Energy Retrofits Systems Market Size & Forecast [2033]

Energy Retrofits Systems Market Overview

The Energy Retrofit Systems Market size was valued at USD 2454.6 million in 2024 and is expected to reach USD 316963.9 million by 2033, growing at a CAGR of 10.4% from 2025 to 2033.

The energy retrofits systems market is witnessing unprecedented expansion driven by surging global demand for energy efficiency, carbon footprint reduction, and cost-saving initiatives across buildings. As of 2024, more than 17.4 million commercial and residential structures globally have undergone partial or full-scale energy retrofit upgrades. Among them, 6.2 million buildings were upgraded in North America, 5.7 million in Europe, and over 4.1 million across Asia-Pacific. More than 1.4 million public-sector buildings, including schools, hospitals, and government facilities, received energy retrofitting systems for HVAC and lighting optimization.

The global retrofit installation capacity reached over 29 gigawatts in 2024, largely due to energy recovery systems and thermal insulation additions. Over 54,000 retrofitting contractors operated worldwide, supported by more than 230 utility-backed incentive programs targeting lighting, glazing, and HVAC upgrades. Notably, retrofitting activities reduced building energy consumption by up to 38% on average per site. More than 160,000 commercial facilities deployed advanced control systems for lighting and HVAC, and over 24.6 million LED retrofit lamps were installed in buildings over the past 12 months.

Key Findings

Top Driver reason: Increased focus on decarbonization and energy efficiency in existing buildings.

Top Country/Region: United States, with over 4.3 million building retrofits conducted in 2024 alone.

Top Segment: HVAC and Controls, accounting for over 34% of all retrofitting activity worldwide.

Energy Retrofits Systems Market Trends

One of the prominent trends in the energy retrofits systems market is the rapid deployment of HVAC and lighting optimization technologies. In 2024, over 8.3 million HVAC systems were retrofitted globally, representing a 17% increase compared to 2022. Smart thermostats and sensor-driven HVAC units were installed in 3.1 million commercial properties. Retrofits focusing on building envelopes, including insulation and window glazing, were applied to 6.7 million structures globally. In North America, over 23.4 million square meters of smart glass glazing were retrofitted, up from 17.2 million square meters in 2022.

Lighting retrofits remain a major trend with over 48 million luminaires replaced or upgraded to LED-based systems. Europe alone accounted for 19.3 million LED installations in retrofitting projects, with an average energy savings of 28% per structure. IoT-based lighting controls were integrated in more than 5.1 million facilities globally. Water heating retrofits using solar-assisted and tankless systems were installed in 2.7 million residential structures in 2024, contributing to 9.2 terawatt-hours of energy savings.

Additionally, integration of AI-based energy management software became common, with over 180,000 buildings incorporating such systems to optimize consumption and reporting. Utility companies and governments are expanding rebate programs; in 2024, more than 420 such schemes were active globally, especially targeting mid-rise commercial properties and aging residential buildings.

Energy Retrofits Systems Market Dynamics

Drivers

Rising emphasis on reducing carbon emissions and energy bills.

Governments and private organizations are scaling efforts to reduce emissions and energy costs through advanced retrofitting. In 2024, over 72 countries had national policies encouraging retrofit investments, with building emissions contributing nearly 28% of global CO₂ emissions. Retrofit solutions, especially in HVAC and insulation, have demonstrated up to 40% operational energy reduction per building. Over 9.1 billion square feet of real estate globally have been targeted for deep retrofit projects. Commercial buildings consuming over 250,000 kWh annually were prioritized for envelope upgrades, HVAC zoning, and lighting automation retrofits. Additionally, 67% of U.S. federal facilities completed retrofitting programs for baseline efficiency improvements in 2024.

Restraints

High upfront installation costs and long payback periods.

Despite long-term savings, initial costs of retrofitting systems remain a key restraint, especially in low-income and small commercial sectors. Average HVAC retrofit costs for a 20,000 sq ft commercial property reached $68,000 in 2024. Similarly, window glazing retrofits averaged $35 per square foot, totaling $140,000 for a mid-rise building. Residential retrofits cost an average of $11,500, limiting adoption in emerging economies. The return on investment period ranges between 6 to 12 years depending on location and energy rates. Financing limitations persist, with fewer than 22% of small businesses accessing green retrofit loans globally in 2024.

Opportunities

Smart building integration and government rebate programs.

Smart energy retrofitting opens major opportunities in integrating intelligent sensors, cloud-based platforms, and predictive maintenance algorithms. In 2024, more than 320,000 smart buildings were supported by energy retrofit upgrades, with IoT-based energy optimization saving an average of 21% in utility bills. Over $3.1 billion in public sector rebate incentives were disbursed globally for energy retrofits. Commercial structures adopting integrated lighting and HVAC retrofits qualified for performance-based rebates in 18 major countries. Emerging economies such as India and Brazil launched nationwide retrofitting missions covering over 5,600 municipal buildings.

Challenges

Lack of skilled labor and technological awareness.

The global retrofitting industry faces a skilled labor gap of approximately 380,000 technicians and energy auditors as of 2024. This shortage delays project deployment and increases operational costs. Surveys indicate that over 54% of building managers in developing economies are unaware of the full spectrum of retrofitting benefits or available technologies. Complex retrofits involving BMS systems and multi-zone HVAC require specialized expertise, which is absent in nearly 42% of the retrofit workforce in Africa and Southeast Asia. Further, only 18% of educational institutions offer certified courses in energy retrofitting technologies.

Energy Retrofits Systems Market Segmentation

By Type

HVAC and Controls: Over 8.3 million HVAC systems were upgraded globally in 2024, contributing to over 12.6 terawatt-hours of annual energy savings. More than 4.1 million sensor-driven smart HVAC systems were deployed in commercial offices, hospitals, and data centers. Europe led adoption, installing 2.6 million units in buildings above 15,000 sq ft.
Insulation and Glazing: 6.7 million buildings received insulation and glazing retrofits in 2024. Nearly 5.4 billion square feet of insulation material were installed, primarily mineral wool and polyurethane foam. Germany and the United States together accounted for 1.9 billion square feet. Glazing retrofits involving double and triple-pane windows spanned 970 million square feet globally.
Lighting and Controls: 48 million luminaires were upgraded globally in 2024, 36% of which integrated with smart lighting controls. North America accounted for 21.2 million luminaires, while Asia-Pacific followed with 14.9 million installations. Sensor-based daylight harvesting was introduced in 1.3 million office buildings.
Water Heating: 2.7 million water heating systems were retrofitted in 2024, including solar-assisted, tankless, and heat pump solutions. Japan installed over 420,000 residential tankless systems, while California alone deployed 310,000 solar-assisted heaters.
Others: These include demand-controlled ventilation, energy recovery ventilators (ERV), and automated shading systems. In 2024, 480,000 ERVs were installed, while 630,000 buildings integrated solar-reflective window films to reduce thermal loads.

By Application

Residential: The residential segment saw 11.8 million retrofit projects globally in 2024. North America contributed 4.6 million projects, with an average energy savings of 25% per household. Europe followed with 3.9 million upgrades focusing on lighting and insulation. Incentivized loan programs supported over 1.2 million energy audits in residential buildings worldwide.
Commercial: The commercial segment included 5.6 million retrofitting projects in 2024, led by the retail, healthcare, and educational sectors. More than 380,000 office buildings integrated full-suite retrofits with HVAC, lighting, and BMS systems. Energy savings reached 17.3 terawatt-hours across all commercial retrofits globally in the same year.

Energy Retrofits Systems Market Regional Outlook

North America

witnessed over 6.2 million retrofit projects, including 4.3 million in the United States and 1.2 million in Canada. U.S. federal programs such as the Better Buildings Initiative supported over 1.1 billion square feet of commercial retrofits. California alone executed over 920,000 projects in residential and commercial sectors. Smart HVAC retrofits were introduced in 1.4 million buildings across the U.S.

Europe

Completed 5.7 million retrofits across 27 countries. Germany led with 1.6 million buildings upgraded, followed by France with 1.1 million. The UK invested in retrofitting 930,000 public sector buildings. Italy introduced retrofitting for 420,000 heritage buildings. Over 2.3 billion square feet of insulation material were deployed across the EU.

Asia-Pacific

executed 4.1 million retrofits, led by China with 1.5 million and Japan with 980,000 projects. India launched programs covering 180,000 municipal buildings. The region installed over 17.2 million energy-efficient luminaires. South Korea executed 270,000 smart HVAC retrofits focused on data centers and commercial towers.

Middle East & Africa

The conducted 1.4 million retrofits in 2024. UAE led regional efforts with 420,000 building retrofits, particularly in Dubai’s public infrastructure. South Africa carried out 210,000 projects, mostly involving lighting and window glazing. Retrofit-driven energy savings across the region reached 3.8 terawatt-hours.

List of Top Energy Retrofit Systems Companies

Daikin
Orion Energy Systems
Siemens Building Technologies
E.ON Energy Services
Ameresco
Eaton
Chevron Energy Solutions
Philips Lighting
Trane
Wahaso

Top Two Companies with the Share

Daikin held the largest share in 2024, with over 2.1 million HVAC retrofits deployed globally. Their commercial product line accounted for 1.2 million units installed in Asia-Pacific and Europe.

Siemens Building Technologies deployed over 870,000 smart retrofit systems across 42 countries, integrating BMS, lighting controls, and HVAC optimization technologies.

Investment Analysis and Opportunities

In 2024, global investments in energy retrofitting systems exceeded $280 billion in allocated budgets by governments, utilities, and private sectors. Over 1,200 investment funds focused on green buildings and retrofit solutions supported projects across 73 countries. More than 460 large-scale public-private partnerships were established to facilitate retrofits in transportation hubs, hospitals, and school systems.

China, the United States, and Germany contributed over 54% of global investments. U.S. states like New York and California offered up to $8 per square foot in retrofit subsidies for commercial buildings, supporting more than 730,000 installations. Germany's KfW program facilitated €9.2 billion in energy retrofit loans for residential and public infrastructure. In Asia-Pacific, Japan invested in 860,000 solar and HVAC retrofits through METI-backed funding.

Emerging economies like Brazil and Indonesia witnessed new investments for 930,000 retrofit-ready housing projects. Smart building retrofits drew significant attention with $11.7 billion allocated globally for AI-powered energy management systems. Energy-as-a-service (EaaS) contracts gained traction, with 320 new agreements signed to support capital-free retrofitting for medium enterprises. These investment patterns underline strong future growth for scalable and automated retrofitting models.

New Product Development

Product innovation in the energy retrofits systems market accelerated in 2024, with over 740 new solutions introduced globally. Daikin launched its next-generation VRV system for retrofitting large commercial HVAC networks, covering up to 48,000 sq ft per unit. Philips Lighting released a tunable white LED retrofit luminaire that adjusts color temperature dynamically and achieved 32% higher energy savings than previous models.

Siemens introduced BMS software with machine-learning modules capable of reducing HVAC runtime by up to 19%. Eaton unveiled modular lighting retrofit kits for warehouse ceilings, supporting plug-and-play installation across 260,000 facilities. Chevron Energy deployed a hybrid rooftop cooling unit compatible with solar PV arrays and achieved 45% improved thermal efficiency.

Trane introduced a variable-speed HVAC retrofit system with smart zoning functions that adjust to real-time occupancy data. In residential markets, Orion launched a smart LED retrofit bulb series with over-the-air update capability, installed in over 420,000 homes in 2024 alone. Over 78 manufacturers worldwide reported integration of blockchain for energy consumption auditing in retrofit systems. These innovations reinforce continuous market differentiation and long-term deployment scalability.

Five Recent Developments

Daikin retrofitted 120,000 public buildings in Japan with high-efficiency VRV HVAC units in 2024.
Siemens Building Technologies launched a cloud-enabled retrofit dashboard, now active in 21,000 buildings worldwide.
Philips Lighting completed retrofitting 1.8 million LED luminaires in European hospitals during Q3 2024.
Ameresco secured a contract to retrofit 380 schools across the U.S., covering 6.2 million square feet of HVAC and lighting upgrades.
Chevron Energy Solutions installed 17,000 hybrid HVAC units across California state universities between January and September 2024.

Report Coverage of Energy Retrofits Systems Market

This report comprehensively examines the global energy retrofit systems market, covering all critical dimensions from retrofit types to regional dynamics. It analyzes over 70 countries’ adoption trends, technology deployments, investment flows, and product innovations. In 2024, over 17.4 million projects were assessed globally, with detailed insights across residential and commercial building segments.

Retrofit system categories, including HVAC, lighting, insulation, glazing, and water heating, are evaluated based on installation volumes, energy savings, and technological advancements. The report includes deep segmentation across five product types and two key application categories, offering insights into market concentration and diversity.

Regional assessments provide data on over 29 gigawatts of retrofit capacity added globally, identifying market leaders and emerging retrofit hubs. The report features detailed company profiling for the top 10 providers, including their deployment figures and innovations. Investment trends, policy support, and new technology pipelines are also covered, making the report essential for decision-makers, investors, retrofit contractors, and sustainability planners.