Energy Retrofit Systems Market Size, Share & Trends Analysis Report By Product (Envelope, LED Retrofit Lighting), By Application (Residential, Commercial, Institutional), By Region, And Segment Forecasts, 2024 - 2030

Market Size & Trends

The global energy retrofit systems market size was estimated at USD 202.56 billion in 2023 and is expected to expand at a CAGR of 7.4% from 2024 to 2030. The global market for energy retrofit systems is experiencing significant growth, driven by the urgent need to enhance energy efficiency and reduce carbon emissions across various sectors. These systems involve the modification of existing buildings and infrastructures to improve energy performance, incorporating advanced technologies such as energy-efficient lighting, HVAC systems, insulation, and renewable energy sources. With increasing regulatory pressures and environmental concerns, governments worldwide are implementing stringent energy efficiency standards and offering incentives for retrofitting projects. This regulatory push, combined with the rising cost of energy and the growing awareness of sustainability issues among consumers and businesses, is propelling the demand for energy retrofit solutions.

In commercial and residential buildings, energy retrofitting is becoming an essential strategy to achieve sustainability goals and reduce operational costs. Commercial buildings, in particular, present vast opportunities for retrofitting due to their high energy consumption and the potential for significant energy savings. Retrofitting not only helps in reducing energy bills but also enhances the value of the properties and improves indoor environmental quality. In the residential sector, homeowners are increasingly adopting energy retrofit measures to lower energy costs, enhance comfort, and reduce their carbon footprint. The integration of smart technologies and IoT in retrofit systems further augments energy management capabilities, allowing for real-time monitoring and optimization of energy use.

The industrial sector is also a major contributor to the energy retrofit systems market, driven by the need to improve energy efficiency in manufacturing processes and reduce greenhouse gas emissions. Industries such as automotive, food and beverage, and chemicals are investing heavily in retrofitting existing facilities with energy-efficient technologies to meet regulatory requirements and achieve sustainability targets. Moreover, the availability of financing options and the emergence of energy service companies (ESCOs) are making it easier for industries to undertake large-scale retrofit projects. The global market is witnessing robust growth across regions, with North America and Europe leading due to their early adoption of energy efficiency measures, while Asia-Pacific is emerging as a key market owing to rapid industrialization and urbanization.

Market Concentration & Characteristics

The market is characterized by its dynamic and competitive nature, with both established players and innovative newcomers striving for market dominance. Leading companies such as Johnson Controls, Honeywell International, Siemens AG, Schneider Electric, and Daikin Industries have a long-standing presence in the market, boasting extensive experience and established customer bases. These companies offer a wide range of retrofit solutions, including energy-efficient lighting, HVAC systems, insulation, and renewable energy integration. However, the industry is also witnessing the emergence of startups and smaller companies introducing disruptive technologies and business models, challenging the traditional market landscape.

Companies are increasingly focusing on new product launches in the market to increase their foothold in the market. For instance, in December 2023, JCP&L launched a set of energy efficiency programs worth USD 964.2 million, which are expected to begin on January 01, 2025. The programs are designed to achieve electricity saving by providing financial support to small businesses and commercial customers for energy efficiency. 

Product Insights

Envelope emerged as the largest product segment, with a revenue share of about 51.56% in 2023, and is expected to witness robust growth over the forecast period. This dominance can be attributed to the critical role that building envelopes play in enhancing energy efficiency. Building envelopes, which include walls, roofs, windows, and doors, are fundamental in minimizing energy loss and improving thermal comfort within buildings. Advanced materials and technologies used in envelope retrofits, such as high-performance insulation, energy-efficient windows, and reflective roofing, significantly reduce heating and cooling demands. This, in turn, leads to substantial energy savings and lower greenhouse gas emissions. The increasing awareness of these benefits, coupled with supportive government policies and incentives aimed at promoting energy-efficient buildings, is driving the adoption of envelope retrofits on a global scale.

Moreover, the envelope segment is poised for robust growth over the forecast period. The continued rise in energy costs and the growing emphasis on sustainable building practices are expected to further stimulate demand for envelope retrofitting. Innovations in materials science and building technology are also enhancing the effectiveness and appeal of these solutions. For instance, developments in phase change materials, vacuum insulation panels, and smart windows are offering unprecedented energy efficiency improvements. In addition, the trend towards green building certifications and the integration of renewable energy systems, such as building-integrated photovoltaics, are likely to boost the adoption of advanced envelope solutions. As more building owners and developers recognize the long-term economic and environmental benefits of envelope retrofits, this segment is expected to maintain its leading position in the market.

Application Insights

Commercial emerged as the largest application segment with a market share of about 55.48% in 2023 and is expected to witness robust growth over the forecast period. This predominance is largely driven by the significant energy consumption associated with commercial buildings, which include offices, retail spaces, hotels, and healthcare facilities. These buildings often have high energy demands due to extensive use of lighting, HVAC systems, and other energy-intensive operations. Consequently, retrofitting these structures with energy-efficient technologies offers substantial opportunities for energy savings and operational cost reductions. Enhanced energy performance through retrofitting not only lowers utility bills but also increases property value, improves occupant comfort, and meets regulatory compliance. The strong economic incentives and regulatory pressures, combined with growing corporate sustainability initiatives, are propelling the adoption of energy retrofit systems in the commercial sector.

Furthermore, the commercial segment is expected to experience robust growth over the forecast period, driven by ongoing urbanization and the increasing focus on sustainable building practices. Innovations in retrofit technologies, such as advanced HVAC systems, smart building management systems, and energy-efficient lighting solutions, are making it easier and more cost-effective for commercial building owners to upgrade their facilities. In addition, the rise of green building certifications, such as LEED and BREEAM, is encouraging the commercial sector to invest in energy retrofits to achieve higher sustainability standards. Financial mechanisms, including energy performance contracts and government incentives, are also facilitating the implementation of retrofit projects. As businesses continue to prioritize energy efficiency and environmental stewardship, the commercial segment is set to remain a dominant force in the market, driving significant expansion and technological advancement.

Regional Insights

North America energy retrofit systems market is expected to grow at a CAGR of 6.9% from 2024 to 2030. This anticipated expansion is attributed to several converging factors propelling the demand for energy-efficient retrofit solutions throughout the region. As energy costs continue to rise and environmental concerns heighten, there is a growing recognition of the urgent need to improve the energy efficiency of existing buildings and infrastructure. Governments across North America are implementing stringent energy efficiency regulations and offering various incentives to encourage retrofitting initiatives. Federal, state, and local programs provide financial incentives such as tax credits, grants, and rebates to incentivize property owners and developers to invest in retrofit projects. Moreover, technological advancements are driving innovation in retrofit solutions, making them more effective, affordable, and accessible. The integration of smart building technologies, energy management systems, and renewable energy sources is revolutionizing retrofitting practices, enabling substantial energy savings and reductions in carbon emissions. With the commercial sector representing a significant portion of the market, driven by the need to reduce operational costs and comply with sustainability standards, the North America market presents promising opportunities for economic growth, environmental sustainability, and technological advancement across the region.

U.S. Energy Retrofit Systems Market Trends

The U.S. energy retrofit systems market is expected to grow at a CAGR of 6.8% from 2024 to 2030. This projected growth reflects a confluence of factors driving increased demand for energy-efficient retrofit solutions. As energy costs escalate and environmental concerns mount, there is a growing recognition of the imperative to enhance the energy efficiency of existing buildings and infrastructure. This imperative is further bolstered by supportive government policies, incentives, and regulations aimed at promoting energy conservation and sustainability. Federal initiatives, including tax credits, grants, and loan programs, incentivize building owners and operators to invest in retrofit projects. In contrast, state and municipal programs complement these efforts with localized incentives and regulations. Technological advancements are also playing a crucial role, making retrofit solutions more effective, affordable, and accessible. The integration of smart building technologies, energy management systems, and renewable energy sources is revolutionizing retrofitting practices, enabling significant energy savings and carbon emission reductions. With the commercial sector, encompassing a vast array of buildings, poised to be a key driver of growth, the U.S. market represents a promising avenue for innovation, economic development, and environmental stewardship as the nation strives towards a more sustainable future.

Europe Energy Retrofit Systems Market Trends

Europe emerged as the largest region globally, with a market share of about 47.62% in 2023, and is expected to witness robust growth over the forecast period. This leading position can be attributed to the region's strong regulatory framework and long-standing commitment to sustainability and energy efficiency. European countries have implemented stringent energy performance standards and ambitious climate targets, which drive the demand for energy retrofit systems. The European Union’s policies, such as the Energy Performance of Buildings Directive (EPBD) and the Renovation Wave initiative, aim to significantly improve the energy efficiency of existing buildings across the continent. These policies not only mandate energy-saving measures but also provide financial incentives and support for retrofitting projects, encouraging building owners and operators to adopt advanced energy retrofit solutions. Moreover, Europe’s focus on reducing greenhouse gas emissions and transitioning to a low-carbon economy has further propelled the market, as retrofitting existing structures is seen as a crucial step in achieving these environmental goals.

Looking ahead, the European market is expected to witness robust growth over the forecast period. The region’s proactive approach to sustainability, combined with continuous advancements in retrofit technologies, is set to drive market expansion. Innovations in smart building technologies, high-performance insulation, and renewable energy integration are making retrofitting projects more efficient and cost-effective. In addition, increasing awareness among consumers and businesses about the long-term benefits of energy efficiency, such as reduced energy costs and enhanced building performance, is fueling the market demand. The commercial and residential sectors are particularly poised for growth as building owners seek to comply with regulatory requirements and enhance property value. Furthermore, government initiatives and funding programs aimed at boosting economic recovery post-pandemic are likely to include substantial investments in green building projects, providing an additional impetus for the market. As Europe continues to prioritize energy efficiency and sustainability, the region is well-positioned to maintain its leadership in the global market, fostering innovation and driving significant environmental and economic benefits.

Europe energy retrofit systems market is expected to grow at a CAGR of 7.5% from 2024 to 2030. This anticipated expansion is driven by a combination of factors fueling the demand for energy-efficient retrofit solutions across the continent. Europe has long been at the forefront of environmental sustainability efforts, with ambitious climate targets and stringent regulations driving the adoption of energy-efficient building practices. The European Union's initiatives, such as the Energy Performance of Buildings Directive (EPBD) and the Renovation Wave Strategy, prioritize energy efficiency improvements in existing buildings to reduce carbon emissions and achieve climate goals. Additionally, financial incentives and funding programs at both the EU and national levels provide support for retrofitting projects, including grants, subsidies, and favorable financing options. Technological advancements are also contributing to market growth, with innovations in materials, building automation, and renewable energy integration enhancing the effectiveness and affordability of retrofit solutions. The commercial and residential sectors are key drivers of demand as building owners and occupants seek to lower energy costs, improve comfort, and meet regulatory requirements. With Europe's strong commitment to sustainability and climate action, the energy retrofit systems market offers promising opportunities for economic development, environmental stewardship, and technological innovation across the region.

Germany energy retrofit systems market is expected to grow at a CAGR of 7.7% from 2024 to 2030. This anticipated growth is driven by underlining the country's commitment to energy efficiency and sustainability. Germany has long been among the global leaders in renewable energy adoption and environmental policies, with ambitious targets for carbon emissions reduction and energy transition. The government's Energiewende initiative aims to transition to a low-carbon, renewable, energy-based economy, placing a strong emphasis on improving the energy efficiency of existing buildings. Various national and regional programs offer financial incentives and support for retrofitting projects, including grants, subsidies, and favorable financing options. Moreover, stringent energy performance standards and regulations further drive the demand for energy-efficient retrofit solutions. Technological innovations, particularly in areas such as building automation, insulation materials, and renewable energy integration, are enhancing the effectiveness and affordability of retrofit measures. The commercial, residential, and industrial sectors are all significant contributors to market growth, as stakeholders seek to reduce energy costs, enhance comfort, and meet sustainability targets. With its progressive policies and commitment to innovation, the Germany market presents promising opportunities for economic development, environmental sustainability, and technological advancement over the forecast period.

Asia Pacific Energy Retrofit Systems Market Trends

The Asia Pacific energy retrofit systems market is poised for significant growth, exceeding a projected CAGR of 7.7% between 2024 and 2030. This anticipated growth is driven by propelling the demand for energy-efficient retrofit solutions across the region. Asia Pacific countries are experiencing rapid urbanization, industrialization, and economic development, leading to an increase in energy consumption and environmental challenges. Governments across the region are recognizing the importance of improving energy efficiency and reducing carbon emissions to achieve sustainable development goals. As a result, there is a growing focus on implementing stringent energy efficiency standards, promoting green building practices, and offering financial incentives for retrofitting projects. Technological advancements, particularly in areas such as smart building technologies, energy management systems, and renewable energy integration, are further driving market growth by enhancing the effectiveness and affordability of retrofit measures. The commercial, residential, and industrial sectors are all significant contributors to market expansion as stakeholders seek to lower energy costs, enhance operational efficiency, and meet sustainability targets. With its dynamic economic growth and increasing environmental awareness, the Asia Pacific market presents promising opportunities for economic development, environmental sustainability, and technological innovation in the years ahead.

The China energy retrofit systems market is poised for significant growth, with a projected CAGR of 7.1% from 2024 to 2030. This anticipated expansion is fueled by various factors driving the demand for energy-efficient retrofit solutions across the country. China, as the world's largest emitter of greenhouse gases, is increasingly prioritizing energy efficiency and environmental sustainability as key components of its development strategy. The government has implemented ambitious energy-saving targets and environmental regulations to address air pollution and mitigate climate change impacts. As a result, there is a growing emphasis on retrofitting existing buildings, industrial facilities, and infrastructure to improve energy efficiency and reduce carbon emissions. Financial incentives, including subsidies, tax breaks, and favorable financing options, are being provided to incentivize retrofit projects. Technological advancements, particularly in areas such as building automation, insulation materials, and renewable energy integration, are also driving market growth by enhancing the effectiveness and affordability of retrofit measures. Additionally, the rapid urbanization and industrialization occurring in China are increasing energy demand and environmental pressures, further driving the need for energy-efficient retrofit solutions across sectors. With its strong government support, growing environmental awareness, and expanding market opportunities, China's energy retrofit systems market presents promising prospects for economic development, environmental sustainability, and technological innovation in the coming years.

Central & South America Energy Retrofit Systems Market Trends

The Central and South American energy retrofit systems market is anticipated to witness substantial growth, projected at a CAGR of approximately 6.5% over the forecast period. Central and South American countries are increasingly recognizing the importance of energy efficiency and sustainability in their development agendas, driven by concerns over energy security, environmental degradation, and climate change impacts. Governments across the region are implementing policies and regulations to promote energy conservation and reduce carbon emissions, providing incentives such as tax incentives, grants, and financing options to encourage retrofitting initiatives. Additionally, the region's growing urbanization and industrialization are driving up energy consumption and environmental pressures, further emphasizing the need for energy-efficient retrofit solutions in buildings, industries, and infrastructure. Technological advancements, including innovations in building materials, energy management systems, and renewable energy integration, are also contributing to market growth by improving the effectiveness and affordability of retrofit measures. With its expanding market opportunities, supportive regulatory environment, and increasing awareness of environmental issues, the Central and South American market presents promising prospects for economic development, environmental sustainability, and technological innovation in the years ahead.

The energy retrofit systems market in Brazil is expected to grow at a CAGR of approximately 7.6% over forecast period. This anticipated growth is propelled by driving the demand for energy-efficient retrofit solutions across the country. Brazil, as a rapidly developing economy and a significant contributor to global greenhouse gas emissions, is increasingly prioritizing energy efficiency and sustainability in its development agenda. The government has been implementing policies and incentives to promote energy conservation and reduce carbon emissions, including tax incentives, subsidies, and financing options to encourage retrofitting initiatives. Brazil's growing urbanization and industrialization are increasing energy consumption and environmental pressures, further highlighting the importance of energy-efficient retrofit solutions in buildings, industries, and infrastructure. Technological advancements, particularly in building materials, energy management systems, and renewable energy integration, are also contributing to market growth by enhancing the effectiveness and affordability of retrofit measures. With its expanding market opportunities, supportive regulatory framework, and growing awareness of environmental issues, the Brazil energy retrofit systems market presents promising prospects for economic development, environmental sustainability, and technological innovation in the coming years.

Middle East & Africa Energy Retrofit Systems Market Trends

The Middle East & Africa energy retrofit systems market is anticipated to experience steady growth, forecasted at a CAGR of approximately 5.6% over the forecast period. This projected expansion reflects the region's increasing recognition of the importance of energy efficiency and sustainability in addressing energy challenges and mitigating environmental impacts. Governments across the Middle East & Africa are implementing policies and initiatives to promote energy conservation and reduce carbon emissions, including incentives such as tax breaks, subsidies, and financing options to encourage retrofitting projects. The region's growing urbanization, industrialization, and infrastructure development are driving up energy consumption and environmental pressures, underscoring the need for energy-efficient retrofit solutions in buildings, industries, and infrastructure. Technological advancements in building materials, energy management systems, and renewable energy integration are further driving market growth by improving the effectiveness and affordability of retrofit measures. With its expanding market opportunities, supportive regulatory environment, and increasing awareness of environmental issues, the Middle East & Africa energy retrofit systems market presents promising prospects for economic development, environmental sustainability, and technological innovation in coming years.

The UAE energy retrofit systems market is poised for steady growth, projected to expand at a CAGR of approximately 5.8% over the forecast period. The UAE, with its rapid economic development and urbanization, is increasingly prioritizing energy efficiency and sustainability as key components of its growth strategy. The government has been implementing policies and initiatives to promote energy conservation and reduce carbon emissions, including incentives such as tax breaks, subsidies, and financing options to incentivize retrofitting projects. The UAE's burgeoning infrastructure, including commercial and residential buildings, is driving up energy consumption and environmental pressures, highlighting the importance of energy-efficient retrofit solutions. Technological advancements in building materials, energy management systems, and renewable energy integration further drive market growth by enhancing the effectiveness and affordability of retrofit measures. With its expanding market opportunities, supportive regulatory environment, and growing awareness of environmental issues, the UAE market presents promising prospects for economic development, environmental sustainability, and technological innovation over the forecast period.

Key Energy Retrofit Systems Company Insights

The market is moderately fragmented, with a sizable number of medium—and large-sized companies. Key players mainly cater to stationary, mobile, portable, and other industries. To maintain and expand their market share, key companies are adopting several organic and inorganic growth strategies, such as facility expansion, mergers and acquisitions, and joint ventures.

• In January 2024, Danfoss partnered with Google to provide energy-efficiency solutions for data centers. Google will leverage Danfoss’ heat reuse modules, which will allow Google to capture and reuse heat generated by data centers as a renewable energy source for on-site heating and neighboring commercial and residential buildings, communities, and industries requiring heat.

• In January 2024, Honeywell collaborated with NXP to integrate NXP semiconductors' neural network-enabled, industrial-grade application processors into Honeywell’s building management systems (BMS).

Energy Retrofit Systems Market Report Scope

Global Energy Retrofit Systems Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global energy retrofit systems market report based on product, application, and region:

• Product Outlook (Revenue, USD Billion, 2018 - 2030)

  • Envelope

  • LED Retrofit Lighting

  • HVAC Retrofit

  • Appliances

• Application Outlook (Revenue, USD Billion, 2018 - 2030)

  • Residential

    • Single-family

    • Apartments / Condominiums

  • Commercial

    • Food sales & service

    • Mercantile

    • Office Buildings

    • Warehouse

    • Others

  • Institutional

    • Education

    • Healthcare

    • Worship Buildings

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

      • California

      • Ohio

      • Texas

      • Vermont

      • Massachusetts

      • Michigan

      • Illinois

      • New York

      • Washington

      • Pennsylvania

      • Oregon

    • Canada

    • Mexico

  • Europe

    • Germany

    • Russia

    • UK

    • Spain

    • Italy

  • Asia Pacific

    • China

    • Japan

    • South Korea

    • India

    • Australia

  • Central & South America

    • Brazil

    • Colombia

    • Paraguay

  • Middle East & Africa

    • Saudi Arabia

    • UAE

    • South Africa

    • Egypt