Global Water Heater Market Size and Share Outlook - Forecast Trends and Growth Analysis Report (2024-2032)

Global Water Heater Market Size

The global water heater market stood at USD 32.56 billion in 2023 and is expected to grow at a CAGR of 4% during the period 2024-2032 to reach a value of USD 46.3 billion in 2032.

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Water Heater Market Growth

Demand from Commercial and Residential Sectors, Technological Advancements to Drive Market Growth

Demand for hot water from commercial and residential sectors is expected to boost the electric water heater market size. Hot water is required for several applications including cleaning, washing, cooking, patient hygiene (in hospitals), etc.  In recent years, the market has witnessed increased demand for more advanced and sophisticated water heating systems. Tankless water heaters are more popular in terms of residential applications, but witnessing increased interest in small commercial buildings, like diners and eating joints. However, such units are more common in larger central systems in bigger structures. Technologically advanced tankless water heaters are expected to drive the water heater market growth during the period 2024-2032 due to advantages such as increased efficiency, extended life, reduced time to dispense hot water, less required space, and increased safety.

China, Mexico, Italy, Germany, and USA were the key exporters of electric instant, storage and immersion water heaters in 2019. Chief importers of electric instant, storage and immersion water heaters in 2019 were USA, France, Germany, United Kingdom, and Spain.

Water Heater Industry Analysis

India, China, Japan, and South Korea Prominent Markets in Asia; Initiatives Such as Japan’s “Introduction Subsidy Scheme” May Help Boost Markets in Other Markets

India, China, Japan, and South Korea are the key markets in Asia. The Eco Cute hot water heat pump, which utilizes CO2 as refrigerant, has witnessed significant success in the previous decade. The considerable growth was seen as an outcome of the “Introduction Subsidy Scheme” implemented by the Japanese Government in 2002 to subsidize a portion of the cost to introduce heat pump water heaters, which could boost water heater market revenue. While the scheme is not currently in force, it is seen as a best-practice policy suitable to be followed by other national marketplaces. South Korea, although a relative newcomer to the market, is looking to grow in the heat pump market.

Air Source Heat Pump (ASHP) a Significant Water Heater Segment in China; Heat Pump Water Heaters (HPWHs) also Gaining Prominence

Heat pump water heaters do not directly generate heat, rather, utilize electricity to move heat between two points. Therefore, such heaters can be significantly more energy efficient as compared to standard electric resistance water heaters, fuelling the growth of water heater. While heat pump water heater systems might usually entail higher initial cost than standard storage water heaters, the higher acquisition and installation costs could be offset by lower operating costs.

In China, household device brands including Midea, Haier, A.O. Smith, etc. are prominent brands in the Air Source Heat Pump (ASHP) water heater segment. The segment is seen as one with significant growth potential. According to the water heater market analysis, heat pumps (particularly ASHPs) are expected to grow in market size to over 15% by 2040. Heat Pump Water Heaters (HPWHs) have also gained prominence owing to their capacity to offer considerably more heat while using the same quantity of electricity as that consumed by standard electric storage water heaters. Several reputed water heating manufacturers have rolled out models, and by 2017-2018, HPWH consignments stood at over 69000 (average), with the projected market penetration of approximately over 1.9%.

Water Heater Industry Trends

Innovative, Energy-efficient and Environmentally Friendly Water Heating Systems Expected to Drive Growth

Companies like Bradford White strive to create innovative, sophisticated, high-performance and reliable products that offer increased energy-efficiency and are environmentally friendly.  Such efforts indicate consumers’ preference for products that improve quality of life while saving energy and not damaging the environment, aiding the commercial water heaters market.  The company’s offerings include models AeroTherm® Heat Pump Water Heater, Infiniti® K Series tankless water heaters and eF Series® gas water heaters – which the company claims are designed to save energy and money.

Similarly, Daikin offers heat pumps delivering cost-effective heating solutions for residential and commercial settings. The company claims that connecting solar collectors to heat pump systems may further enhance efficiency and savings.

Recent Developments

Goldmedal Electricals, an Indian electrical goods company, announced the launch of Iconiq and the Iconiq Digi storage water heaters in January 2024. These heaters possess features such as temperature adjustment, remote control, and feather touch panel, among others, which makes it stand out in the market.

Industry Outlook

The global water heater market is driven by rising urbanization and demand for energy-efficient solutions, alongside technological advancements and government incentives.

From the data provided by the IEA, the global number of residential buildings using solar thermal technologies for water heating has shown significant growth. In 2010, there were 129 million residential buildings using this technology. By 2018, this number had nearly doubled to 242 million. As per the water heater industry analysis, the trend continued, with 250 million residential buildings in 2019 and 256 million in 2020. The growth persisted, reaching 262 million in 2021, 266 million in 2022, and 269 million in 2023. Projections indicate that by 2030, the number of residential buildings using solar thermal technologies for water heating will rise to 280 million.

This consistent increase highlights a strong global shift towards sustainable energy solutions for residential water heating. The penetration of solar thermal technologies in residential buildings is clearly expanding.

Annual operating costs for water heaters varied significantly between solar and traditional systems from 2018 to 2023. Solar water heaters had the lowest costs, ranging from $90 to $175 annually, offering substantial savings and increasing the water heater industry revenue with more purchases. Traditional tank gas or electric water heaters had higher operating costs, between $225 and $580 annually, driven by continuous energy consumption. Tankless gas or electric heaters also incurred considerable costs, ranging from $150 to $535 annually. The lower operational expenses of solar water heaters, primarily due to their reliance on renewable energy, have increasingly attracted consumers seeking cost-efficient and environmentally friendly solutions. In contrast, traditional and tankless systems faced higher expenses due to reliance on non-renewable energy sources and higher utility bills. These differences in operating costs have driven the growth of the water heater industry, with a growing preference for solar water heaters amid rising energy prices and environmental awareness.

What Factors are Strengthening the Growth of the Global Water Heater Market?

• Urbanization and Population Growth: Increased urban population drives demand for residential water heaters.

• Technological Advancements: Innovations in energy-efficient and smart water heaters attract consumers and aid water heater demand growth.

• Rising Disposable Income: Higher incomes enable more households to afford advanced water heating systems.

• Government Incentives: Policies and incentives for energy-efficient appliances boost market growth.

What Challenges are Impacting the Global Water Heater Market Share?

• High Initial Costs: Expensive installation and purchase prices deter potential buyers.

• Energy Consumption: Concerns over high energy usage impact consumer decisions.

• Regulatory Compliance: Strict regulations and standards increase compliance costs.

• Supply Chain Issues: Disruptions and delays in the supply chain affect availability and pricing as well as water heater demand forecast.

Key Trends Influencing the Global Market:

• Smart Water Heaters: Growing adoption of connected smart water heaters with remote control features.

• Energy Efficiency: Increasing demand for high-efficiency and eco-friendly water heating solutions.

• Tankless Systems: Rising popularity of tankless water heaters for their space-saving and energy-efficient benefits.

• Renewable Energy Integration: As per the water heater market dynamics and trends, integration of solar and other renewable energy sources into water heating systems.

Key Demand Indicators in the Global Market

• Replacement Demand: Ageing infrastructure in developed regions leads to high replacement demand for modern, efficient water heaters.

• Commercial Sector Growth: Expansion of hotels, hospitals, and educational institutions drives significant water heater demand especially in category of industrial-grade water heaters.

• Energy Efficiency Regulations: Stricter energy efficiency standards push consumers and businesses to upgrade to compliant, high-efficiency water heaters.

• Emerging Markets: Rapid urbanization and industrialization in developing countries create new demand for residential and commercial water heating solutions.

Key Price Indicators in the Global Water Heater Market

• Key price indicators in the global water heater market, including electric, solar, and gas heaters, involve raw material costs such as steel and copper, which significantly influence manufacturing expenses.

• Energy efficiency standards and technological advancements impact prices, with more efficient models typically costing more.

• Supply chain dynamics, including transportation and distribution costs, further affect pricing. Regional economic conditions and currency fluctuations play a role in determining prices across different markets. 

• Additionally, market competition, brand positioning, and the type of heater (electric, solar, or gas) contribute to pricing strategies adopted by manufacturers.

Competitive Factors in the Global Market

• The growth of the water heater market is driven by technological advancements, with companies focusing on innovative, energy-efficient solutions to attract eco-conscious consumers.

• Brand reputation and reliability are crucial, as established brands with quality products have a competitive edge. 

• Price competitiveness is vital, with manufacturers balancing cost-effectiveness and quality. Strong customer service, including warranties and after-sales support, significantly influences consumer choices and can increase water heater market revenue. 

• Adapting to regulatory changes and meeting energy efficiency standards are essential for market positioning. For instance, tankless water heaters are gaining popularity for their efficiency and space-saving benefits. 

• Strategic partnerships and robust distribution networks enhance market reach, allowing companies to cater to diverse consumer needs effectively.

Key Players in the Global Market and their Strategic Initiatives

• O. Smith Corporation: It is one of the largest water heater manufacturers that focus on expanding product portfolio with energy-efficient and smart water heaters, strategic acquisitions to enhance market presence, and investment in R&D for innovative solutions.

• Rheem Manufacturing Company: Development of eco-friendly and high-efficiency water heaters, expansion into emerging markets, and partnerships with smart home technology providers to integrate advanced features.

• Ariston Thermo Group: Commitment to sustainability with the introduction of renewable energy-powered water heaters, expanding global distribution network, and enhancing digital capabilities for better customer service.

• Bosch Thermotechnology: Emphasis on advanced heating solutions like hybrid and condensing water heaters, investment in IoT and smart home technologies, and strengthening presence in key markets through strategic alliances offer lucrative water heater market opportunities.

• Whirlpool Corporation: Diversification of product range to include energy-efficient electric, gas, and solar water heaters, leveraging brand strength to capture new market segments, and enhancing manufacturing processes to reduce costs and improve quality.

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Global Water Heater Industry Segmentation

By product, the market is segmented into:

• Electric

• Solar

• Gas

By technology, the market is segmented according to:

• Tankless

• Storage

• Hybrid

According to capacity, the market is classified as follows:

• Below 30 Liters

• 30 - 100 Liters

• 100 - 250 Liters

• 250-400 Liters

• Above 400 Liters

• Others

By application, the market is segmented into:

• Residential

• Commercial

• Industrial

By region, the market is segmented into:

• North America

• Europe

• Asia Pacific

• Latin America

• Middle East and Africa

Competitive Landscape

The report presents a detailed analysis of the following key players in the market, looking into their capacity, and latest developments like capacity expansions, plant turnarounds, and mergers and acquisitions:

• Bosch Thermotechnology Corp

• Ariston Holding NV

• Rinnai America Corporation

• Bradford White Corporation

• Whirlpool Corporation

• Others

The EMR report gives an in-depth insight into the industry by providing a SWOT analysis as well as an analysis of Porter’s Five Forces model.

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Water Heater Market Regional Analysis

Air to Water (ATW) Heat Pumps a Significant Market in Europe

In Europe, air to water (ATW) heat pumps contribute significantly to demand of water heater market. In France, sanitary hot water or cylinder-integrated ATW heat pumps are in considerable demand. According to analyst reports, 2017 witnessed decreased growth, but sales of hot water heat pumps rose in 2018 with an overall growth of over 13%. In the USA, sales of cylinder-integrated electric storage heat pump water heater (HPWH) units increased to nearly 70000 pieces yearly in 2017-2018, which accounted for over 1.9% of the overall yearly electric storage water heater sales. Air-to-water heat pumps have witnessed significant growth in China.

Key Highlights of the Report

Water Heater Market Report Snapshots

Water Heater Market Size

Water Heater Market Growth

Water Heater Companies