Global Low-GWP Water-Source Chiller & Heat Pump Market Size, Share, Trends and Forecasts 2032

Key Findings

• The low-GWP water-source chiller and heat pump market focuses on HVAC systems using refrigerants with significantly reduced global warming potential.

• Water-source systems offer higher efficiency compared to air-source alternatives in many climates.

• Regulatory pressure to phase down high-GWP refrigerants is the primary adoption driver.

• Commercial buildings, campuses, and district energy systems dominate demand.

• Low-GWP refrigerants such as HFOs, CO₂, and blends are gaining traction.

• Water-loop infrastructure enables efficient heat exchange and load balancing.

• Energy efficiency and lifecycle emissions reduction are key decision criteria.

• OEMs are redesigning compressors and heat exchangers for new refrigerants.

• Retrofit demand is increasing as existing systems approach refrigerant phase-out deadlines.

• The market is strategically important for low-carbon building thermal systems.

Low-GWP Water-Source Chiller & Heat Pump Market Size and Forecast

The global low-GWP water-source chiller and heat pump market was valued at USD 9.6 billion in 2025 and is projected to reach USD 26.9 billion by 2032, growing at a CAGR of 15.8%. Growth is driven by refrigerant regulations and rising demand for energy-efficient HVAC solutions. Water-source systems deliver stable performance across seasons. Commercial construction and retrofit activity support expansion. Long-term emissions reduction targets reinforce demand. Technology upgrades sustain market momentum.

Market Overview

The low-GWP water-source chiller and heat pump market includes HVAC systems that use water loops, groundwater, or condenser water for heat exchange while employing refrigerants with low global warming potential. These systems are widely deployed in commercial buildings, institutional facilities, and district energy networks. Water-source architecture improves efficiency and load balancing. Low-GWP refrigerants reduce lifecycle climate impact. System design emphasizes safety, efficiency, and regulatory compliance. The market serves new construction and retrofit applications.

Low-GWP Water-Source Chiller & Heat Pump Value Chain & Margin Distribution

Low-GWP Water-Source Chiller & Heat Pump Market By Refrigerant Type

Low-GWP Water-Source Systems – Adoption Readiness & Risk Matrix

Future Outlook

The low-GWP water-source chiller and heat pump market will expand steadily as refrigerant phase-down schedules tighten globally. OEMs will continue redesigning systems for ultra-low GWP fluids. Retrofit activity will accelerate as legacy systems are replaced. Water-source solutions will gain preference in large-scale developments. Efficiency improvements will reduce operating costs. Long-term growth is anchored in decarbonized building thermal systems.

Low-GWP Water-Source Chiller & Heat Pump Market Trends

• Accelerated Transition To Low-GWP Refrigerants
  Regulatory mandates are forcing rapid refrigerant transitions. High-GWP refrigerants are being phased out. OEMs are prioritizing low-GWP portfolios. System redesign efforts are increasing. Safety and performance trade-offs are actively managed. Market education is expanding. Transition timelines shape procurement decisions.

• Growing Preference For Water-Source HVAC Architectures
  Water-source systems offer stable thermal performance. Energy efficiency improves across operating conditions. Load balancing reduces peak demand. System reliability is enhanced. Large buildings favor centralized water loops. Lifecycle cost benefits drive adoption. Water-source architecture gains momentum.

• Expansion Of Retrofit And Replacement Demand
  Existing HVAC assets face refrigerant obsolescence. Retrofit options are limited. Full system replacement increases. Owners seek compliant solutions. Low-GWP water-source systems fit retrofit needs. Incentives support upgrades. Replacement demand accelerates growth.

• Integration With Smart Building Management Systems
  Digital controls optimize system efficiency. Predictive maintenance improves uptime. Energy monitoring enhances performance. Smart integration reduces operating costs. Automation improves load management. Data-driven optimization gains importance. Smart HVAC becomes standard.

Market Growth Drivers

• Global Refrigerant Phase-Down Regulations
  Regulatory frameworks mandate GWP reduction. Compliance deadlines are approaching. High-GWP systems face retirement. Low-GWP alternatives become mandatory. Enforcement strengthens demand. OEM compliance strategies drive sales. Regulation is the primary growth engine.

• Rising Demand For Energy-Efficient Commercial Buildings
  Energy costs continue to rise. Efficiency standards tighten. Water-source systems deliver high COP. Long-term savings justify investment. Green building certifications drive adoption. Efficiency goals align with low-GWP systems. Sustainability fuels growth.

• Lifecycle Emissions Reduction Goals
  Operational and refrigerant emissions matter. Low-GWP fluids reduce climate impact. Water-source efficiency lowers energy use. Lifecycle assessments influence procurement. ESG reporting increases accountability. Emissions reduction supports demand. Climate goals sustain growth.

• Growth Of District Energy And Campus Systems
  District energy projects expand globally. Water loops enable centralized systems. Scalability improves economics. Low-GWP compliance is essential. Campuses prioritize long-term efficiency. Centralized systems favor water-source solutions. Infrastructure growth drives demand.

Challenges in the Market

• Higher Initial Capital Cost
  Low-GWP refrigerants increase system cost. Advanced components add expense. Installation complexity raises capex. Budget constraints limit adoption. ROI depends on long-term savings. Cost justification is critical. Capital intensity slows penetration.

• Refrigerant Safety And Handling Complexity
  Some low-GWP refrigerants are mildly flammable. Safety codes are stricter. Installer training is required. Compliance increases complexity. Perceived risk affects acceptance. Safety management is essential. Handling challenges slow adoption.

• Water Infrastructure Limitations
  Water-source systems require suitable loops. Not all sites qualify. Retrofit feasibility varies. Infrastructure upgrades add cost. Water availability concerns exist. Site-specific constraints limit deployment. Infrastructure readiness affects growth.

• Installer Skill Gaps And Market Education
  Low-GWP systems require new expertise. Training availability is uneven. Installer shortages delay projects. Education is ongoing. Knowledge gaps affect quality. Workforce readiness remains uneven. Skills development is critical.

Low-GWP Water-Source Chiller & Heat Pump Market Segmentation

By Refrigerant Type

• HFO-Based Refrigerants

• CO₂ (R744)

• Low-GWP Blends

By Application

• Commercial Buildings

• Institutional Facilities

• District Energy Systems

By Region

• North America

• Europe

• Asia-Pacific

Leading Key Players

• Daikin Industries

• Carrier Global

• Trane Technologies

• Johnson Controls

• Mitsubishi Electric

Recent Developments

• Daikin expanded low-GWP water-source chiller platforms.

• Carrier introduced next-generation low-GWP heat pump systems.

• Trane enhanced water-source systems using HFO refrigerants.

• Johnson Controls advanced low-emission HVAC portfolios.

This Market Report Will Answer the Following Questions

• What is the projected size of the low-GWP water-source HVAC market through 2032?

• Which refrigerants dominate adoption?

• How do regulations influence system design?

• What role do water-source systems play in decarbonization?

• Which sectors drive demand?

• What challenges affect installation and cost?

• How does retrofit demand impact growth?

• Which players lead innovation?

• How do lifecycle emissions shape procurement?

• What future technologies will influence the market?