R718 Refrigerant Market: Water-Based Chillers, Industrial High-Temperature Heat Pumps, and Data Center Cooling to Drive Strong Market Expansion Through 2036

The global R718 Refrigerant Market was valued at USD 185.9 million in 2025 and is projected to expand at a strong CAGR of 11.5% to reach approximately USD 552.1 million by 2036, driven by rising interest in water as a refrigerant with zero GWP and zero ozone depletion potential, growing use of mechanical vapor compression and water-vapor heat pumps for industrial process heat, and adoption of water-based chillers for data centers and commercial buildings that need chilled water at moderate temperatures. The market encompasses R-718 by type (pure water, water-based binary mixtures, and water with corrosion inhibitors or additives), application, end user, and technology (water vapor compression systems and absorption or adsorption systems using water as a working fluid).

The R718 Refrigerant Market’s strong 11.5% CAGR reflects growing demand for refrigeration and heat pump technologies that avoid fluorinated gases entirely. R-718 is water, which is non-toxic, non-flammable, inexpensive, and has no climate impact as a refrigerant. Its main technical challenge is its very low vapor pressure at typical cooling temperatures, which requires large compressors operating under deep vacuum. In one commercial design, the eChiller from Efficient Energy, the evaporator runs at about 18 mbar and the compressor outlet at about 136 mbar, and the chiller reaches an EER above 20 in free-cooling mode. Absorption chillers using water as the refrigerant and lithium bromide as the absorbent are also a long-established part of the market.

Executive Snapshot

Why use water as a refrigerant?
Water has a GWP of zero, no ozone depletion potential, and no toxicity or flammability, so it is not affected by HFC quotas, PFAS rules, or flammable refrigerant safety limits. It also has a very high latent heat of vaporization. These properties make it attractive for long-life equipment where owners want to avoid future regulatory risk. For building owners and data center operators with sustainability targets, choosing water avoids the reporting and compliance burden associated with fluorinated refrigerants.

How do water vapor compression chillers work?
In water vapor compression chillers, a small fraction of the water evaporates under deep vacuum, cooling the remaining water, and a high-speed compressor raises the vapor pressure so it can condense at a higher temperature. In the eChiller, about 1% of the water evaporates, and the temperature rises from 16 °C to 52 °C across the compressor. Because pressures are so low, the CIBSE Journal notes that EN 378 certification and F-gas leak monitoring are not required. Because the refrigerant is water, any leak simply releases water vapor, which removes environmental and safety concerns associated with other refrigerants.

Where are R-718 chillers used?
Water-based chillers suit applications that need chilled water at 16 °C or above, such as data center and IT room cooling, chilled beams, and process cooling. Siemens and BT were early adopters of the eChiller, with BT operating high-density server systems cooled by eChillers since 2017 in Hamburg. As data centers move to warmer chilled water temperatures, the application range for R-718 chillers is widening. Higher chilled water temperatures in modern data centers increase the number of hours when free cooling is possible.

What role do absorption chillers play?
Absorption chillers use water as the refrigerant and lithium bromide as the absorbent, driven by heat rather than electricity. They are widely used in district cooling, combined heat and power plants, and industrial sites with waste heat. Absorption and adsorption systems make up a significant share of R-718 use, especially in Asia and the Middle East. Large absorption chillers can deliver several megawatts of cooling and are common in Japan, China, and South Korea.

How are water vapor heat pumps used in industry?
Mechanical vapor recompression (MVR) and steam-generating heat pumps compress water vapor to produce steam or high-temperature heat for evaporation, drying, and distillation in food, dairy, chemical, and pulp and paper industries. These systems can recycle waste heat and replace fossil-fuel boilers, supporting industrial decarbonization. Research and demonstration projects in Europe are extending water vapor heat pumps to higher temperatures and capacities. MVR systems are already widely used in evaporators for dairy, sugar, and chemical processing, and newer designs aim to deliver steam directly for broader process use.

What efficiency can R-718 chillers achieve?
The eChiller achieves an EER of 3.4 at 35 °C ambient and 7.4 at 21 °C, with a seasonal EER above 11 in northern German conditions. Performance is best when chilled water temperatures are relatively high and condensing temperatures are moderate. This makes R-718 chillers well suited to temperate climates and data center applications. Seasonal efficiency is especially important for data centers, which run cooling systems all year.

What additives are used?
Water used as a refrigerant can include corrosion inhibitors to protect metal components, and binary mixtures may be used in absorption systems. Water treatment is important to prevent scaling, corrosion, and biological growth. Specialty fluid suppliers provide inhibitor packages and monitoring services.

What are the limitations of R-718?
Low vapor pressure means large vapor volumes and the need for large or very high-speed compressors. Water freezes at 0 °C, which limits use to applications above freezing unless special technology is used. Capital costs can be higher than conventional chillers, and the supplier base is small. Manufacturers are working to reduce compressor size and cost through new turbo-compressor designs.

How does regulation affect the market?
HFC phase-down rules and the EU F-gas Regulation’s 2050 HFC phase-out encourage technologies without fluorinated gases. PFAS concerns around some HFOs also increase interest in natural refrigerants. Energy efficiency requirements for data centers and buildings favor high-efficiency free-cooling chillers. Building certification schemes also reward the use of zero-GWP refrigerants.

Which R718 refrigerant market segments are growing fastest?
Industrial high-temperature heat pumps; data center cooling; water vapor compression systems with centrifugal and multi-stage compressors; district cooling and utilities; and food processing and cold chain applications are the fastest-growing segments. Industrial heat pumps for steam generation in food, dairy, and chemical plants are expected to grow fastest, as companies look for ways to replace fossil-fuel boilers with electrified process heat.

Market Dynamics: R718 Refrigerant Market

  • Data centers emerging as a key application: Rising IT loads and warmer chilled water temperatures favor water-based chillers. Operators value zero-GWP solutions for sustainability reporting.
  • Industrial heat pumps driving growth: Water vapor compression for steam and process heat supports industrial decarbonization. Food, dairy, and chemical plants are early adopters.
  • Absorption chillers providing a stable base: Lithium bromide absorption chillers using water are widely used in district cooling and CHP plants. This is a mature but steady segment.
  • Small supplier base: A limited number of companies offer water vapor compression chillers. This limits competition but also constrains market growth.
  • Free cooling boosting efficiency: R-718 chillers can achieve very high efficiency in free-cooling mode. This lowers operating costs in temperate climates.
  • Regulatory certainty attracting investors: Water is unaffected by HFC and PFAS rules. Equipment owners see it as a future-proof choice.
  • Water treatment services: Specialty treatment and inhibitor services support reliable operation. These services add recurring revenue.
  • Research on higher-temperature systems: European research projects are developing water vapor heat pumps that deliver steam above 150 °C. Success would open large industrial markets.
  • Hybrid systems combining technologies: Some installations combine water-based chillers with conventional chillers for peak loads. This lets owners capture efficiency gains while managing capital costs.
  • Lifecycle cost focus: Buyers evaluating R-718 chillers compare total lifecycle cost, including energy and refrigerant management, rather than purchase price alone. Lower operating costs can offset higher capital costs over the equipment life.

Market Segmentation: R718 Refrigerant Market

By Type
  • Pure Water (R718)
  • Water-Based Binary Mixtures
  • Water with Corrosion Inhibitors / Additives
By Technology
  • Water Vapor Compression Systems
    • Centrifugal Compressor Systems
    • Multi-Stage Compression Systems
    • Steam / Vapor Ejector Systems
  • Absorption / Adsorption Systems Using Water as a Working Fluid
  • Other Technologies
By Application
  • Industrial Refrigeration & Cooling
  • Commercial HVAC Systems
  • Heat Pumps
    • Industrial High-Temperature Heat Pumps
    • Commercial Heat Pumps
  • Chillers
    • Industrial Process Chillers
    • Commercial Water Chillers
  • Cold Storage & Thermal Energy Storage
  • Other Applications
By Vertical
  • Food Processing & Cold Chain
  • Data Center Cooling
  • Pharmaceutical Manufacturing
  • Chemicals & Petrochemicals
  • Industrial Manufacturing
  • Commercial Buildings
  • District Cooling & Utilities
  • Other End Users
By Geography
  • North America: United States, Canada, and Mexico
  • Europe:  Germany, U.K., France, Italy, Spain, Russia, Benelux, Nordics, and Rest of Europe
  • Asia Pacific: China, Japan, India, South Korea, Australia, New Zealand, Taiwan, South East Asia, and Rest of Asia Pacific
  • Latin America: Brazil, Argentina, Columbia, Chile, Peru, and Rest of Latin America
  • Middle East: Saudi Arabia, United Arab Emirates, Oman, Qatar, and Rest of Middle East
  • Africa: Nigeria, Egypt, Ethiopia, South Africa, and Rest of Africa

Key Growth Drivers: R718 Refrigerant Market

  1. HFC phase-down and PFAS concerns: Restrictions on fluorinated gases increase interest in water as a refrigerant.
  2. Industrial decarbonization: Steam and process heat heat pumps reduce fossil fuel use in industry.
  3. Data center growth: AI and cloud computing increase demand for efficient cooling.
  4. District cooling expansion: Absorption chillers using water serve growing district cooling networks.
  5. Energy efficiency requirements: High EERs such as above 20 in free-cooling mode help meet efficiency targets.
  6. Waste heat recovery: Absorption and MVR systems can use waste heat, lowering energy costs.
  7. Simplified compliance: Low pressures mean EN 378 certification and F-gas monitoring are not required for some systems.
  8. Corporate sustainability reporting: Companies reporting refrigerant emissions favor zero-GWP options. Water eliminates refrigerant-related emissions entirely.
  9. Rising energy prices: High energy costs make efficient free-cooling chillers and heat recovery more attractive. This improves the payback on R-718 systems.

Regional Outlook: R718 Refrigerant Market

  • North America: Data centers and industrial facilities in the United States are exploring water-based chillers and MVR heat pumps, while absorption chillers are used in campuses and CHP plants. HFC restrictions and corporate sustainability goals support adoption. Cloud operators in the Pacific Northwest and the northern Midwest, where climates favor free cooling, are among the potential early adopters.
  • Europe: Europe leads in water vapor compression chillers and industrial heat pumps, with Germany home to Efficient Energy, whose eChiller has operated at a BT data center in Hamburg since 2017. The F-gas Regulation and industrial decarbonization policies support growth, and research projects are developing higher-temperature water vapor heat pumps. Industrial heat pump programmes in Germany, the Netherlands, and Denmark support water vapor systems for process steam.
  • Asia-Pacific: Japan, China, and South Korea have large markets for absorption chillers using water and lithium bromide, and Japan has developed water vapor heat pumps for industrial use. Growing data center markets in the region are a new opportunity. Large Chinese manufacturers of absorption chillers also export to other Asian and Middle Eastern markets.
  • Middle East & Africa: District cooling in the Gulf uses absorption chillers in some plants, especially where waste heat is available. High ambient temperatures limit the efficiency of water vapor compression chillers, so absorption is the main R-718 technology in the region. Industrial facilities with waste heat, such as refineries and power plants, are potential users of absorption systems.

Competitive Landscape: R718 Refrigerant Market

Key Players: Efficient Energy GmbH, GEA Group, Johnson Controls, Carrier Global Corporation, Trane Technologies, Mitsubishi Electric, Daikin Industries, Ltd., Kelvion, Alfa Laval, Danfoss, Mayekawa, Panasonic, LG Electronics, Samsung Electronics, Evapco

  • GEA Group [December 2025] — introduced the Grasso L XHP high-pressure screw compressor for industrial heat pumps with condensing temperatures up to 95 °C and 2–11 MW of heating capacity per compressor, reflecting growing demand for natural-refrigerant industrial heat pumps that complement water-vapor systems in process heat applications.
  • Dow [May 2026] — launched the Dow Coolant Care Network, an end-to-end service model for data center liquid cooling fluids, highlighting the growth of water-based cooling loops in AI data centers.

Consultant POV

The R718 Refrigerant Market’s strong 11.5% CAGR from USD 185.9 million in 2025 toward approximately USD 552.1 million by 2036 is anchored in water’s zero-GWP profile, growing industrial heat pump and data center demand, and regulatory pressure on fluorinated refrigerants. Companies such as Efficient Energy GmbH, GEA Group, and Johnson Controls are developing and supplying water-based and natural refrigerant technologies. Over the forecast period, higher-temperature water vapor heat pumps and data center chillers will be the main sources of growth. Equipment makers that can lower the capital cost of water vapor compressors and extend operating temperatures will unlock larger markets in data centers and industrial process heat. Demonstration projects and early reference installations will be important in building customer confidence.

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