales Channel
- Direct (OEM to End-User)
- Distributor / Installer Network
- E-Commerce
Detailed Research Methodology and Data Validation
Primary Research
We interviewed Estonian wholesalers, certified installers in Harjumaa, utility engineers at Utilitas, and municipal retrofit program officers. Their insights on average selling prices, rebate uptake rates, and seasonal installation capacity bridged data gaps and challenged early assumptions before we locked the model.
Desk Research
We began by pulling baseline demand signals from open sources such as Eurostat trade codes 841861 and 841869, the Estonian Environment Agency's building energy statistics, the European Heat Pump Association's sales dashboards, and policy papers from the Ministry of Economic Affairs and Communications. Company filings, tender notices on Tenders Info, and patent counts from Questel added competitive color, while D&B Hoovers supplied historical revenue for key installers. A second pass gathered electricity-to-gas retail price spreads, district heating tariff bulletins, and national retrofit grant ledgers that inform payback calculations. The sources named illustrate the wider evidence pool; many additional references were tapped for triangulation and clarifications.
A follow-up scan of paid databases (Dow Jones Factiva for news flow and Marklines for OEM product launches) helped our analysts tie market inflections to corporate moves, ensuring that our desk work stayed current.
Market-Sizing and Forecasting
We used a top-down construction that starts with customs import volumes, converts them with weighted average selling prices, and then adjusts for locally produced units and re-exports. Targeted bottom-up checks (sampled OEM shipments times installer margins) validated those totals. Key variables inside our workbook include heat pump stock per 1,000 households, annual residential retrofit permits, electricity versus gas price differential, rebate budget absorption, and district heating carbon intensity. Multivariate regression links these drivers to historical sales and projects demand through 2030, while scenario analysis stress tests price shock and policy delay cases. When bottom-up estimates diverge by over five percent, we rerun price bands before finalizing the curve.
Data Validation and Update Cycle
Every quarter, our analysts rerun anomaly scans that flag sharp volume or price swings; flagged series trigger call-backs to at least two prior respondents. The full report is refreshed annually, and a fast-track update is issued whenever major subsidy rules or grid tariff revisions surface.
Why Our Estonia Heat Pump Baseline Commands Reliability
Published numbers differ because firms treat refurb sales, ASP evolution, and currency bases in unique ways. We openly document our scope, refresh cadence, and driver set, which lets clients track each assumption.
Benchmark of Current-Year Market Values
Benchmark comparison
| Market Size | Anonymized source | Primary gap driver |
|---|---|---|
| USD 21.3 M (2025) | Mordor Intelligence | - |
| USD 15 M (2024) | Regional Consultancy A | Omits hybrid and exhaust-air units; uses list instead of transacted prices |
| EUR 6 M (2016) | Trade Journal B | Historical customs only, no retrofit channel or price inflation adjustment |
The comparison shows estimates shrink when hybrid systems, current ASPs, and retrofit demand are overlooked. By blending transparent scope choices with live primary checks, Mordor Intelligence delivers a balanced, reproducible baseline that decision-makers can trust.
Key Questions Answered in the Report
How big is the Estonia heat pump market in 2025?
The Estonia heat pump market size is projected to reach about USD 21.3 million in 2025, on its way to USD 26.4 million by 2030 at a 4.43% CAGR.
Which heat-pump type sells the most units in Estonia?
Air-source units dominate, commanding 70% of 2024 revenue due to lower upfront cost and straightforward installation.
Why are electricity price spikes still favoring heat pumps?
Gas prices have risen faster, and with heat-pump COPs around 4.0 a typical system still delivers heat more cheaply than a new gas boiler even under high power tariffs.
What is driving commercial adoption of heat pumps?
EU Fit-for-55 energy-performance rules, smart-grid pilots and rising ESG disclosure standards are pushing offices and retail sites, resulting in a 5.2% CAGR for the commercial segment.
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