Global demand for cooling and heating as a service stood at USD 83,153.6 million in 2024. The industry is further projected to exhibit a y-o-y growth of 7.6% in 2025 and reach USD 89,726.9 million in the same year and surging at a CAGR of 8.5% between 2025 and 2035, demand for the cooling and heating as a service is estimated to reach USD 203,866.0 million by 2035.
The cooling and heating as a service industry is poised to demonstrate significant growth between 2025 and 2035, driven by its adoption across diverse sectors. The transition towards a service-based model is fueled by the need for cost efficiency, operational flexibility, and enhanced energy management.
As businesses continue to pursue sustainable and scalable solutions, the industry is expected to be highly expansive, with the compound annual growth rate (CAGR) anticipated to reach double-digit figures.
Revolutionary in its essence are those innovations in smart technologies, IoT, to redefine and evolve the concept of CaaS and HaaS. Advanced sensors coupled with real-time monitoring, AI-driven analytics deliver pinpoint control on temperatures.
These can even forebode potential equipment downtimes for efficient productivity levels to ensure that their service lifespan is maximized to help energy-saving capabilities for optimum value extraction on a long-run perspective of integrating the concepts into smart infrastructural constructions.
| Attributes | Key Insights |
|---|---|
| Estimated Size, 2025 | USD 89,726.9 million |
| Projected Size, 2035 | USD 203,866.0 million |
| Value-based CAGR (2025 to 2035) | 8.5% |
Global interest in sustainability and decreasing carbon footprints is the key driver of the CaaS and HaaS sector. More service providers are offering environmentally friendly solutions, using renewable energy sources, and integrating advanced energy-efficient technologies.
This has the potential to be in alignment with the global environmental regulations and corporate sustainability goals and therefore appealing to companies that would want to improve their green credentials while meeting severe environmental standards.
Emerging economies are experiencing a fast-growing demand for cooling and heating as a service driven by rapid industrialization and urbanization. Countries in Asia-Pacific, and Africa invest heavily in infrastructure development; so, the market opportunities are vast.
The acceptance of service-based models across these regions is driven by the need for cost-effective and scalable solutions to meet the growing demands for reliable and efficient temperature control systems.
The CaaS and HaaS sector is diversifying across a wide range of industries, including residential, commercial, industrial, and specialized sectors like pharmaceuticals and data centers. The industry-specific requirements lead to the development of customized service offerings.
This diversification not only broadens the scope of the sector but also protects it from sector-specific downturns, leading to stable and sustained growth over the forecast period.
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Adoption of Renewable Energy Sources and Natural Refrigerants in Cooling and Heating Systems
The heating and cooling industry is shifting focus on energy-efficient and environmentally friendly solutions since concerns about climate change and sustainability grow.
Companies adapt to renewable energy sources including solar-powered HVAC systems as well as natural refrigerants such as CO2 and ammonia, which have much fewer environmental impacts than the old chemicals. These solutions aid in the reduction of energy usage, decrease carbon emissions, and meet stringent environmental regulations.
Companies such as Daikin and Trane are in a leading position with energy-efficient solutions. Daikin developed the air conditioner that used compressors operating on inverters, making energy consumption cheaper and running costs more modest. Geothermal systems use the Earth's natural temperature in heating and cooling buildings at Trane.
Such green technologies not only save on costs but also help companies achieve a more sustainable future. More companies are likely to be adopting these innovations as demand for eco-friendly solutions is on the rise, so the focus on energy-efficient heating and cooling systems is expected to be even greater.
Integration of IoT and Data Analytics Revolutionizing Efficiency in Cooling and Heating Systems
The integration of Internet of Things technology and data analytics transforms the HVAC industry by providing real-time monitoring and predictive maintenance capabilities. IoT sensors in HVAC systems collect data regarding performance, temperature, energy consumption, and system health. Data collected is analyzed to optimize energy usage, predict potential failures, and make operations more efficient.
Companies such as Honeywell and Carrier are using IoT and predictive analytics to improve operational efficiency. Honeywell applies these technologies for proactive maintenance, which minimizes downtime for clients. In the same way, Carrier integrates IoT and digital controls to offer predictive maintenance, which ensures continuous system performance and prevents service interruptions.
IoT integration allows for smart thermostats and automated temperature controls, offering more personalized and energy-efficient climate management. The Nest and Ecobee smart thermostats are examples of devices that learn user behavior and adjust their settings automatically, thus bringing about significant energy savings. These systems give consumers insights into their usage patterns, encouraging more sustainable practices and reducing environmental footprints.
Customer Preference for Durable and Low-Maintenance Heating and Cooling Systems Hindering Market Growth
Increased priority by customers to systems offering durability and minimal maintenance over regular heating and cooling services, which have led to increased demand for those services negatively. New technologies include energy-saving units and smart systems designed for minimal failure and repair requirements.
For example, new models of heat pumps and highly efficient air conditioners last much longer and require less servicing, which results in lower demand for service. This tends to limit the growth potential for the service market, since consumers desire lower operating costs and less need for service intervention.
The adoption of maintenance-preferred systems has impacted revenues significantly, as service providers face limited opportunities for routine maintenance, repairs, or replacement of their systems. This phenomenon is closely tied to the increased purchase price customers are willing to pay, anticipating higher system performance through maintenance, repair, and replacement.
This trend is particularly pronounced in residential sectors, where there is a rising adoption of high-performance, energy-efficient heating systems, such as geothermal heat pumps. As a result, service providers have had to alter their business models to adapt or risk experiencing declining growth.
Increasing Industrialization in Emerging Economies Boosts Demand for Heating and Cooling Systems and Services
Growth and industrialization in the Middle East and Africa, especially in regions like Saudi Arabia, UAE, and South Africa is giving new dimensions to the demand of advanced heating and cooling applications in different geographical parts. The region has not only invested heavily in major areas of petrochemical sectors, manufacturing, and the construction industry but also ensures that the working conditions were optimal.
For example, Saudi Arabia's Vision 2030, which seeks to shift the economy from relying only on oil, has witnessed growth in industrial projects where both worker comfort and efficient production demand cooling systems. On a similar scale, in South Africa, the expansion of industrial facilities in Johannesburg and Cape Town cities creates a greater need for HVAC services in plants and commercial buildings.
For instance, in the UAE, there has been rampant urban development with the expo 2020 in Dubai and smart cities under construction. That is making the demand of innovative cooling and heating solutions that are energy-efficient.
African cities like Nairobi and Lagos are growing into industrious metropolises to support this growth, for new industrial buildings and facilities. These infrastructure projects open up wide opportunities for HVAC service providers to offer energy-efficient, smart systems to meet the increasing needs of the region.
Tier 1 companies include industry leaders with annual revenues exceeding USD 300 to 350 million. These companies are currently capturing a significant share of 20-25% globally. These frontrunners are characterized by high production capacity and a wide product portfolio. These companies stand out due to their extensive expertise in manufacturing and broad geographical reach, supported by a robust consumer base.
They offer a wide range of products and leverage the latest technology to meet regulatory standards. Prominent companies within Tier 1 include Daikin Industries Ltd., Carrier Corporation, Trane Technologies, Johnson Controls, Engie SA, and others.
Tier 2 companies encompass mid-sized participants with revenues ranging from USD 100- 250 million, holding a presence in specific regions and exerting significant influence in local economies. These firms are distinguished by robust presence overseas and in-depth industry expertise.
They possess strong technology capabilities and adhere strictly to regulatory requirements. However, the firms may not wield cutting-edge technology or maintain an extensive global reach. Noteworthy entities in Tier 2 include Chart Industries (Howden), HillPhoenix, Mayekawa, Star Refrigeration, Energy Partners, Sabroe, ColdHubs, Kaer, Ecozen Solutions, J&E Hall, EquansLtd.
Tier 3 encompasses most of the small-scale enterprises operating within the regional sphere and catering to specialized needs with revenues below USD 50 to 100 million. These businesses are notably focused on meeting local demand and are hence categorized within the Tier 3 segment.
They are small-scale participants with limited geographical presence. In this context, Tier 3 is acknowledged as an informal sector, indicating a segment distinguished by a lack of extensive organization and formal structure in comparison to the structured one. Tier 3 includes SokoFresh, Green AC Air Conditioning, Hansa Industrieanlage, Climate Partners, CoolCrop, KoolBoks, Remeha, and others.
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The section below highlights assessments of cooling and heating as a service sale across key countries. South Africa, the Balkan & Baltics region, and Turkey are expected to showcase promising double-digit growth, with each exhibiting a strong CAGR through the forecast period.
| Countries | Value CAGR (2025 to 2035) |
|---|---|
| South Africa | 15.9% |
| Balkan & Baltics | 15.7% |
| Turkiye | 15.1% |
| Spain | 12.2% |
| Mexico | 11.6% |
The increasing demand for energy-efficient solutions in South Africa is highly driving the adoption of cooling and heating services. As the cost of energy continues to rise and environmental concerns become more important, both residential and commercial sectors are looking for more sustainable options.
Energy-efficient cooling and heating services offer an opportunity to reduce consumption, lower bills, and reduce carbon footprints, thus making them an attractive solution for consumers and businesses alike. This is very prevalent in cities, which consume a higher level of energy.
Ongoing infrastructure development in South Africa is another key driver accelerating the adoption of these services. With new residential and commercial buildings being constructed, there is an increasing focus on incorporating energy-efficient systems into building designs.
Additionally, the growing demand for cooling and heating solutions in industrial and commercial sectors, such as manufacturing and food processing, further propels the market for efficient services.
As the country continues to modernize its infrastructure, the demand for reliable, energy-efficient cooling and heating services will rise. Here, service providers will be able to introduce innovative solutions tailored to the local market and enhance their competitive edge and address both sustainability goals and increasing energy demands.
As the construction sector is increasing, there is an added requirement for efficient and cost-effective temperature control solutions in newly developed buildings. Developers are focusing on the use of advanced cooling and heating systems that can ensure comfort, energy savings, and sustainability for the residents, and that leads to the adoption of these services.
The Turkish government's emphasis on urban development and smart cities is making the cooling and heating as a service market more attractive. Policies that promote energy efficiency, sustainability, and green building are in line with the increasing demand for such solutions.
The pressure to make buildings more energy-efficient and environmentally friendly has made integrated heating and cooling systems more prominent, which further accelerates market growth.
The country has been actively implementing policies and regulations aimed at reducing carbon emissions and promoting sustainable construction practices. The European Union's Green Deal, along with Spain's own environmental goals, is pushing industries to adopt greener technologies, making energy-efficient heating and cooling systems more sought after in both residential and commercial sectors.
The demand for these systems is further driven by Spain's emphasis on green building certifications, such as LEED and BREEAM. These certifications encourage the use of energy-saving technologies and have become a benchmark for new developments.
In their pursuit of these criteria, building owners and developers are increasingly looking towards advanced heating and cooling solutions that consume less energy, reduce operational costs, and support sustainability initiatives in general.
Commitments to renewable energy sources like Spain's have aligned to the rising trend of choosing energy-efficient HVAC solutions in the building industry. For instance, Spain is revolutionizing innovation and market development in the energy-efficient space by embedding solar power into their heating and cooling systems combined with heat pumps and other kinds of green technologies.
The section explains the growth trajectories of the leading segments in the industry. In terms of End-use Industry, the Residential & Commercial category will likely dominate and generate a share of around 34.0% in 2024.
| Segment | Cooling as a Service (Caas) (Service Type) |
|---|---|
| Value Share (2024) | 57.4% |
Cooling as a Service stands out with 57.4% of the market as demand grows for energy-efficient scalable, and cost-effective solutions in cooling. Industries like pharma, food and beverage, and data centers need very consistent precise cooling to safeguard the product quality and effectiveness of operation.
CaaS helps such industries to gain more advanced cooling solutions without having hefty capital expenses, thus making them more energy efficient while cutting operational costs to facilitate sustainability.
CaaS is flexible and scalable, making it ideal for businesses with varying cooling needs. It provides on-demand cooling services that can be adjusted according to seasonal or operational requirements.
From process cooling in manufacturing facilities to space cooling in offices and commercial spaces, CaaS can be tailored to meet specific demands. This scalability, combined with predictable costs and minimal maintenance responsibilities, makes it a highly attractive solution across a wide range of industries.
| Segment | Residential & Commercial (End-use) |
|---|---|
| Value Share (2024) | 34.0% |
The residential as well as commercial sectors are witnessing a growing energy-efficient heating and cooling demand. With the increasing energy expenses and more emphasis on sustainable living, consumers and businesses move towards services that save energy without compromising the comfort level.
This further fuels the market growth as organizations provide environment-friendly, cost-cutting solutions that enable customers meet environmental standards and reduce the utility bills.
The integration of smart technologies in heating and cooling systems is picking up steam in residential and commercial spaces. IoT-enabled devices, thermostats, and sensors allow users to monitor and control temperature settings remotely, improving convenience and energy efficiency.
Climatic change and extreme temperature variations are the forces behind growing demands for efficient heating and cooling systems in residential and commercial spaces.
Unpredictable temperature variations necessitate prompt demand for dependable, versatile systems. Hence, heating and cooling service providers concentrate on developing solutions that function well under variable climatic conditions to maintain comfort and safety in residences and businesses.
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Key players in the Cooling and Heating as a Service industry are working on improving their capabilities and resources to meet the rising demand across different applications. It involves investments in state-of-the-art technologies, extension of service offerings, and optimizing operational efficiencies.
By increasing their resource base, the companies can provide high-quality and reliable services that respond to the changing needs of clients and stay ahead of competition in the market.
Forging strategic partnerships and joint ventures to co-develop innovative new products and solutions is a common practice among most leading companies. By leveraging their expertise and resources, these collaborations can lead to significant sector and technological innovation.
This collaborative approach enables companies to diversify their product portfolios, enter new industries, and address the specific requirements presented by various end-use industries in different fields.
Major players have been using geographic expansion in order to capture new growth opportunities. This includes entering into emerging customer bases and increasing their footing in the existing ones. By spreading their footprints across the globe, companies get access to new customer bases, diversify revenue streams, and reduce the risk of market saturation.
Industry Updates:
In terms of Service Type, the industry is divided into cooling as a service (caas), which includes process cooling, space cooling, and spot cooling, and heating as a service (haas), which includes process heating, space heating, and radiant heating.
In terms of Service Model, the industry is divided into Subscription-Based, Pay-per-Use, and Hybrid models.
In terms of end-use, the industry is segmented into Residential & Commercial, Food & Beverages, Pharmaceutical, Chemical & Petrochemical, Textile, Electronics, Automotive, Agriculture & Aquaculture, Utility & Energy, Transportation & Storage, IT & Data Center, Mining & Metal, and Others
Key regions such as North America, Latin America, Western Europe, Eastern Europe, East Asia, South Asia, Middle East and Africa (MEA), have been covered in the report.
The global market was valued at USD 83,153.6 million in 2024.
The global market is set to reach USD 89,726.9 million in 2025.
Global demand is anticipated to rise at 8.5% CAGR.
The industry is projected to reach USD 203,866.0 million by 2035.
Daikin Industries Ltd, Carrier Corporation, Trane Technologies, Johnson Controls, Engie SA are prominent companies.
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Cooling and Heating as a Service Market
