Commercial Water Heater Market Size, Share & COVID-19 Impact Analysis, By Storage Capacity (Below 500 L, 500-1000 L, 1000-2000 L, 2000-3000 L, More than 3000 L) By Power Rating (0 to 10 kW, 10 to 50 kW, 50 to 100 kW, 100 to 300 kW, More than 300 kW), By Fuel Type (Electric, Gas, Oil, Solar, Hybrid, Others), By Application (Healthcare, Restaurants, Institutes, Offices, Others), and Regional Forecasts, 2021-2028

The global commercial water heater market size was USD 5.59 billion in 2020. The market is projected to grow from USD 5.98 billion in 2021 to USD 8.69 billion in 2028 at a CAGR of 5.5% in the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with the market witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market will exhibit a lower growth of -5.2% in 2020 as compared to the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

It is a closed vessel in which water is heated by the combustion of fuels, electricity and provides a continual supply of hot water. The water is heated through a heat transfer process that uses an energy source such as oil, electricity, solar to heat water above its initial temperature. These heaters are designed for applications that require a larger amount of hot water and used in corporate places, institutes, industries to fulfill their need for hot water.

A commercial heater comes in different categories, and it varies as per power capacity, storage capacity, type of fuel used and is considered an essential factor that impacts the demand for the commercial heater. Various key players are focusing on developing efficient technologies for heaters due to the aggregative energy crisis and are exploiting renewable sources as energy to simultaneously manage the energy consumption and reduce the severity of this problem.

Furthermore, the rising demand for energy-efficient heaters for commercial applications is propelling the demand for this heaters across the globe. Additionally, the rising consumption of hot waters in healthcare, hotels, and restaurants drives the market growth.

COVID-19: Pandemic-Related Lockdowns and Decrease in Commercial Water Usage

The COVID-19 pandemic has severely impacted the growth of market. The crisis evolved by the outburst of this global infection problem has carried every country in an unprecedented situation. Factors, such as restriction on shipping products, disruptions in manufacturing and supply arrangements, and mandated shutdowns by governmental authorities, have adversely impacted the operation of the market.

The impact on business has been severe, including supply-chain disruptions, to moving the workplaces online, which resulted in significant reductions in demand for commercial water usage with empty office buildings, offices, restaurants, and others. In addition, the COVID-19 pandemic has brought a considerable shift of water use from large commercial to the residential sector due to travel restrictions and lockdowns which have significantly reduced revenues of market player. For instance, A.O. Smith, has anticipated a decline of almost 4% in volumes for the commercial heater industry due to the delays caused by the COVID 19 impact.

LATEST TRENDS

Growing Interest in Water Heating Installation for Public and Buildings Likely to Drive The Market Growth

The demand for hot waters in commercial buildings is significantly tied to the building’s total energy consumption. The majority demand for hot waters in commercial buildings includes offices, hospitals, hotels, motels, commercial laundries, buildings with industrial processes, and other buildings such as dormitories or other high-density housing facilities where the commercial water heating is done with storage waters that use gas, oil, or electricity as a fuel.

The increasing demand for hot water, especially from hospitality, entertainment, travel, and tourism, has resulted in a growing interest in heating appliances and has attracted various initiatives to increase the installation of this heaters and create significant opportunities for the market. For instance, Mexico City has announced a funding of USD 8 billion for 750,000 square meters of solar thermal panels dedicated explicitly to commercial water heating.

Moreover, In Kuwait, the government has started using solar water heating in public buildings and complexes to reduce electricity reliability and imports of natural gases. Furthermore, the country Sabah Al Ahmed University has installed 0.5MWth of rooftop systems on its facilities. The Kuwaiti Public authority has announced plans to install solar heaters on new villas, buildings that it builds in the coming years and creating opportunities for commercial solar heaters.

DRIVING FACTORS

Rising Focus for Increasing the Efficiency of Building Systems and Technologies Drives the Market Growth

Heaters and major energy consumers use almost 18% of all the commercial or building energy and many technologies are designed to improve the energy performance of the building and to improve the efficiency of these appliances. The water heating efficiency can be enhanced by using an advanced heat pump, thin insulation, and other improved designs. The enhanced insulation and different strategies can reduce hot water distribution losses in commercial buildings and large complexes. Moreover, heater with storage tank is a suitable appliance for providing essential services to optimize electricity performance and load shifting by using communication and control technologies and increases the demand for higher savings and improved energy-efficient products.

For instance, in March 2021, Massachusetts stepped up for energy-saving policies to halve the greenhouse gas emission by 2030 and achieve zero emission by 2050. The law sets the efficiency standards for 17 commercial and residential products and direction to the state government for developing stringent building code which mandates the energy cut waste in buildings and adoption of energy-saving technology, and the implementation of plans to meet them, including deployment goals for heat pumps and other products. 

Increasing Focus for Energy-efficient Products for Commercial Application Drives the Market Growth

The electrification in buildings and complexes involves substituting electric technologies for water heating by the end uses. In addition, some end uses in the commercial sector are partially electrified, such as solar heaters. These hybrid-heat commercial heating systems can automatically switch fuels deepening upon the price and availability, which makes this business closely linked to the energy consumption and CO2 emission, which has aroused the development and widespread use of highly efficient water heaters to reduce the impact on the environment significantly.    

Looking at the breakdown of energy consumption and CO2 emission by heaters, various key players and organizations are pushing their steps to prevent global warming through their business activities and promote the adoption of energy-efficient and environmentally conscious products. For instance, Rinnai Corporation has been promoting the conversion of tank-less heaters in North America, which are more efficient and ease the impact on the global environment. In addition, the company is promoting the use of gas powered heaters over the electric type heaters in support of the growing demand for high-capacity and highly efficient gas heaters, which supported the gradual expansion of commercial gas water heaters.

RESTRAINING FACTORS

Higher Installation and Maintenance Costs Likely To Hinder Market Growth

The water heating system always needs to meet the minimum applicable mechanical, plumbing, electrical, and other code while installing to meet the expected efficient rate and measure total lifetime cost, including the first cost, operating cost, and the replacement cost of the unit. The deployment of commercial water heaters is affected mainly due to the high upfront operating cost due to higher prices of repairs or replacing the unit. The operating cost of this heater is principally impacted due to the water heater placement, especially if the unit is poorly insulated. 

Moreover, the lowest price this heater tends to have the most expensive operational and maintenance costs over their lifetime. At the same time, a storage tank or oversized heaters unit carries a high purchase rate increase in energy cost due to the standby losses, which generally occur due to scorching climates where the heat losses in the tank increase the cooling load. However, the periodic maintenance of this heaters can minimize energy losses and significantly improve the heater life. In addition, government schemes and capital subsidy, which cover the upfront cost, such as consumer grants, one-time payments by a utility or government agency of the product, also increase its adoption.

SEGMENTATION

By Storage Capacity Analysis

Below 500 Liters Segment Accounted for Largest Commercial Water Heater Market Share

Based on storage analysis, the market is categorized into below 500 L, 500-1000 L, 1000-2000 L, 2000-3000 L, more than 3000 L. The below 500 liters storage capacity segment is expected to dominate the market share due to its ability to recover the large quantities of hot water required in a short duration of time. Moreover, this storage tank capacity is generally used in commercial offices, sports complexes, salons and SPAs, cafes for hot waters.

The 500-1000 liters storage capacity for commercial water heating is generally used in standalone retails and hotels, where hot water is used in washrooms, washbasins, kitchen sinks, and others. The heat recovery factor plays an important role, as the shortest recovery period must be sufficient to heat all the water in storage. The 1000-2000 liters storage capacity is used where the commercial hot water requirement is higher, and generally, a storage tank with larger capacities is preferred. This storage tank capacity is usually installed in educational institutes, universities, and others.

The 2000-3000 liters storage capacity is generally preferred where the purpose of the storage tank is to permit relatively low heater recovery capacity while maintaining adequate hot water supply during the demand period. For example, places like warehouses or industrial processing use hot waters as demand, which operate in multiple shifts. The more than 3000 liters storage capacity is used in hospitals and other places where the demand factor is maximum for all practical purposes.

By Power Rating Analysis

0 To 10 kW Power Capacity Dominates the Market

Based on power capacity, the market is segmented into 0 to 10 kW, 10 to 50 kW, 50 to 100 kW, 100 to 300 kW, and more than 300 kW. The 0 to 10 kW power capacity segment is expected to dominate the market segment and is generally used where the storage capacities of heaters range between 30-100 liters. The 10 to 50 kW power capacity is generally used in this heaters where the storage capacity varies between 50 to 500 liters, and they are used in commercial offices, cafes, restaurants, and other applications.

The 50 to 100 KW power capacity is generally used where the storage capacity ranges between 700 to 1400 liters, and they are used in schools, colleges, and other applications. The 100 to 300 kW power capacity is generally used where the storage capacity ranges between 1500 liters to 4000 liters and is used in healthcare like hospitals, nursing homes, and other applications.

The more than 300 kW power capacity is generally used in heaters where the storage capacity is usually larger and varies between 4500 liters and above. This power capacity is used in the application, where a large amount of hot water is required continuously.

By Fuel Type Analysis

Electric Fuel Type Dominates the Market

The market is segmented into electric, gas, oil, solar, hybrid, and others based on fuel type. In the electric fuel type heaters, the unit uses electricity to warm up the heating element to transfer the heat to the water inside. The electric units have wide availability and are the most common in the American commercial industry.

The gas fuel type uses a gas supply to generate flames that produce hot water. The relatively economical factor, ready availability, and efficient fuel supply are expected to propel the demand for gas fuel type during the forecast period. In oil fuel type, flames are produced with the help of oil, where the oil is most commonly stored on-side in a large tank. The oil fuel type heaters is preferred for mid-sized commercial applications.

The solar is one of the most energy-efficient and environment-friendly units but is significantly determined by the weather conditions and the installed location. The energy efficiency of solar units depends upon the annual average sunshine hours and is more generally preferred where the climate is usually warmer and sunny. However, the unit requires a backup plan such as gas or instant electric gas to continue to run when there is no solar availability.

The hybrid type or heat pump heater helps save up much electric consumption as the unit doesn’t directly generate the heat. The unit uses the air from its surroundings to heat the water, and electricity is only used to move the heat to the water. The hybrid units are generally installed on the top, due to which it requires a more vertical clearance and consumes more space. The other segments consist of dual fuel, condensing, biofuel heaters.

By Applications Analysis

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Healthcare Application Dominates the Market

Based on application, the market is segmented into healthcare, restaurants, institutes, offices, and others. Healthcare is one of the biggest energy consumers across the globe. Hospitals, nursing homes, and clinics use hot waters to sanitize the equipment and medical devices within their premises and are also used for showers and other purposes. Heaters with a high peak flow rate are generally preferred in healthcare applications for a limited period.

In restaurant applications, hot water supply is one of the essential components used in almost every activity performed, including kitchen, laundries, customer comfort, hygiene, and water heaters with high flow rate, or high rate if the equipment is generally used preferred in the hotel industry. In offices application, these heaters have significant usage and are consistent in use, such as washrooms, government offices, cafeterias, cleaning purposes, and others. Heaters with large fixture count and constant use are generally preferred in offices buildings. The demand for hot water in offices typically varies and depends upon the number of people and staff present, so offices or retail outlets require heaters with higher capacity.

In institutes, water is being used in tremendous amounts for everyday activities and requires water heating for their systems such as restrooms, drinking water facilities, locker rooms, cafeteria, laboratories, outdoor playing fields, and others in colleges and universities. Generally, heaters with full simultaneous use and multiple fixtures are preferred in institute buildings. The other segments consist of saloons, car washes, SPAs, and standalone retail.

REGIONAL INSIGHTS

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For regional analysis, the market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. North America is expected to dominate the market segment due to the more significant water heating consumption and various sustainable initiatives from key players to deliver energy-efficient products. Moreover, the comprehensive product lines offered by key players such as A.O. Smith and NIBE Industries give a competitive advantage to the market. The storage tank-type heaters is largely adopted for commercial purpose. However, various key players promote the conversion of tankless type heaters for more energy-efficient heaters.

In Europe, the zero-emission of carbon movement is driving the hybrid heater segment due to its highest level of heat efficiency and is strengthening the market across the region. In addition, various countries are abandoning natural gas-based systems and are finding a more efficient and ideal solution that uses renewable energy is expected to propel the demand for hybrid-type heaters. Moreover, various acquisition programs by key players have strengthened the market presence in Europe. For instance, in 2020, acquisition programs by NIBE Industries have strengthened its position in the water heater segment in Eastern Europe, the heat pump market in the Netherlands, and more significant properties for the heat pump segment in Germany, Austria, Switzerland, and Italy.

In Asia Pacific, the product holds a particular share of the market due to its compact design and partial development of other units. However, in China, the installation of gas pipelines and the growing demand for highly efficient and high capacity is expected to expand the gas type commercial heaters across the country. Moreover, in Japan, key players are shifting their former one-time sales model to a new business model designed for recurring sales, such as replacing water heaters. For instance, in January 2020, Noritz created an account on the LINE app, which provides daily information on suitable replacement models of heaters, resulting in new opportunities for customers to consider purchasing a new, more convenient, or economical replacement.

In Latin America, Brazil led the expansion of gas heaters due to electricity shortages. Moreover, renewable heating technologies, notably solar water heating, are reaching the maturity stage and can be cost-competitive with fossil fuel-based heat in an increasing number of countries. In the Middle East & Africa, commercial solar heater usage has resulted in reducing the power consumption and infrastructure cost for various large-scale businesses. Countries across the region have one of the highest hours of sunshine rates globally, which is expected to increase the adoption of some incentive measures and subsidy schemes regarding solar heaters.

KEY INDUSTRY PLAYERS

A.O. Smith Focuses on Expanding its Product Line and Utilize its Channels to Market New Products

The market comprises small and large players delivering scale products for numerous applications shaping the competitive landscape. Key players operating in the market are A.O. Smith, Rinnai Corporation, Midea Group, Rheem Manufacturing, which are working on technological advancement to hold a substantial presence globally.

A.O. Smith Corporation is one of the world’s leading manufacturers of commercial water heaters and offers a comprehensive product line featuring the best-known brands across North America, Europe, China, and India. The company and its management focus on applying innovative technology and energy-efficient solutions to products marked worldwide and build a platform through new product development, strategic acquisitions, and partnerships.

• In August 2020, A.O. Smith announced the addition of Cyclone XL to its commercial gas water heating line. The new cyclone XL adjusts the firing rate, which meets the demand and results in greater efficiency and more cost savings. The cyclone is ideal for commercial applications like hotels, healthcare facilities, housing complexes, and convection venters.

LIST OF KEY COMPANIES PROFILED:

• A.O. Smith (U.S.)


• Rinnai Corporation (Japan)


• Rheem Manufacturing (Scotland)


• Ariston Thermo spA (Italy)


• Racold (India)


• Midea Group (China)


• Nibe Corporation (Sweden)


• Nortiz Corporation (Japan)


• Hubbell (U.S.)


• Valliant (Germany)


• Lowe’s (U.S.)


• Bradford White Corporation (U.S.)


• Flexiheat UK Ltd (U.K.)


• Daikin Industries (Japan)

KEY INDUSTRY DEVELOPMENTS:

• June 2020 - A.O. Smith has announced the launch of 20 new commercial heat pumps models. The new product line will provide contractors, engineers, and architecture with their customers an innovative, reliable, and energy-efficient answer for large commercial applications.


• June 2019 - Rheem, a global water heating and HVAC manufacturer, has announced its partnership with United Illuminating (UI), a subsidiary of AVANGRID Inc., and EnergyHub. As a part of the program, UI has utilized the EnergyHub mercury distributed energy resource management system (DERMS) to aggregate; Rheem developed an intelligent heat pump heater for demand response events.

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The market research report presents a comprehensive assessment of the industry by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views to formulate the market research report. Furthermore, the report covers a detailed commercial water heater market analysis and information as per market segments, including technology, application, and regions, helping our readers to get a comprehensive overview of the global industry.

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