The tankless water heater market size was valued at USD 3.58 billion in 2021, it is estimated to reach USD 6.84 billion by 2030 and expand at a CAGR of 7.45% over the forecast period.
Tankless water heaters are an excellently cost-efficient alternative to conventional water heater tanks, in addition to being more energy-efficient than traditional water heater tanks. Tankless water heaters, also called instant, constant flow, tank-less, direct-vent, or flash hot water heaters, are appliances that do not store any water in internal tanks but instead heat large volumes of water quickly by convection from a supply source. Other names for tankless water heaters include instant, constant flow, tankless, direct-vent, or flash hot water heaters. After there, the heat is sent to a network of showerheads, faucets, and bathtubs, where it is used to directly heat the water. Tankless heaters are an excellent choice for situations in which there is either an inadequate supply of natural gas or propane gas or in which there is a concern about the cost of the fuel.
Rapid urbanization is a phenomenon that is shared by both industrialized and emerging nations. The United Nations (UN) projects that by the year 2050, around 68% of the world's population would reside in urban regions, which is an increase from the current percentage of 55% in 2018. In 1950, there were 751 million people living in urban areas, but in 2018, there were around 4.2 billion people living in urban areas, according to the same source. As a direct consequence of this, there has been an uptick in requests for tankless water heaters. As a result, factors such as these are anticipated to be a primary driver of growth in the worldwide tankless water heater market share over the period covered by the projection.
The demand for water heaters that are efficient in terms of energy among consumers in industrialized nations is growing. As a consequence of this, leading players in the market are concentrating their efforts on the introduction of energy-efficient goods that can reduce monthly energy costs and lead to the installation of an increasing number of heating appliances that are energy-efficient. As a result, the expansion of the worldwide tankless water heater market share would be fuelled by these factors during the projected period.
In the market for tankless water heaters throughout the world, electric heaters are seeing a significant uptick in demand. This is a result of the fact that they are simple to set up and call for a reduced number of maintenance procedures. Additionally, electric devices have a long lifespan and have low ongoing maintenance and replacement expenses. In addition, the cutting-edge design of these heaters makes it possible to put them in confined spaces while at the same time eliminating the need for ventilation. This is in contrast to the design of gas water heaters.
The high initial investment cost, in addition to the high cost of tankless water heaters in comparison to the cost of regular water heaters, is anticipated to be another factor that would hamper the growth of the market over the course of the projected period. In addition, other issues such as the unavailability of appropriate equipment and fluctuations in the supply of natural gas or propane are anticipated to be additional factors that will hinder the growth of the market for tankless water heaters throughout the course of the anticipated timeframe.
Because, for instance, they can only supply hot water to one faucet at a time, the smaller units cannot create enough hot water for the household. On the other hand, there are larger units that can also be purchased, and these units provide adequate hot water for homes, but they are more expensive. It is anticipated that this aspect may slow down the expansion of the tankless water heater industry. In addition, the huge unit makes use of high-powered burners and needs specific venting, both of which are requirements that are anticipated to further inhibit the expansion of the market.
Over the course of the projected period, it is predicted that rising rates of replacement of conventional water heaters with tankless water heaters would present enormous opportunities. Traditional water heaters are being phased out in favor of tankless models thanks to financial incentives provided by the government in the form of rebates and subsidies, as well as a shift in customers' attitudes toward more technologically sophisticated heaters. As a result, increased rates of replacement of already-installed water heaters in both residential and commercial settings are anticipated to be a primary driver of market expansion.
The expansion of the market is anticipated to be propelled during the projected period by the increasing demand for hybrid tankless water heaters that are simple in both their operation and their installation. In addition, the incorporation of regular features found on traditional water heaters into energy-efficient and cost-effective tankless water heaters is anticipated to create enormous development prospects for both the client and the producer. As a result, the growing popularity of hybrid tankless water heaters is anticipated to be a driving force behind market expansion.
| Study Period | 2018-2030 | CAGR | 7.45% |
| Historical Period | 2018-2020 | Forecast Period | 2022-2030 |
| Base Year | 2021 | Base Year Market Size | USD 3.58 Billion |
| Forecast Year | 2030 | Forecast Year Market Size | USD 6.84 Billion |
| Largest Market | Europe | Fastest Growing Market | North America |
As a result of increased manufacturing adoption and a movement in customer demand toward more energy-efficient and cost-effective products, Europe maintained the largest market share in 2018. In addition, growing demand from commercial establishments such as restaurants, hotels, and hospitals is anticipated to have a beneficial influence on the expansion of the market. In addition, a growing number of nations, like Switzerland, Germany, and the United Kingdom, are adopting tankless water heaters, which is driving up demand in the region.
From 2019 to 2025, it is predicted that growth in North America will occur at a CAGR that is the highest, at 10.7%. Over the course of the projection period, one of the most important factors that will be driving demand for tankless water heaters is an increased awareness connected to ecological products, together with an increase in product visibility. In addition, the presence of significant competitors in the area is anticipated to drive demand for tankless water heaters in the years to come.
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The global tankless water heater market is segmented by product, applications, and region.
In 2018, electric heaters held the largest market share, and it is projected that this segment would have the most rapid expansion in the years to come. These kinds of heaters are simple to set up and need a lower investment in labor than other kinds. In addition, electric items often have a long lifespan and have low ongoing maintenance and repair costs. When compared to their gas equivalents, these heaters feature a cutting-edge design that makes it possible to place them in a limited amount of space and eliminates the need for ventilation in the process. In addition, electric items call for far less or even no maintenance, in contrast to gas products, which need periodic maintenance performed by qualified personnel. It is anticipated that these features would promote the usefulness of items powered by electricity in comparison to their gas equivalents.
In 2018, the residential application market had the dominant share of 72.4% of the overall market. The rising popularity of products that save energy and are better for the environment, such as tankless water heaters, is the primary driver that is driving demand for these kinds of items in the domestic market. Additionally, during the forecast period, an increase in the number of residential units because of a growing middle-class population is anticipated to drive the adoption of these solutions, particularly in emerging economies such as India and China.
In addition, increasing quality of living combined with a movement in consumer preference toward goods that are energy efficient, such as tankless water heaters, is anticipated to continue to be a factor that is positive for the expansion of the market. In addition to this, the launch of creative goods is anticipated to pave the way for new opportunities. For example, Rheem's Prestige models have EcoNet Smart Technology, which offers Wi-Fi connectivity and add-on capabilities that give system security, control, and monetary savings. This technology is available in all of Rheem's models.
From 2019 to 2025, the market for commercial applications will rise at a compound annual growth rate (CAGR) of 7.8%. Over the course of the forecast period, an important driver that is projected to drive demand for tankless water heaters is anticipated to be increasing product visibility of new products. For example, the tankless water heater offered by Intellihot not only eliminates energy waste and the associated negative environmental effect, but it also reduces greenhouse gas emissions by more than 40%.
In addition, the tankless system includes two years of remote monitoring 24 hours a day, seven days a week, with serviceable components being sent onsite in advance. This feature contributes to the increased use of these systems in the business sector. The need for tankless water heaters is expected to be fueled by an increase in the number of commercial buildings because of the expansion of the tourist sector. In addition, the demand for hot water across restaurants, hotels, and resorts is expected to increase. Increasing awareness and severe government rules on the use of energy-efficient and environmentally friendly water heaters across government buildings and hospitals would lead to an increase in demand during the projected period.
