South Korea 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 2.11 Billion |
| Market Size (2030) | USD 2.80 Billion |
| Growth Rate (2025 - 2030) | 5.84% 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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South Korea Heat Pump Market Analysis by Mordor Intelligence
The South Korea Heat Pump Market size is estimated at USD 2.11 billion in 2025, and is expected to reach USD 2.80 billion by 2030, at a CAGR of 5.84% during the forecast period (2025-2030).
Decarbonisation targets set for mid-century, tougher building-code requirements, and a deep local supply chain are steering installations across homes, offices, and factories. Air-source units remain the volume leader because they are easier to site and cost less up-front, yet ground-source systems are scaling quickly in projects that chase lifetime energy savings and year-round performance. Retrofits are picking up as half of all dwellings are more than 30 years old, while e-commerce portals are making small systems easier to size, finance, and purchase. Large domestic brands are pouring capital into low-GWP refrigerants, high-efficiency compressors, and cloud-linked controls, widening the technology’s appeal and strengthening export prospects
Key Report Takeaways
- By type, air-source units held 76% of South Korea heat pump market share in 2024; ground-source systems are on track for a 6.1% CAGR to 2030.
- By end-user vertical, the residential segment commanded 58% of South Korea heat pump market share in 2024, while industrial installations are advancing at a 5.9% CAGR through 2030.
- By installation type, new-build projects captured 61% of the South Korea heat pump market in 2024; retrofits are projected to expand at a 5.6% CAGR to 2030.
- By sales channel, distributors and installers controlled 67% of 2024 revenue, whereas e-commerce sales are forecast to grow at a 6.2% CAGR over the same period.
- By rated capacity, units below 10 kW accounted for 53% of demand in 2024, while systems in the 50–100 kW band are set to log a 5.7% CAGR to 2030.
South Korea Heat Pump Market Trends and Insights
Drivers Impact Analysis
| Driver | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Growing use of heat pumps beyond space heating and cooling | +1.8% | National (early urban uptake) | Medium term (2–4 years) |
| Government initiatives that mandate high-efficiency HVAC | +2.2% | New development zones nationwide | Medium term (2–4 years) |
| Rapid urbanization and new-build momentum | +1.3% | Seoul, Busan, Incheon | Short term (≤ 2 years) |
| Source: Mordor Intelligence | |||
Growing use of heat pumps beyond space heating and cooling
Heat pumps are moving into domestic hot-water production, pool heating, and low-temperature industrial processes. Domestic hot-water units are expanding at 17.4% CAGR as builders specify integrated space-heating/hot-water packages that shrink mechanical-room footprints. LG’s launch of a washer-dryer combo with a built-in heat-pump loop illustrates versatility and consumer appeal[1]Saebom Lee, “It is easy to misunderstand that Korean carrier air...,” MK News, mk.co.kr In food processing and textiles, industrial heat pumps are displacing gas boilers to curb operating costs. Carrier’s agricultural trials demonstrate payback in a single heating season[2]Hang-Mun Cho, “A Study on Supply Strategy of Hydrothermal Energy in Seoul,” Seoul Research Institute, si.re.kr. Seoul is also piloting hydrothermal networks that harvest river energy; feasibility studies show 2.3 million TOE of untapped potential—enough to outstrip the city’s current renewable output.[3]Yujun Jung, “A Comprehensive Review of Thermal Potential and Heat Utilization for Water Source Heat Pump Systems,” Energy and Buildings, doi.org
Government initiatives that mandate high-efficiency HVAC
Zero-Energy Building rules in force since 2017 require stringent performance thresholds, often achievable only with heat pumps. Planned installation of 1.7 million units by 2050 anchors demand visibility, while local content requirements ensure spending circulates through domestic factories and service providers.
Rapid urbanization and new-build momentum
High-rise housing starts around Seoul and coastal metros integrate heat pumps from design stage, cutting mechanical rooms and providing cooling redundancy for humid summers. Smart-city pilots layer building-energy management systems atop variable-speed compressors, illustrating how digital control lifts seasonal performance without adding floor area.
Restraints Impact Analysis
| Restraint | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Installation cost & complexity, especially in retrofits | −1.2% | Older urban cores | Short term (≤ 2 years) |
| Limited public awareness of heat-pump benefits | −0.9% | Secondary cities & rural areas | Medium term (2–4 years) |
| Shortage of qualified installation technicians | −1.3% | Nationwide growth clusters | Medium term (2–4 years) |
| Source: Mordor Intelligence | |||
Installation cost and complexity, especially in retrofits
Ground-source boreholes can exceed 50% of project cost, and limited curb space in dense downtowns hampers rig access. Developers remain cautious until drilling contractors, municipal regulators, and lenders streamline permit-to-commissioning workflows.
Limited public awareness of heat-pump benefits
Floor-radiant “ondol” traditions keep homeowners comfortable with legacy boilers; many remain unaware of lifecycle savings from inverter-driven compressors. Awareness campaigns led by the Korea Heat Pump Alliance focus on side-by-side cost comparisons and showcase retrofits in 1970s apartment towers.
Shortage of qualified installation technicians
As shipments rise, training throughput lags; top brands now fund installer academies and remote-diagnostic tools to shorten troubleshooting time and protect warranty reputations.
Segment Analysis
By Type: Air-source leads; ground-source accelerates
Air-source models dominate with 76% share in 2024 thanks to modest installation footprints and falling component costs. Most multi-split residential systems now use reversible cycles, further embedding heat-pump logic in mainstream HVAC. Ground-source units, advancing at 6.1% CAGR, benefit from stable subsurface temperatures, giving factories and hospitals predictable COPs even in cold snaps. Government recognition of hydrothermal energy as renewable lifts market visibility for water-source projects serving district networks.
The South Korea heat pump market size for ground-source installations is projected to expand faster than any other category, reinforcing supplier incentives to develop compact borehole rigs and shared-loop configurations. Water-source systems gain traction in waterfront redevelopments that leverage river thermal capacity and free up rooftop space for photovoltaics.
Note: Segment shares of all individual segments available upon report purchase
By Rated Capacity: Small units dominate; mid-range rises
Units below 10 kW attract single-family homes and small offices, translating into 53% of revenue in 2024. Growth in the 50–100 kW tranche (5.7% CAGR) stems from light-industry users replacing ageing oil boilers to lower Scope 1 emissions. The South Korea heat pump market share for these mid-range units is expected to widen as packaged rooftop models offer simplified plug-and-play installation.
By Application: Space heating tops; domestic hot water surges
Space heating represents 49% of demand in 2024, anchored by four-season operation and zoning flexibility. Domestic hot-water systems, advancing at 5.7% CAGR, close the utilisation gap that once limited return on investment. Integrated heat-pump water heaters now include legionella-control cycles, boosting confidence among hospitality operators. The South Korea heat pump market size for hot-water units is set to exceed air-conditioning replacement volumes by late decade.
By End-User Vertical: Residential largest; industrial fastest
Residential hold 58% of 2024 shipments, yet the industrial segment’s 5.9% CAGR signals rising demand for medium-temperature process heat in textiles, electronics, and food processing. Pilot lines that recover waste heat for low-pressure steam demonstrate attractive payback times, nudging heavy-industry buyers toward phased conversion plans.
By Installation Type: New-build leads; retrofit gains momentum
New construction secures 61% of orders due to code-driven design embeds. Retrofits, growing 5.6% CAGR, target the vast stock of 1980s apartments. Policy makers consider grant structures that tie floor-area expansion permits to the adoption of high-efficiency HVAC, catalysing refurbishment queues. Proper sizing and flow-rate optimisation during retrofits already cut pump power by 10%, according to field studies, helping the South Korean heat pump industry overcome cost hesitancy.
By Sales Channel: Distributor networks prevail; e-commerce surges
Traditional distributor–installer ecosystems handle 67% of turnover, providing site surveys, load calculations, and warranty labour. Online platforms, growing 6.2% CAGR, simplify model selection through chat-bots and augmented-reality placement apps. Brands now treat digital storefronts as lead-generation engines that funnel complex projects back to authorised installers.
Geography Analysis
South Korean demand clusters around the Seoul Capital Area, which accounts for the highest concentration of new high-rise housing and office towers. The region’s stringent local ordinances on energy intensity drive early adoption of variable-refrigerant-flow heat pumps connected to building management systems.
Busan and Incheon follow, propelled by large port redevelopments and logistics parks that require year-round temperature regulation for perishable goods. Municipal incentives for water-source systems tied to harbour cooling loops are expected to scale trial installations into city-wide networks, expanding South Korea heat pump market size in coastal provinces.
Interior provinces such as Chungcheong and Gyeonggi are emerging growth pockets where industrial estates are switching to mid-temperature heat pumps, benefitting from favourable electricity-to-LNG price spreads. Rural counties lag on penetration due to less stringent building codes, yet government grants targeting farm-based food-processing lines could unlock incremental volumes.
Competitive Landscape
The South Korea heat pump market is moderately consolidated. Domestic champions LG Electronics and Samsung Electronics leverage in-house compressor expertise, robust patent portfolios, and dense service networks. Both emphasise R290 refrigerant and Wi-Fi-enabled predictive maintenance to comply with low-GWP rules and differentiate on convenience. Foreign suppliers such as Daikin, Mitsubishi Electric, and Carrier compete in premium categories and often supply compressors or controls to local OEMs, increasing ecosystem interdependence.
Small and mid-sized firms including Kyungdong Navien and Hanon Systems focus on niche offerings—condensing hybrid boilers and vehicle heat-pump modules, respectively—broadening the competitive set without diluting pricing power in core residential splits. Strategic moves now prioritise geographic diversification beyond East Asia, with LG outlining a revenue-doubling plan in HVAC by 2030 and Samsung acquiring Europe’s FläktGroup to deepen commercial-air-handling know-how.
Industry players also pilot “Heat as a Service” models that bundle equipment, installation, and energy-saving guarantees into monthly fees. This approach lowers barriers for energy-intensive SMEs and creates an annuity-style revenue stream that smooths hardware sales cycles.
South Korea Heat Pump Industry Leaders
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Daikin Industries Ltd.
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Mitsubishi Electric Corp.
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LG Electronics Inc.
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Fujitsu General Ltd.
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Carrier Global Corp.
- *Disclaimer: Major Players sorted in no particular order
Recent Industry Developments
- March 2025: Samsung introduced its AI-enabled Eco Heating System at ISH 2025, aiming for ≥30% HVAC sales growth in 2025. The launch signals a push toward natural-refrigerant portfolios that satisfy incoming European F-gas revisions.
- February 2025: LG and Samsung unveiled next-generation compressors at AHR Expo 2025, emphasising fast retrofits.
- April 2024: Hanon Systems commercialised a fourth-generation EV heat-pump module first deployed in the Kia EV3, enhancing vehicle winter range.
- May 2024: Samsung acquired FläktGroup for EUR 1.5 billion (USD 1.63 billion) to accelerate its industrial HVAC footprint.
Research Methodology Framework and Report Scope
Market Definitions and Key Coverage
Our study considers every newly installed, factory-built system that transfers heat into or out of buildings in South Korea through an electrically driven vapor-compression cycle, covering air-source, water-source, and ground-source units across residential, commercial, industrial, and institutional premises. Accessories, maintenance services, window air-conditioners, and pure refrigeration equipment fall outside this scope.
Scope exclusion: stand-alone electric heaters and fossil-fuel boilers are not modeled.
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
Structured interviews and short surveys with heat-pump OEM engineers, distributor networks, energy-service contractors, and local officials across Seoul, Busan, and Jeju help us validate uptake drivers, subsidy pass-through rates, and prevailing average selling prices. Follow-up calls ensure assumptions on installation labor cost and coefficient of performance are grounded in field reality.
Desk Research
Mordor analysts first compile historic demand and price clues from non-paywalled tier-1 sources such as the Korea Energy Agency's Renewable Heat Statistics, Korea Customs Service HS-code shipment data, KOSIS building completion records, and policy papers from the Ministry of Trade, Industry and Energy. International context is taken from IEA Heat Pump Centre digests and peer-reviewed HVAC journals. Company filings, investor presentations, and press releases enrich competitor revenue splits, while paid tools like D&B Hoovers and Dow Jones Factiva supply corroborative financials. The sources listed here are illustrative; many additional materials are screened to cross-check facts and fill gaps.
Market-Sizing & Forecasting
A top-down model reconstructs 2019-24 demand by aligning local production, import, and export flows with replacement cycles and stock-turnover logic. Outputs are then cross-checked through a bottom-up roll-up of sampled supplier revenues and installer channel checks. Key variables tested include new-dwelling completions, heating-degree days, electricity-to-gas tariff differentials, government rebate budgets, average COP drift, and unit ASP trends. A multivariate regression links these drivers to shipments, while ARIMA smooths short-term shocks before projections to 2030. Any bottom-up shortfalls are bridged using calibrated penetration-rate proxies derived from primary interviews.
Data Validation & Update Cycle
Outputs pass three rounds of analyst review, variance screening against external energy-use indicators, and senior sign-off. The model refreshes annually, with interim updates triggered by material subsidy revisions or major policy announcements. A final check is run just before each report release.
Why Mordor's South Korea Heat Pump Baseline Is Widely Trusted
Published market values can diverge because firms choose different product mixes, price bases, and refresh cadences. By anchoring estimates to verified trade flows and on-the-ground rebate uptake, Mordor Intelligence minimizes hidden assumption drift.
Key gap drivers include rival studies that exclude ground-source units, apply uniform ASP escalation, or roll forward historic growth rates without testing them against housing starts and tariff movements. Our annual update cycle and double-source validation reduce these discrepancies.
Benchmark comparison
| Market Size | Anonymized source | Primary gap driver |
|---|---|---|
| USD 2.11 B (2025) | Mordor Intelligence | - |
| USD 1.29 B (2024) | Regional Consultancy A | Omits retrofit segment and uses static ASP |
| USD 1.22 B (2024) | Trade Journal B | Excludes industrial heat-pump demand and assumes conservative subsidy uptake |
Differences aside, the comparison shows that Mordor's blended top-down with bottom-up check delivers a balanced, transparent baseline that decision-makers can reliably trace back to clear data points.
Key Questions Answered in the Report
1. What is driving growth in the South Korea heat pump market?
Rapid decarbonisation policies, stricter building-energy codes, and domestic manufacturing strength underpin a 5.84% CAGR to 2030.
2. Which heat-pump type leads the market?
Air-source units captured 76% share in 2024 because of lower installation complexity and broad product availability.
3. Why are retrofit projects gaining momentum?
Nearly half of housing stock is over 30 years old; upgrading to heat pumps cuts energy bills and helps owners meet tightening efficiency standards.
4. How are e-commerce channels affecting sales?
Online platforms simplify sizing and financing for small systems and are expanding at a 19.2% CAGR, although professional installers remain crucial.
5. Which segment is the fastest-growing end-user?
Industrial applications, advancing at an 18.9% CAGR, reflect factories switching to medium-temperature heat pumps for process heat and carbon cuts.
6. What role do domestic brands play globally?
LG and Samsung leverage local R&D to export low-GWP, connected heat-pump lines, chasing growth in North America and Europe amid subsidy tailwinds.
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