Commercial Boiler Market Size, Share & Trends Analysis Report By Fuel Type (Natural gas, Oil, Coal, Others), By Technology (Condensing, Non-condensing), By Capacity (Less than 10 MMBtu/hr, 10-50 MMBtu/hr, Others), By End-User (Offices, Hospitals, Educational Institutions, Lodging, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2030

Market Overview

The global commercial boiler market had a revenue share of USD 1,947 million in 2022, presumed to reach USD 2,713 million by 2030, expanding at a CAGR of 4.23% during the forecast period of 2022-2030.

Common applications for commercial boilers include heating schools, offices, apartment complexes, and hospitals. Commercial boilers can be fueled by gas or oil and produce hot water or steam. The heated water or steam circulates through radiators, baseboard units, and fan coils. Some boilers transform hot water into steam, while others utilize cold water. The boiler's burners or electric coils generate heat, which is then transferred to the water through the heat exchanger. Based on the type of boiler, the process produces either hot water or steam. Pipes distribute the hot water or steam throughout the commercial building. The water or steam enters radiators or other parts that redistribute the heat to heat your interior spaces. The most popular fuel used in commercial boilers is natural gas. Some boilers use fuel oil or electric resistance coils to generate heat from electricity.

The commercial boiler market is anticipated to grow due to the implementation of building energy codes and increased spending on urban center expansion. Modern heating systems are highly efficient, can be synchronized with home automation systems, and have a lower likelihood of malfunctioning, increasing demand for the product. Initiatives undertaken by the government authorities to minimize the carbon footprint of commercial establishments have increased expenditures for the modernization of existing facilities, thereby boosting the demand for energy-efficient boilers. Increased commercial sector investments in developing economical and environmentally friendly infrastructure are also anticipated to drive the global market growth for commercial boilers.

Market Dynamics

Global Commercial Boiler Market Drivers

The Growth in Commercial Tourism Infrastructure and Energy-Efficient Boilers

Various states worldwide experience extreme summer and winter temperatures, resulting in highly seasonal demand for space heating. Due to a rise in discretionary income and an increase in the number of tourists during the winter months, it is anticipated that the commercial boiler market will expand significantly in mountain states. Due to the hotel industry's consistent demand for hot water, the region's expanding tourism sector is expected to pave the way for the commercial boiler market growth. In addition, as the state's educational sector develops, there will be greater demand for efficacious heating systems in the institutions, which is anticipated to enhance the deployment of commercial boiler systems.

Additionally, demand for energy-efficient solutions is anticipated to increase in the future. Energy-efficient boilers are necessary to reduce future operating costs, capital expenditures, and utility system costs. Commercial boilers' performance is crucial to commercial enterprises' efforts to cut utility costs. The efficiency of a boiler is measured by the heat output ratio to the fuel needed for maintenance and engineering operations in various industries; consequently, organizations strive to provide efficient boiler performance. Thus, boosting the commercial boiler market. 

Global Commercial Boiler Market Restraints

High Cost of Installation

The price of steam boilers varies based on design parameters and after-sales service levels. Budget steam boilers have shorter lifespans, fewer guarantees, and less customer service than standard steam boilers. Utilizing rare metals and cutting-edge technologies, boilers with enhanced performance have been created. Installation of a steam boiler system is expensive, making it one of the most necessary expenditures a manufacturing company can make. Due to the high degree of technical competence required for the operation of steam boilers and the separate construction of boiler houses in the utility area, it is anticipated that the cost will remain high. Thus, hindering the growth of the commercial boiler market.

Global Commercial Boiler Market Opportunities

The Increasing Demand for Compact Design

Utility space is the primary consideration for new plant installations and expansions of existing plants. Components like the boiler, economizer, superheater, and air preheater should have a compact design to enhance space utilization in process industries. With capacity installations, there is less space for utility equipment on the floor. Maximizing space has resulted in a strong demand for compact steam boilers with low fuel use. The emphasis of boiler manufacturers is on marketing steam boilers tailored to the specific process requirements of various businesses, such as offices, hospitals, schools, and hotels. Hence, this demand for compact size for boilers creates lucrative opportunities for the market. 

Regional Analysis

The region-wise segmentation of the global commercial boiler market includes North America, Europe, Asia-Pacific, and LAMEA.

The Asia Pacific and Europe will dominate the regional market

The Asia Pacific will command the market with the largest share while growing at a CAGR of 2.92%. Due to nations such as India, China, and Japan, Asia-Pacific largely dominates the regional market. The rise of various industries, including offices, hospitals, educational institutions, and hotels, is fueled by the region's economic prosperity. The region has developed into a global manufacturing powerhouse due to its diverse manufacturing and processing industries. Alongside China's conversion into a high-skilled manufacturing powerhouse, other developing nations such as India, South Korea, Taiwan, and Vietnam contribute to the expansion of businesses seeking to relocate their low- to medium-skilled manufacturing operations to countries with lower labor costs.

Europe will expand at a CAGR of 6.13% and hold USD 996 million. Countries like the United Kingdom, Germany, and France are primarily responsible for the region's expansion. Most buildings in the United Kingdom, like healthcare facilities and educational institutions, rely heavily on low-pressure heating systems. Commercial boiler units with a central plant are installed in these situations to supply the heating demand during extremely cold weather. Healthcare and retail are anticipated to contribute substantially to the UK's commercial boiler market. In these industries, there is a significant need to replace traditional boilers with new commercial boilers, which is anticipated to provide the industry with excellent growth potential. In addition, higher spending on commercial infrastructure development may raise product demand during the forecast period. The market for commercial boilers in the United Kingdom is anticipated to be driven by an increase in demand for environmentally friendly energy products under regulations to lower carbon emissions.

Segmental Analysis

The global commercial boiler market is classified based on fuel type, technology, capacity, end-user, and region. 

The segment includes natural gas, oil, coal, and others based on fuel type.

The natural gas section is projected to grow at a CAGR of 4.53% and hold the largest market share. Natural gas is a highly efficient and cost-effective heating fuel in the business sector, where it is used for both water and steam facilities. The rising demand for natural gas in commercial boilers results from the government's emphasis on natural gas as an environmental priority, leading to a rise in natural gas usage relative to other fuels. Moreover, natural gas is 90% more efficient, environmentally friendly, and cost-effective, the primary driver for natural gas in the commercial boiler industry. In addition, natural gas fuel's less disruptive nature compared to other fuels and quick boiling system features serve as the primary growth factor for the commercial boiler market.

The oil section will hold the second-largest share. Commercial boilers fueled by oil are referred to as oil-fired commercial boilers. Oil-fired boilers are an excellent option for water and steam systems in commercial applications. The oil used in boilers is efficient, trustworthy, and readily accessible. The oil used in commercial boilers is a highly stable, combustible, and non-explosive commodity, mitigating some safety concerns associated with other fuels. Oil fuel is durable, dependable, low-maintenance, readily available, and highly efficient, significantly contributing to the segment's market growth.

Based on technology, the segment includes condensing and non-condensing.

The condensing section is projected to grow at a CAGR of 5.12% and hold the largest market share. Condensing boilers are becoming increasingly used in the corporate sector. Due to the often-low temperature of hot water loops in small business applications, condensing hot water boilers are designed to achieve a high-efficiency level that traditional boilers cannot. The segment's rise is related to the growing demand for space and water heating systems. Implementing favorable government policies, such as tax refunds and tax incentives, increases product penetration around the globe.

The non-condensing section will hold the second-largest share. A non-condensing boiler will function regardless of the weather. With this type of boiler, no line should transport water from the back of the boiler; therefore, pipes cannot freeze under any circumstances, and there is no danger of pipes becoming cold or inflicting severe damage to the workplace.

Based on capacity, the segment includes less than 10 MMBTU/HR, 10-50 MMBTU/HR, and others.

The less than 10 MMBTU/HR section is projected to grow at a CAGR of 5.15% and hold the largest market share. The heat input capacity of commercial boilers is typically less than 10 MMBtu/hour. Hospitals, universities, schools, government buildings, and military bases utilize institutional boilers to generate steam, hot water, and electricity. Boiler systems at institutions are used to heat with hot water or steam. Low initial investment and maintenance expenses, ease of installation, and the ability to quickly produce hot water and steam are some of the advantages of low-capacity boilers over other alternatives.

The 10-50 MMBTU/HR section will hold the second-largest share. Boilers having a capacity between 10 and 50 MMBtu/hr are typically employed in residential, commercial, and industrial settings. Increased investments in commercial center development and high spending on healthcare facility modifications are anticipated to contribute positively to the industry's growth.

Based on end-user, the segment includes offices, hospitals, educational institutions, lodging, and others.

The offices section is projected to advance at a CAGR of 3.71% and hold the largest market share. The economic importance of offices has increased the demand for various amenities. The increasing demand for offices is one of the key factors driving the expansion of the commercial boiler market. Increased demand for office heating systems such as blowers, geysers, and others has increased demand for commercial boilers, driving the market's expansion.

The lodging section will hold the second-largest share. Increased demand for hotels, resorts, guest houses, rest houses, and lodgings fuels the expansion of the market for commercial boilers. In addition, an increase in tourism-based economies serves as the primary source of income for every nation. The hotel industry is expanding in tandem with the rise in tourism.

Impact of covid-19

COVID-19 has positive and negative market consequences, as carbon emissions have decreased globally due to the lockout. COVID-19's reduction in emissions is a short-term benefit. Still, when industries and enterprises attempt to recoup some of their financial losses in the first quarter of the year, carbon emissions will rise dramatically. COVID-19 had a negative impact on global recycling efforts. Countries, notably the United States, have halted or decreased recycling programs to focus on collecting additional domestic waste or because services have been disrupted by the virus.

Also, with industries slowly returning to normalcy following the COVID-19 outbreak, this shift in workplace health and safety is expected to increase due to mandatory social distancing and continuous personal care through sanitization to eliminate even the tiniest possibility of COVID-19 spread. COVID-19 has impacted various companies' revenues, and if the lockdown is lifted, companies will turn their attention to operations to make up for their losses.

Recent Developments

• In 2022, A.O. Smith Corporation acquired Atlantic Filter Corporation, a water treatment solutions provider.