Cooling and Heating as a Service Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Service Model (Subscription-Based, Pay-per-Use, Hybrid Models, Others), By Service Type (Cooling as a Service, Heating as a Service), By End User (Residential, Commercial, Industrial, Others), By Region, By Competition, 2020-2030F

Market Overview

Global Cooling and Heating as a Service Market was valued at USD 84.7 billion in 2024 and is expected to reach USD 153.9 billion by 2030 with a CAGR of 10.3% through 2030. The shift from capital-intensive models to subscription-based services is gaining traction, enabling users to reduce upfront investments and rely on operational expenditure (OPEX). Rapid urbanization, smart city initiatives, and expanding commercial infrastructure are further accelerating the need for efficient climate control solutions. Stringent environmental regulations aimed at reducing carbon footprints are also propelling market growth, as governments worldwide push for energy-efficient heating and cooling systems.

Additionally, advancements in IoT, AI-driven analytics, and smart HVAC technologies are optimizing energy consumption, enhancing predictive maintenance, and reducing overall energy waste. The integration of renewable energy sources, such as solar and geothermal heating and cooling, is also playing a crucial role in CHAAS adoption. Furthermore, the increasing prevalence of district heating and cooling networks is supporting the expansion of service-based HVAC models. Emerging markets, particularly in Asia-Pacific and the Middle East, are experiencing significant demand due to industrial growth and infrastructure development, making CHAAS a vital solution for sustainable climate management.

Key Market Drivers

Shift Towards Energy Efficiency and Sustainability

The global Cooling and Heating as a Service (CHAAS) Market is experiencing significant growth due to the increasing emphasis on energy efficiency and sustainability. With rising concerns over climate change, governments, businesses, and consumers are actively seeking solutions that reduce energy consumption and minimize carbon emissions. Traditional HVAC systems are known for their high energy demand and maintenance costs, prompting a shift towards more efficient service-based models. CHAAS allows businesses and homeowners to access state-of-the-art heating and cooling solutions without requiring large capital investments, thereby reducing financial barriers to adopting energy-efficient technology. Global energy demand for cooling is anticipated to increase by 45% by 2050 compared to 2016 levels, escalating from 7 to 12 exajoules.

One of the primary factors driving this shift is the growing implementation of stringent environmental regulations. Governments worldwide are enforcing policies such as the Paris Agreement and national energy efficiency standards, requiring industries to optimize their energy use and lower greenhouse gas emissions. The transition to CHAAS enables companies to comply with these regulations without needing to invest in expensive equipment upgrades. By offering energy-efficient solutions through advanced smart controls, automation, and real-time monitoring, CHAAS providers ensure reduced power consumption and lower operational costs for businesses. In developing economies, the cooling market is expected to expand from approximately USD 300 billion to at least USD 600 billion per year by 2050, presenting a significant opportunity for sustainable solutions.

Additionally, the adoption of renewable energy sources is playing a vital role in shaping the CHAAS market. Companies are integrating solar-powered cooling systems, geothermal heating, and energy-efficient district heating and cooling networks into their service offerings. These sustainable solutions help mitigate environmental impacts while reducing dependence on conventional fossil-fuel-based energy sources. Moreover, advancements in IoT and AI-driven energy management further optimize cooling and heating efficiency, enabling predictive maintenance, remote monitoring, and automated performance adjustments.

Another key driver is the increasing urbanization and infrastructure development worldwide. The rapid expansion of cities, commercial establishments, and smart buildings is creating a demand for sustainable and cost-effective HVAC solutions. CHAAS enables businesses and residential complexes to implement flexible heating and cooling systems that adjust based on real-time occupancy and weather conditions, thereby reducing waste and maximizing efficiency. The rise of smart cities also fosters the demand for CHAAS, as integrated and automated HVAC solutions align with urban sustainability goals.

Ultimately, the shift towards energy-efficient, eco-friendly, and technologically advanced heating and cooling solutions is a fundamental driver of the global CHAAS market. As industries and governments strive to meet environmental targets while controlling costs, CHAAS presents a viable and scalable alternative that combines sustainability with operational efficiency.

Increasing Adoption of Subscription-Based and Pay-Per-Use Models

Another major factor driving the Cooling and Heating as a Service (CHAAS) Market is the growing preference for subscription-based and pay-per-use models. Traditional HVAC systems require high capital investments, regular maintenance, and eventual system replacements, making them expensive and resource-intensive for businesses and homeowners. CHAAS eliminates these challenges by offering heating and cooling solutions as a service, where customers only pay for usage rather than owning the equipment. This operational expenditure (OPEX) model makes CHAAS an attractive alternative, particularly for businesses looking to optimize cash flow and avoid upfront capital costs.

The increasing adoption of “as-a-service” business models across industries has made CHAAS a natural progression for heating and cooling solutions. Companies are now prioritizing flexibility, scalability, and cost predictability, which service-based HVAC models provide. Unlike traditional HVAC ownership, where maintenance and repair costs can be unpredictable and expensive, CHAAS providers take full responsibility for system upkeep, upgrades, and efficiency improvements. This ensures long-term cost savings and improved reliability for end users.

Moreover, the integration of advanced technologies such as IoT, AI, and automation has made pay-per-use models even more effective. IoT-enabled sensors and AI-driven analytics allow CHAAS providers to monitor real-time usage, predict demand patterns, and optimize energy consumption based on occupancy and weather conditions. This results in smarter energy use, reduced waste, and enhanced customer satisfaction. Businesses and property owners benefit from automated climate control solutions that adjust based on data insights, ensuring consistent comfort while reducing unnecessary energy expenditures.

Additionally, the rise of industrial and commercial applications is contributing to the widespread adoption of CHAAS. Large office buildings, shopping malls, hospitals, and manufacturing plants require efficient heating and cooling solutions to maintain operational efficiency and regulatory compliance. CHAAS provides a reliable and cost-effective way to meet these demands without requiring businesses to manage HVAC systems internally. The district heating and cooling sector is also leveraging CHAAS, allowing entire communities and industrial zones to benefit from centralized, highly efficient climate control systems.

The CHAAS model is particularly beneficial for emerging economies and developing markets, where businesses and homeowners may not have the financial resources to invest in high-end HVAC systems. Instead of purchasing and maintaining expensive equipment, they can access high-performance heating and cooling solutions through affordable service agreements. This democratization of advanced HVAC technology is helping bridge the gap between industrialized and developing nations, supporting economic growth and environmental sustainability simultaneously.

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Key Market Challenges

High Initial Setup Costs and Infrastructure Limitations

One of the biggest challenges facing the Cooling and Heating as a Service (CHAAS) Market is the high initial setup costs required to establish the necessary infrastructure. While the CHAAS model shifts capital expenditure (CAPEX) away from end-users and onto service providers, these companies must make substantial upfront investments in energy-efficient HVAC systems, IoT-enabled monitoring tools, and automation technologies. The costs associated with installing centralized district heating and cooling networks, integrating renewable energy sources, and deploying smart controls can be prohibitively expensive, particularly in developing economies where infrastructure is less developed.

In many regions, aging HVAC infrastructure poses an additional barrier to CHAAS implementation. Older buildings and industrial facilities often rely on outdated heating and cooling systems that are not compatible with modern service-based models. Retrofitting these facilities requires significant capital investment and engineering expertise, which can deter potential CHAAS providers from entering certain markets. Additionally, the lack of standardized regulations and policies for CHAAS implementation in different countries makes it difficult to create a uniform approach for service providers, further increasing costs and complexity.

Another challenge is the reliability of energy supply, especially in areas with unstable power grids or inconsistent access to renewable energy sources. Many CHAAS providers aim to offer sustainable heating and cooling solutions by integrating solar, geothermal, and waste heat recovery technologies. However, fluctuations in renewable energy availability, coupled with limitations in battery storage and energy distribution, can affect service consistency. Without proper energy management infrastructure, CHAAS companies may struggle to deliver uninterrupted heating and cooling services, leading to customer dissatisfaction and reduced market adoption.

Moreover, scalability is a concern, particularly for small and medium-sized enterprises (SMEs) that lack the financial and operational capacity to expand into new regions. Unlike traditional HVAC sales, where revenue is generated upfront, CHAAS operates on a long-term revenue model, requiring service providers to carefully balance investment costs with customer acquisition and retention. In markets with lower adoption rates or slower return on investment (ROI), providers may hesitate to enter, limiting market expansion.

To overcome these challenges, service providers must secure funding and partnerships with governments, energy companies, and financial institutions to support large-scale infrastructure projects. Governments can play a crucial role by offering subsidies, tax incentives, and regulatory support to encourage CHAAS adoption. Additionally, innovations in modular and scalable HVAC solutions can help reduce upfront costs and make CHAAS more accessible to a broader customer base. By addressing these infrastructure and financial challenges, the market can achieve greater scalability and long-term sustainability.

Market Awareness, Adoption Barriers, and Customer Hesitation

Despite the many benefits of CHAAS, lack of awareness and understanding among potential customers remains a significant challenge. Many businesses and residential consumers are still unfamiliar with the service-based model and how it differs from traditional HVAC ownership. The perception that leasing or subscribing to HVAC solutions is more expensive in the long run deters potential adopters from transitioning to CHAAS. Additionally, companies with existing HVAC systems may be reluctant to switch due to uncertainty about cost savings, efficiency improvements, and the reliability of service providers.

One of the key barriers to adoption is the long-term commitment required for service agreements. Unlike purchasing an HVAC system outright, CHAAS typically involves multi-year contracts, which some businesses may perceive as inflexible or financially risky. Customers may fear being locked into agreements with high termination fees or limited customization options, leading to hesitation in signing up for CHAAS solutions. Additionally, businesses that have already invested heavily in traditional HVAC infrastructure may be reluctant to abandon sunk costs, making them resistant to transitioning to a new service model.

Trust and credibility also play a crucial role in CHAAS adoption. Because this model relies on continuous service delivery rather than a one-time product sale, customers need assurance that service providers will offer reliable maintenance, system upgrades, and cost-effective energy management. In markets where the CHAAS concept is relatively new, businesses may lack confidence in the ability of service providers to consistently deliver quality heating and cooling solutions. Additionally, concerns about data security and privacy related to IoT-enabled HVAC systems can deter customers from embracing smart, cloud-connected climate control solutions.

Furthermore, regulatory uncertainties and compliance challenges create additional hurdles for market adoption. Different regions have varying laws regarding energy efficiency, emissions targets, and HVAC service contracts, which can complicate standardization and implementation. Service providers must navigate complex regulatory landscapes to ensure their CHAAS offerings comply with local energy policies and consumer protection laws. Inconsistencies in regulations across countries or even states can slow down market expansion and discourage international investments in CHAAS solutions.

To address these challenges, CHAAS providers need to invest in customer education and marketing strategies to highlight the cost savings, flexibility, and sustainability benefits of service-based HVAC models. Demonstrating clear ROI through case studies, pilot projects, and transparent pricing models can help build customer trust and confidence. Additionally, offering flexible service plans, short-term contracts, and performance-based pricing structures can make CHAAS more appealing to businesses hesitant to commit to long-term agreements.

Another solution is fostering strategic partnerships between CHAAS providers, HVAC manufacturers, and utility companies to create bundled service offerings that integrate heating, cooling, and energy management solutions. Governments can also play a role by providing subsidies, incentives, and public-private partnerships to encourage wider adoption. By increasing awareness, building trust, and addressing regulatory complexities, the CHAAS market can accelerate its growth and overcome key adoption barriers.

Key Market Trends

Integration of Smart Technologies and AI-Driven Energy Management

One of the most significant trends shaping the Cooling and Heating as a Service (CHAAS) Market is the growing integration of smart technologies, IoT (Internet of Things), and AI-driven energy management systems. As digital transformation accelerates across industries, HVAC service providers are leveraging real-time data analytics, cloud computing, and predictive maintenance to optimize heating and cooling efficiency. These technologies allow for seamless automation, reducing energy wastage and ensuring HVAC systems operate at peak performance while minimizing costs for end-users.

AI-powered analytics and machine learning algorithms enable CHAAS providers to predict demand patterns, adjust energy usage dynamically, and identify potential system failures before they occur. This shift from reactive to proactive and predictive maintenance helps reduce downtime, extend equipment lifespan, and enhance customer satisfaction. IoT-enabled sensors continuously monitor temperature, humidity, air quality, and occupancy levels, allowing for precise adjustments that optimize indoor climate control while minimizing unnecessary energy consumption.

Another key driver of smart technology adoption in CHAAS is the rise of smart buildings and connected ecosystems. With the increasing development of smart cities, commercial complexes, and energy-efficient residential communities, HVAC systems are being integrated with building management systems (BMS) to create interconnected, responsive environments. CHAAS providers are offering solutions that align with smart grid technology, enabling dynamic load balancing and efficient distribution of energy resources. By leveraging AI-driven automation, smart CHAAS systems can detect changes in external weather conditions and adjust indoor temperatures accordingly, ensuring maximum comfort with minimal energy usage.

Moreover, the integration of digital twin technology is revolutionizing CHAAS operations. A digital twin is a virtual model of a physical HVAC system that continuously receives data from real-world operations. This allows CHAAS providers to simulate different scenarios, optimize performance, and conduct remote troubleshooting without physical interventions. This innovation significantly enhances efficiency and reduces service disruptions, making CHAAS even more attractive for businesses and residential users.

The adoption of AI and smart technologies is also making CHAAS more scalable. With AI-driven insights, providers can customize solutions based on a building’s specific energy needs, whether it’s a small office, a shopping mall, or an industrial facility. Additionally, blockchain technology is being explored for transparent energy transactions and contract management, improving trust and accountability in pay-per-use service models.

Growing Adoption of Renewable and Sustainable Energy Sources

Another major trend driving the Cooling and Heating as a Service (CHAAS) Market is the increasing adoption of renewable energy sources and sustainable HVAC solutions. As businesses and governments prioritize environmental sustainability, there is a strong push toward reducing carbon footprints, minimizing reliance on fossil fuels, and integrating clean energy alternatives into heating and cooling systems.

One of the most prominent developments in this space is the rising use of solar-powered cooling and geothermal heating in CHAAS offerings. Many service providers are implementing solar thermal energy for cooling applications, where sunlight is used to drive absorption chillers that provide efficient and eco-friendly air conditioning. Similarly, geothermal heat pump systems are gaining traction, utilizing underground heat for sustainable heating and cooling without excessive electricity consumption. These systems are particularly beneficial for district heating and cooling networks, where entire communities or commercial zones can leverage centralized, renewable-powered HVAC solutions.

Another key trend is the integration of waste heat recovery systems. Many industrial facilities generate large amounts of excess heat that, when captured and repurposed, can be used for heating purposes within the CHAAS framework. This not only reduces energy waste but also lowers overall operational costs for businesses, making CHAAS a more attractive solution for energy-intensive industries. Waste heat utilization is becoming a crucial component of circular economy strategies, where HVAC solutions are designed to maximize energy efficiency through closed-loop systems.

Additionally, green refrigerants are being widely adopted in CHAAS solutions to address environmental concerns associated with traditional cooling systems. Conventional refrigerants, such as hydrofluorocarbons (HFCs), contribute significantly to global warming. In response, HVAC service providers are transitioning toward low-global-warming-potential (GWP) refrigerants such as hydrofluoroolefins (HFOs), ammonia, and CO₂-based cooling systems. These eco-friendly refrigerants comply with international regulations, such as the Kigali Amendment to the Montreal Protocol, and support sustainability goals in HVAC operations.

Governments worldwide are also playing a pivotal role in promoting renewable-powered CHAAS solutions through incentives, subsidies, and regulatory support. Many countries are introducing tax benefits, green energy credits, and carbon reduction mandates to encourage businesses and property owners to adopt service-based, eco-friendly HVAC systems. In regions with strong renewable energy policies, CHAAS providers are increasingly integrating wind, hydroelectric, and biomass energy sources into their heating and cooling services, ensuring that the transition to clean energy-powered HVAC systems remains financially viable and scalable.

Furthermore, corporate sustainability initiatives are accelerating the shift toward renewable-based CHAAS solutions. Large enterprises and multinational corporations are committing to net-zero carbon targets, requiring energy-efficient HVAC systems that align with sustainability goals. By adopting CHAAS, companies can reduce their carbon emissions without making large upfront investments, supporting both financial and environmental objectives. As of 2023, global renewable energy capacity reached 3,530 GW, with solar, wind, hydro, and other renewable sources accounting for the majority of this growth. This represents a 10% increase from the previous year. Solar power capacity surpassed 1,200 GW globally in 2023, making it the leading renewable energy source by capacity. The solar market has been growing at a rate of 20-25% annually over the past decade. Global wind power capacity exceeded 1,000 GW in 2023, with offshore wind becoming a rapidly growing segment, particularly in regions like Europe and China.

Segmental Insights

End User Insights

Residential dominated the Global Cooling and Heating as a Service Market, driven by the increasing demand for energy-efficient, cost-effective, and sustainable HVAC solutions in homes and apartment complexes. With rising global temperatures and extreme climate variations, homeowners are seeking flexible and subscription-based heating and cooling solutions that eliminate the need for high upfront costs associated with traditional HVAC system ownership. The growing adoption of smart home technologies, IoT-enabled thermostats, and AI-driven energy management systems is further propelling the shift toward service-based models, allowing consumers to optimize energy usage while reducing electricity bills.

Urbanization and rapid residential construction, particularly in Asia Pacific, North America, and Europe, are key factors driving the CHAAS market in the residential segment. Government policies promoting energy-efficient housing, green building certifications, and incentives for renewable-powered HVAC systems are encouraging homeowners to adopt pay-per-use or subscription-based heating and cooling services. Additionally, aging HVAC infrastructure in developed countries is leading homeowners to opt for service-based solutions that provide regular maintenance, upgrades, and remote monitoring without the financial burden of system replacements. With increasing awareness of carbon footprint reduction and sustainable living, the residential sector’s shift toward CHAAS is expected to accelerate. As more households prioritize cost savings, energy efficiency, and convenience, the residential segment will continue to be the leading contributor to global CHAAS market growth.

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Regional Insights

Asia Pacific dominated the Global Cooling and Heating as a Service Market, driven by rapid urbanization, increasing industrialization, and growing demand for energy-efficient HVAC solutions. Countries such as China, India, Japan, and South Korea are witnessing significant investments in smart infrastructure, commercial real estate, and sustainable energy solutions, fueling the adoption of CHAAS. The region's expanding middle-class population and rising disposable incomes have also contributed to a surge in demand for affordable, flexible, and efficient heating and cooling services, particularly in residential and commercial buildings.

Government initiatives aimed at reducing carbon emissions and promoting energy-efficient technologies play a key role in CHAAS market expansion across Asia Pacific. Nations like China and India are implementing strict environmental regulations, pushing businesses to adopt green HVAC solutions, including solar-powered cooling, geothermal heating, and IoT-enabled energy management systems. Additionally, the presence of leading HVAC manufacturers and technology providers in the region is accelerating innovation in service-based HVAC models.

The increasing focus on smart cities, district cooling systems, and renewable energy integration further strengthens Asia Pacific’s position as the global leader in CHAAS adoption. With continued investments in sustainable infrastructure and energy-efficient technologies, the region is expected to drive the future growth of the global CHAAS market.

Recent Developments

• Panasonic Corporation revealed that its Heating & Ventilation A/C Company officially launched the OASYS Residential Central Air Conditioning System in the U.S. market on January 7, 2025. This new system represents a significant innovation in home climate control, designed to provide enhanced comfort, energy efficiency, and advanced features for residential properties. The OASYS Residential Central A/C System is built with cutting-edge technology, integrating smart controls and eco-friendly cooling solutions that cater to the growing demand for sustainable, energy-efficient home appliances. Panasonic’s system promises to deliver exceptional cooling performance while minimizing energy consumption, making it an ideal choice for homeowners looking to reduce their environmental footprint.
• In September 2024, Thermax, a leader in energy and environmental solutions, showcased a range of cutting-edge clean energy, air, and water technologies at Boiler India 2024. The company introduced several innovative products, including the Greenpac biograte boiler, Thermeon 2.0, and advanced biogas and carbon capture solutions, all part of its effort to drive the energy transition. Thermax's presentation highlighted several new products from its heating division, with a particular emphasis on its universal biograte combustion technology, which provides exceptional flexibility in utilizing various biomass fuels. Among the key launches based on this technology were the Greenpac, a versatile biograte boiler, and Greenbloc, a high-performance thermic fluid heater, both designed to offer efficient, sustainable heating solutions for diverse energy needs. These innovations reflect Thermax's commitment to advancing clean and sustainable energy solutions in the industrial sector.
• At ACREX India 2024 in Noida, Voltas unveiled its latest commercial air conditioning product lineup, featuring the new Inverter Scroll Chillers designed specifically for commercial spaces. These advanced chillers offer a cooling capacity range of 12-72 TR and utilize eco-friendly refrigerants, supporting sustainability goals.

Key Market Players

• Johnson Controls International plc
• Siemens AG
• Schneider Electric SE
• Trane Technologies Company, LLC
• Honeywell International Inc.
• Daikin Industries, Ltd.
• Carrier Global Corporation
• Mitsubishi Electric Corporation
• Bosch Thermotechnik GmbH
• Lennox International Inc.

Report Scope:

In this report, the Global Cooling and Heating as a Service Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Cooling and Heating as a Service Market, By Service Model:

o   Subscription-Based

o   Pay-per-Use

o   Hybrid Models

o   Others        

• Cooling and Heating as a Service Market, By Service Type:

o   Cooling as a Service

o   Heating as a Service           

• Cooling and Heating as a Service Market, By End User:

o   Residential

o   Commercial

o   Industrial

o   Others           

• Cooling and Heating as a Service Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  Germany

§  France

§  United Kingdom

§  Italy

§  Spain

§  Belgium

o   Asia Pacific

§  China

§  India

§  Japan

§  South Korea

§  Australia

§  Indonesia

§  Vietnam

o   South America

§  Brazil

§  Colombia

§  Argentina

§  Chile

o   Middle East & Africa

§  Saudi Arabia

§  UAE

§  South Africa

§  Turkey

§  Israel

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Cooling and Heating as a Service Market.

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Company Information

• Detailed analysis and profiling of additional market players (up to five).

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