The Tankless Water Heater Market is estimated to be valued at USD 4.11 billion in 2024, exhibiting a CAGR of 8.5% over the forecast period (2024-2031). Rising demand for energy-efficient water heating solutions and increasing spending on infrastructure development projects across the commercial and residential sectors are driving the growth of the tankless water heater market. Furthermore, growing adoption of smart and IoT-enabled tankless water heaters is also expected to support the market expansion over the coming years.
Rising Infrastructure Development
Growing population and rapid urbanization have bolstered infrastructure development activities globally. This has significantly driven the demand for tankless water heaters from various end-use sectors such as hospitality, healthcare, and commercial buildings. Tankless water heaters offer optimized space utilization and provide hot water on-demand.
Growing Demand for Energy-Efficient Solutions
Stringent regulations regarding energy conservation and rising energy costs have increased the focus on energy-efficient water heating technologies. Tankless water heaters are highly energy-efficient as they heat water only as required and eliminate standby heat losses associated with storage tank water heaters. Their energy savings and lower operating costs are fostering their adoption rates.
Increasing energy efficiency requirements are driving the tankless water heater market
Governments across various countries are implementing stringent regulations regarding energy efficiency of appliances. Tankless water heaters are more energy efficient as compared to traditional storage tank water heaters as they heat water only when it is required. This on-demand heating mechanism significantly reduces standby heat losses. According to the Department of Energy, a tankless water heater uses 8% to 14% less energy annually as compared to a storage tank water heater. The Energy Policy Act of 2020 set the minimum thermal efficiency standards for tankless water heaters at 0.82. Such stringent regulations regarding energy efficiency are driving higher adoption of tankless water heaters.
Growing demand for space saving water heating solutions
With increasing urbanization and decreasing living spaces, there is a growing demand for space saving products across various application areas including water heating. Tankless water heaters occupy very less space as compared to traditional storage tank water heaters as they do not require a large tank to store hot water. This makes them an ideal solution for space constrained environments like apartments, condominiums, recreational vehicles, etc. According to a study, tankless water heaters can reduce the required space by up to 80%. The space saving capability of tankless water heaters is a major market driver.
High initial installation and equipment cost are restraining the market growth
Although tankless water heaters provide long term savings on energy bills due to their high efficiency, their initial purchase and installation cost is significantly higher than traditional storage tank water heaters. On an average, the installation cost of a tankless water heater ranges between US$1,000 and US$2,500 depending on the product features, installation complexity, labor, etc. This high upfront cost makes them less affordable for price sensitive customers and households with smaller hot water requirements. The payback period ranges between 5 and 10 years, restraining faster adoption.
Requirement of specialized technicians for installation and servicing
Tankless water heaters have complex designs involving advanced technologies like condensing heat exchangers which require specialized technical knowledge for installation as well as servicing. Most normal plumbers do not have expertise in installing tankless units. This leads to higher labor costs. Lack of trained technicians in many regions pose a challenge for installation and after sales service of tankless water heaters, especially in rural areas. This requirement of specialized skills is limiting the market growth.
Increasing new residential and commercial construction
Growing population, urbanization and rising incomes are fueling new residential construction activities across developed and developing markets. According to the US Census Bureau, over 1.3 million new privately owned housing units were started in 2020. Tankless water heaters are increasingly being installed in new residential and commercial building projects due to their various benefits like superior energy efficiency, space-saving capability and demand based operation. This new construction market presents a major growth opportunity.
Growing preference for smart and connected water heaters
With increasing digitization, there is a growing preference for smart and connected products across various categories including heating equipment. Tankless water heaters are being integrated with smart control modules that enable remote monitoring and control with smartphone apps. Features like leak detection, error notifications, energy consumption tracking are driving demand for smart tankless water heaters. Tech-savvy millennials and Gen Z have high affinity towards such smart, WiFi-enabled products. This growing demand for IoT-enabled water heaters presents an opportunity for tankless water heater manufacturers to expand their smart product portfolio.
Link - https://www.coherentmarketinsights.com/market-insight/tankless-water-heater-market-3358
Key Developments
- On February 23, 2024, Smith announced that it will showcase its newest advancements in heating technology at the 2024 NAHB International Builders' Show (IBS).
- In 2023, the German brand Clage introduced its next-generation water heaters in India.
- In 2022, Bradford White Water Heaters, a manufacturer specializing in residential and commercial water heating and storage solutions, launched the KwickShot. This reliable and easily installed tankless electric water heater is available in both thermostatic and non-thermostatic models, catering to a wide range of water temperature requirements for various everyday applications. This introduction has significantly enhanced the company’s product portfolio.
- In 2022, Rinnai, a leading manufacturer of tankless water heaters, introduced the New RE Series Tankless Water Heater with Smart-Circ Intelligent Recirculation. This innovative product offers several notable features
Key Players
Rheem Manufacturing Company, Rinnai Corporation, O. Smith, Noritz America Corp., Ariston Thermo Group, Kyungdong Navien Co. Ltd., Stiebel Eltron GmbH & Co. KG, Bradford White Corp., Haier Electronics Group Co Ltd., Bajaj Electricals Ltd, Robert Bosch LLC, Navien Inc., Eccotemp Systems, LLC, Chronomite Laboratories Inc., Intellihot, Stiebel Eltron, Niagara Industries Inc., Vordosch, and Zanskar
