Tankless Water Heater Market By Fuel Type (Electric, Gas), By Application (Residential, Commercial), And Region for 2024-2031

Tankless Water Heater Market Valuation – 2024-2031

An increasing emphasis on energy efficiency and sustainability. As customers and governments throughout the world become more concerned about environmental impact and energy usage, tankless water heaters provide an appealing option. These machines use less energy than standard storage water heaters because they heat water only when needed, reducing the reserve heat loss associated with storing hot water in tanks. Tankless water heaters are also an attractive alternative for both residential and commercial applications due to their compact design, which saves space and reduces overall energy usage which drives market expansion to surpass a revenue of USD 3.1 Billion in 2023 and reach USD 4.92 Billion by 2031.

Furthermore, government incentives and legislation supporting energy-efficient equipment are major drivers of the tankless water heater industry. These projects encourage customers to switch to tankless water heaters by providing financial incentives, tax credits, or rebates for energy-efficient products. Furthermore, rules requiring minimum energy performance criteria for water heaters force manufacturers to design more efficient models, which encourages adoption. As consumers look for ways to lower their energy bills and reduce their environmental effect, the availability of government incentives and restrictions provides a compelling reason to switch to tankless water heaters. This promotes market growth by driving the adoption and penetration of energy-efficient water heating technologies expected to rise steadily in the coming years to grow at a CAGR of 6.55% from 2024 to 2031.

Tankless Water Heater MarketDefinition/ Overview

Tankless water heaters, also known as on-demand or instantaneous water heaters, are devices that heat water just as needed, removing the need for a storage tank. They operate by heating water as it passes through a heat exchanger, resulting in a constant supply of hot water. Tankless water heaters are used in residential, commercial, and industrial settings and provide benefits such as energy efficiency, space savings, and an infinite supply of hot water. Tankless water heaters are predicted to play an important role in lowering energy consumption and greenhouse gas emissions connected with water heating in the future, as environmental awareness and technology breakthroughs grow. Continued innovation in materials, design, and control systems is predicted to improve their performance and efficiency, allowing them to reach new markets and applications.

Will Rising Demand for Compact Size of Water Heater Drive the Tankless Water Heater Market?

The increasing demand for compact-sized water heaters is expected to fuel considerable expansion in the Tankless Water Heater Market. Traditional bulky water heaters are difficult to use in urban settings and increasingly tiny living spaces due to limited space. Tankless water heaters provide a tempting answer to this problem due to its compact form, which allows for various installation options in small locations such as closets, utility rooms, or even placed on walls. This compact form not only maximizes usable space but also adheres to modern design trends that favor minimalist and space-saving solutions.

Tankless water heaters are also versatile due to their compact design, making them suited for a wide range of applications including residential residences, flats, commercial buildings, and industrial sites. As urbanization continues and the requirement for effective space usage grows, the popularity of tiny tankless water heaters is projected to increase. This increasing desire for space-saving solutions is expected to drive market expansion and acceptance, as individuals and companies alike look for efficient and practical water heating choices that meet modern living and operational requirements.

Furthermore, the versatility and convenience provided by small tankless water heaters make them very desirable to consumers looking for modern, efficient, and space-saving water heating options. As consumer preferences shift toward compact and multifunctional equipment that maximize space use, the demand for small tankless water heaters is likely to increase. Their capacity to provide hot water on demand without the need for huge storage tanks is perfectly aligned with modern living standards, resulting in market development. With consumers increasingly emphasizing convenience, efficiency, and space-saving features, small tankless water heaters are positioned to play a critical role in influencing the future of the water heating industry.

The government incentives and legislation supporting energy-efficient equipment help to boost the adoption of tankless water heaters. These incentives, such as tax credits, rebates, and energy efficiency programs, encourage consumers to transition to tankless water heaters in order to lower their energy bills and lessen their carbon footprint. As a result, the market for tankless water heaters is booming, driven by both financial advantages and a growing emphasis on sustainability and environmental responsibility.

Will Increasing High Cost of Water Heaters Restrain the Growth of the Tankless Water Heater Market?

The rising cost of water heaters may hinder the expansion of the tankless water heater industry. While tankless water heaters provide long-term energy savings and other benefits such as space efficiency and an infinite supply of hot water, their initial purchase price is typically higher than that of classic storage water heaters. This increased initial cost may discourage some consumers, particularly those with budget constraints or those who value immediate cost savings over long-term advantages.

Furthermore, installing tankless water heaters frequently entails changes to existing plumbing and electrical systems, which can dramatically raise the overall cost of adoption. As a result, the perceived high cost of tankless water heaters may limit their widespread adoption, especially in areas where affordability is a major concern. Customers may be hesitant to engage in these systems due to the higher costs connected with installation, preferring more traditional and less expensive water heating alternatives instead. This challenge emphasizes the significance of lowering costs and offering incentives or financing alternatives to make tankless water heaters more accessible to a wider variety of users, hence supporting market growth.

However, it is important to note that, despite the initial expenditure, the total cost of ownership for tankless water heaters often exceeds that of regular water heaters. With energy savings and lower maintenance costs taken into account, tankless water heaters are frequently more cost-effective in the long run. Despite this, the initial cost may dissuade some buyers, limiting wider adoption. Efforts to educate consumers about the long-term benefits and possible savings of tankless water heaters, as well as providing financing choices or incentives, are critical to overcoming this obstacle and propelling market growth.

Furthermore, as technology progresses and economies of scale reduce manufacturing costs, the price difference between tankless and regular water heaters is likely to diminish, thus alleviating this constraint over time. Nonetheless, addressing the perceived high cost through consumer education, financing choices, and incentives may be required to realize the full growth potential of the Tankless Water Heater Market. Manufacturers can reduce the perceived high cost of tankless water heaters by educating consumers about the long-term benefits and cost reductions, as well as giving financing alternatives or incentives to offset initial prices.

Category-Wise Acumens

Will Rising Demand for Gas Fuel Propel the Tankless Water Heater Market?

Rising demand for gas-powered tankless water heaters is predicted to significantly boost the tankless water heater industry. Gas tankless water heaters are preferred over electric tankless water heaters because they provide higher flow rates and a more continuous hot water supply. They are especially useful in bigger households and business situations where the demand for hot water is great and continuous. Gas water heaters’ ability to swiftly heat water without the need for a storage tank makes them an appealing alternative for users wishing to save money on energy and increase heating efficiency.

Furthermore, technological improvements have made gas tankless water heaters more energy-efficient and environmentally friendly, increasing their popularity. These changes help to minimize energy usage and greenhouse gas emissions, making gas tankless water heaters an appealing option for environmentally conscious consumers. This greater efficiency and environmental advantage drive the market, encouraging more homeowners and businesses to choose gas tankless water heaters as a long-term and cost-effective water heating solution.

With natural gas available in many places and reduced operating costs compared to electricity, many users are choosing gas-powered models. This tendency is further assisted by infrastructural developments and the growth of natural gas networks, which make gas supplies more accessible. As a result, the improved availability and affordability of natural gas are driving market expansion for gas tankless water heaters.

For instance, in October 2023, Navien started distributing its new NHW-A non-condensing tankless water heater. The NHW-A comes in two configurationsNHW-AI for interior installations and NHW-AE for external installations, according to a Navien press release. Both the NHW-AI and NHW-AE are available in 160,000 Btuh, 180,000 Btuh, and 199,900 Btuh sizes, with natural gas or liquid propane fuel options.

Additionally, electric tankless water heaters are the market’s fastest-expanding sector. The expansion of electric tankless water heaters is being driven by greater awareness of environmental sustainability and the increased use of renewable energy sources. These heaters are simple to install, require little maintenance, and are perfect for tiny households or places with restricted access to natural gas. As technology progresses and demand for eco-friendly appliances rises, the electric Tankless Water Heater Market is likely to expand significantly.

Will the Rising Usage in Residential Areas Drive the Tankless Water Heater Market?

The growing popularity of tankless water heaters in residential settings is expected to considerably boost the tankless water heater industry. Homeowners are increasingly drawn to tankless water heaters for its multiple advantages, including energy efficiency, space-saving design, and the ability to provide an unending supply of hot water on demand. Unlike traditional storage water heaters, tankless versions eliminate the energy losses involved with keeping a huge tank of hot water, resulting in cheaper energy costs and a lesser environmental impact.

Tankless water heaters are also perfect for modern homes with limited space due to their compact design, which allows for flexible installation possibilities in small closets, utility rooms, or even on walls. This space-saving feature is extremely appealing to homeowners trying to maximize their living space, pushing the market by addressing the needs of modern residential spaces and contributing to the growing use of tankless water heaters.

Government incentives and rebates for energy-efficient home equipment drive uptake by making the initial expenditure more affordable. As energy costs rise and environmental concerns develop, more homes are projected to switch to tankless water heaters, resulting in significant growth in the residential market. This trend reflects a broader shift toward more sustainable and efficient home solutions, emphasizing the importance of residential demand in growing the tankless water heater industry.

The commercial category is the fastest-growing segment in the tankless water heater industry. Businesses, including hotels, restaurants, and hospitals, are rapidly discovering the advantages of tankless water heaters, which include lower energy costs and continuous hot water supply. The requirement for dependable and efficient hot water systems in high-demand environments pushes commercial adoption. As more organizations prioritize sustainability and cost-efficiency, demand for tankless water heaters in commercial applications is likely to skyrocket.

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Country/Region-wise

Will the Growing Adoption of Energy–Efficient Appliances in North America Escalating the Tankless Water Heater Market?

The increasing adoption of energy-efficient appliances in North America is driving the tankless water heater industry. As customers grow more aware of their environmental impact and seek ways to cut energy usage and utility bills, demand for energy-efficient solutions such as tankless water heaters is increasing. These appliances save a lot of energy compared to standard storage water heaters because they heat water only when it’s needed, reducing the standby heat loss that comes with storing hot water in tanks.

Additionally, government incentives and legislation promoting energy efficiency are important drivers of the Tankless Water Heater Market. Programs such as Energy Star certifications, tax incentives, and rebates encourage consumers to invest in more environmentally friendly water heating solutions by switching to tankless heaters. Governments promote energy-efficient appliance adoption and market expansion by providing financial incentives and recognition. This increases consumer interest and investment in tankless water heaters, helping to expand the industry and promote the use of ecologically friendly water heating systems.

Furthermore, technological improvements have greatly improved the efficiency, performance, and cost of tankless water heaters, making them highly desirable solutions for both homeowners and businesses. These technological advancements have resulted in higher heating efficiency, greater dependability, and lower maintenance requirements, making tankless water heaters more appealing to a wider spectrum of users. Furthermore, as manufacturing and installation costs have decreased, tankless water heaters have become more affordable and cost-effective over time. As a result, the growing popularity of these modern water heating systems is propelling market expansion by fulfilling the growing demand for energy-efficient and convenient solutions in both residential and commercial applications.

The strong emphasis on sustainability in this region is propelling it to a major percentage of worldwide tankless water heater sales. With consumers increasingly favoring environmentally friendly solutions, tankless water heaters provide an energy-efficient alternative to standard water heating systems. This emphasis on sustainability supports market growth by matching with customer preferences and regulatory actions that aim to reduce energy usage and environmental impact. As a result, North America emerges as a key driver in the adoption of tankless water heaters, influencing the future of residential and commercial water heating solutions.

Will Growing Concerns about Energy Conservation in the Asia Pacific Drive the Tankless Water Heater Market?

Growing concerns about energy conservation in Asia Pacific are expected to generate significant growth in the Tankless Water Heater Market. As Asia Pacific countries experience rapid economic development, urbanization, and population growth, energy consumption rises, notably in the residential and commercial sectors. This increase in energy demand has created worries about sustainability and environmental effects, driving governments, corporations, and consumers to look for more energy-efficient alternatives. Tankless water heaters address these concerns by providing on-demand hot water while avoiding the standby energy losses associated with classic storage water heaters.

The compact size of tankless water heaters is a major market driver in Asia Pacific’s densely populated cities. Tankless water heaters are an attractive alternative for residential and commercial properties with limited space in cities due to their lower footprint. This tiny form enables versatile installation options, such as wall mounting or placing in restricted locations, enhancing usable space in congested urban environments. As a result, tankless water heaters are becoming increasingly popular in Asia Pacific’s densely populated cities, propelling market growth and acceptance among both consumers and companies.

Rising urban populations and expanding construction activity in Asia Pacific are creating strong demand for space-saving and energy-efficient residential appliances, with tankless water heaters emerging as a popular choice. As cities become more densely populated and space becomes more restricted, tankless water heaters’ small form addresses the requirement for optimal use of available space in residential homes. Also, the emphasis on energy economy is consistent with environmental sustainability goals and resolves concerns about growing energy costs, accelerating the adoption of tankless water heaters. This combination of factors fuels market expansion by addressing urban dwellers’ rising need for space-saving and environmentally friendly water heating systems.

Moreover, government policies promoting energy efficiency and environmental sustainability, together with increased consumer awareness, are key drivers of tankless water heater adoption in the Asia Pacific area. Subsidies, rebates, and tax breaks for energy-efficient equipment are important incentives for households and businesses to invest in tankless water heaters. As governments focus energy conservation and environmentally friendly practices, these programs promote widespread use of tankless water heaters, hence contributing to market growth. The combination of government assistance and rising consumer awareness emphasizes the need of tankless water heaters as vital components of sustainable water heating systems throughout Asia Pacific.

Competitive Landscape

The competitive landscape of the Tankless Water Heater Market is characterized by intense competition and a diverse array of players vying for market share. Innovation and technological advancements drive competition, with companies constantly striving to develop more energy-efficient, compact, and durable tankless water heaters. Market players focus on product differentiation through features such as smart connectivity, improved heating performance, and enhanced user experience. Additionally, brand reputation, distribution networks, and after-sales service offerings play crucial roles in shaping competitive dynamics. Regulatory trends, such as energy efficiency standards and environmental regulations, also influence market competitiveness by driving product innovation and the adoption of eco-friendly technologies. Moreover, partnerships and collaborations between manufacturers, retailers, and energy utilities further intensify competition by expanding market reach and enhancing product offerings.

Some of the prominent players operating in the Tankless Water Heater Market include

A.O. Smith, Rheem Manufacturing Company, Rinnai Corporation, Navien, Inc., Noritz America, Takagi, Stiebel Eltron, Inc., EcoSmart Green Energy Products, Inc., Robert Bosch LLC, Bradford White Corporation.

Latest Developments

• In November 2023, President Biden invoked a Cold War-era rule to direct government dollars toward American manufacturing of electric heat pumps, an alternative to gas-powered residential furnaces. This effort intends to increase domestic production, reduce reliance on fossil fuels, and promote energy-efficient home heating solutions, all in line with the broader goals of improving energy security and addressing climate change.
• In March 2024, Bradford White Corporation, an industry-leading manufacturer of water heaters, boilers, and storage tanks, will highlight innovative products offered by its Bradford White Water Heaters and Laars® Heating Systems brands at the Canadian Mechanical and Plumbing Exposition (CMPX) in Toronto.
• In January 2024, the midea Kitchen and Water Heater Appliances Business Division (Midea KWHA) recently attended the AHR Expo, a significant event for HVACR experts, held in Chicago. The AHR Expo brings together manufacturers and suppliers of all sizes and specialties, creating an atmosphere for idea sharing and displaying the future of HVACR technology.

Report Scope

Tankless Water Heater Market, By Category

Fuel Type

• Electric
• Gas

 Application

• Residential
• Commercial

Region

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa

Research Methodology of Market Research