Market Overview
The Total Addressable Market (TAM) for Water Heater was valued at USD 26.8 billion in 2021. It is projected to reach USD 39.15 billion by 2030, growing at a CAGR of 4.3% during the forecast period (2022-2030).
Water heating is a heat transfer process that raises the temperature of water from its starting point. Hot water is typically used in the home for cooking, cleaning, bathing, and space heating. There are numerous uses for hot water and steam in the industrial sector. Traditional water heaters, kettles, cauldrons, pots, and coppers heat water in the home. These metal containers do not continuously supply heated water at a set temperature. In addition, water heaters, hot water tanks, boilers, heat exchangers, geysers (in Southern Africa and the Arab world), and calories are appliances that continuously supply hot water. The primary driver of the market growth is the need for hot water for numerous home activities, such as washing, bathing, cleaning, and cooking.
Market Dynamics
Market Drivers
Rising Requirements for Energy-Efficient Water Heating Systems and Technological Progress
The process of heating water above its actual temperature involves transmitting heat via an energy source. Water heating accounted for nearly 16% of total energy consumption in a few International Energy Agency (IEA) countries' residential energy consumption shares in 2018. Therefore, choosing energy-efficient water heaters and using energy-saving techniques can help consumers lower their monthly water heating costs. Both rising consumer demand and helpful government restrictions are behind the trend toward energy efficiency.
Energy-efficient appliances and building materials are increasingly influenced by energy and environmental restrictions—many contractors, builders, and engineers that support and work on green projects now prioritize energy efficiency. Furthermore, as numerous states and towns around the nation implement legislative measures to lower greenhouse gas emissions and energy use in buildings, green technologies and sustainability are becoming increasingly important in the United States. It is anticipated that more challenging construction norms and regulations will increase demand for intelligent and energy-efficient water heating systems over the forecast period.
Market Restraints
High Installation, Operation, and Maintenance Costs
Every home needs a water heater because it is used to heat water for various daily residential uses. Traditional or "tank-type" water heaters have a storage tank and can run on gas or electricity. The tank takes in cold water, warms it up, and then stores it for use throughout the structure or home. Tank-type water heaters typically have capacities between 20 and 80 gallons, determining a substantial portion of their price. These systems are less expensive upfront than tankless water heaters, but their maintenance expenses are typically more extraordinary.
In the U.S., the price of a brand-new tank-type water heater, including installation fees, runs from USD 1,300 to USD 2,000. This pricing includes the cost of a straightforward tank water heater, installation labor, materials, permits, and old unit removal. Traditional water heaters come in a variety of sizes, with the larger models being more expensive. On the other hand, tankless water heaters have a higher initial cost but lower ongoing costs in addition to benefits like limitless hot water. Tankless heaters are powered by electricity or gas and do not contain any internal water storage. These water heaters are more environmentally friendly because they are small and only heat the water when needed.
Market Opportunities
Growing Activities Related to Residential and Commercial Construction
Rising construction investment in the developing economies of the Asia-Pacific and the Middle East and Africa is anticipated to have a favorable impact on the demand for water heaters over the forecast period. This is due to economic and industrial expansion as well as population growth. Governments in several developing nations have made considerable investments in public infrastructures, such as hospitals, offices, and housing societies. One of the major trends to develop as a result of the epidemic is the rising popularity of single-family homes. Many Americans had been moving to denser metropolitan areas before the epidemic in search of better job opportunities and more desirable lifestyles, especially the younger generations.
However, because the newest building is geared toward multi-family, high-density houses, these high-density metropolitan areas typically have fewer single-family homes. However, these trends have changed since the pandemic due to the challenges associated with maintaining the necessary social distance rules. With the shift to studying and working from home, there is also an expanding need for extra living space.
Regional Analysis
The global water heater market is divided into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific Dominates the Global Market
Asia-Pacific is the most significant global water heater market shareholder and is expected to grow at a CAGR of 4.90% during the forecast period. The demand for water heaters is anticipated to increase significantly over the forecast period as developing nations like China, India, and Vietnam attempt to recover economically from the recent epidemic. Increased infrastructure spending, a strong housing market, and the economic prosperity of South Asian and South East Asian nations contribute to market expansion. Additionally, it is anticipated that focusing on carbon neutrality and energy-efficiency standards would accelerate market growth. Demand for water heaters is anticipated to rise over the forecast period due to economic expansion in nations like China and India and the expanding availability of gas and electricity in China's semi-urban areas.
Europe is anticipated to increase at a CAGR of 4.30%, generating USD 10,984.41 million during the forecast period. As a result of supportive actions taken by the governments of several regional economies, significant wage growth, and the creation of new jobs, the market is anticipated to grow over the forecast period. Government spending on digital and transportation infrastructure will probably spur regional economic growth. It is anticipated that private investments, notably in the building sector, will foster regional economic growth. The demand for water heaters is expected to be driven by the need for hot water in Europe's cold climate regions. The market for heating equipment has been driven by regulations like the Ecodesign Directive, which focused on the energy efficiency and NOx emissions of water heaters, boilers, and space heaters.
While consumption and investments are behind, countries in Central and South America like Brazil, Peru, and Argentina have begun economic recovery as manufacturing net exports have reached pre-pandemic levels. Remittance inflows, rising food prices, and efficient government support contributed to the economies' improved GDP development. Natural disasters, such as the devastation brought on by storms Eta and Iota in November 2020, present an extra threat to regional growth and restrain the market's expansion. It is anticipated that the Middle Eastern nations of Qatar and Oman will enhance their petrochemical and oil production output. One sign of a promising future for the oil and gas industry is the production of natural gas in Phase 2 of Oman's Khazzan field and the commissioning of the Liwa Plastics Industrial Complex.
Segmental Analysis
The global water heater market is segmented by product and technology.
By Product Analysis
Based on product, the global water heater market is bifurcated into electric, gas, and solar.
The electric segment is the highest contributor to the market and is expected to grow at a CAGR of 4.15% during the forecast period. Electric water heaters come in various styles and configurations, including storage or tank-style heaters, on-demand heaters, and tankless heaters. Electric water heaters with tanks heat the water inside the tank using immersion heating elements. These water heaters have several parts, including two heating elements, a manual reset high-limit switch, an upper thermostat, and a lower thermostat. One of the heating components is located toward the tank's top, and the other is close to the bottom. Single-element water heaters use a single heating element at the tank's base.
Solar water heaters heat water by utilizing solar thermal energy. There are several different designs of these water heaters, and all of them come with a collector and storage tank. The kind of collector and the circulation system are used to categorize solar water heaters. Batch collectors, evacuated tube collectors, and flat-plate collectors are a few different types of collectors. In insulated boxes with dark tubes or tanks, batch collectors boil water and store it until it is needed. The water can stay in the collector for a longer time and get very hot if the hot water demand for a particular household is minimal. In order to prevent scalding at the faucet, a tempering valve is employed. This valve combines hot and cold water to reduce the water's temperature before it reaches the faucet.
By Technology Analysis
Based on technology, the global water heater market is bifurcated into tankless, storage, and hybrid.
The storage segment owns the highest market share and is expected to grow at a CAGR of 4.10% during the forecast period. The traditional water heaters with the most significant market share on a global scale are storage water heaters. Storage water heaters are in high demand because of their affordable beginning costs and capacity to supply many systems simultaneously. Since storage water heaters were intended to fit in domestic spaces, replacing an old unit with a new one was very simple. Compared to tankless water heaters, which have an average lifespan of 20 to 25 years, storage water heaters have a shorter lifespan of 6 to 10 years.
The technology segment with the fastest predicted growth is hybrid heat pumps. This pump consumes around 60% less energy than conventional electric units since it does not directly produce heat; instead, it transfers heat from one place to another using electricity. Hybrid heat pumps are more suitable in areas without natural gas sources. Additionally, compared to tankless water heaters, hybrid water heaters can provide hot water for longer. An additional heat generator from a different energy source is combined with an electrically powered heat pump to create a hybrid electric heat pump (a boiler operating gas, oil, or pellets). A condensing gas boiler is linked with most hybrid heat pumps now on the market.
By Capacity Analysis
Based on capacity, the global water heater market is bifurcated into below 30 liters, 30 - 100 liters, 100 - 250 liters, 250 - 400 liters, and above 400 liters.
The 30 - 100 liters segment is the highest contributor to the market and is anticipated to grow at a CAGR of 3.90% over the projected period. An increase in the adoption of 30 to 100-liter water heaters in residential and commercial settings, such as hospitals, banks, hotels, and retail centers, is anticipated to support market expansion. Customers choose multiple small-capacity water heaters connected in series to meet hot water demand because they can provide system redundancy, lowering downtime. Conventional storage water heaters use large storage tanks to heat water, which results in standby losses and uses more energy. Additionally, timely repair is required for storage tanks, which raises maintenance and operation costs.
Commercial buildings with intermittent hot water demand typically employ water heaters with capacities between 100 and 250 liters. In the past, families with one to five people would employ storage-type water heaters. It is projected that rising urbanization and continuous migration to cities will increase demand for water heaters with a capacity of 100 to 250 liters. A water heater's capacity is a critical factor in determining its efficiency. The time to heat the water will increase if the water heater's capacity is lower than required, while operational costs could rise if the water heater's capacity is much larger than required. The main elements affecting a water heater's capacity are the flow rate and the temperature of the water at the inlet.
By Application Analysis
Based on application, the global water heater market is bifurcated into residential, commercial, and industrial.
The residential segment owns the highest market share and is expected to grow at a CAGR of 4.20% during the forecast period. Water heaters in residential structures, such as flats, bungalows, and apartments, are used for cooking, bathing, cleaning, dishwashing, space heating, laundry, and hand washing. The U.S. EPA estimates that in 2009, residential water heating used around two quadrillions of Btu of energy, or 18% of all the energy used by the U.S. residential sector. In addition, according to the U.S. Energy Information Administration, residential water heating in the United States used close to 19–20% of total energy use in 2015. Hot water usage is rising because it keeps people warm, especially in countries with chilly climates.
Restaurants, hotels, cafes, dormitories, hospitals, nursing homes, institutional living quarters, retail centers, vacation homes, motels, sewage treatment plants, and correctional facilities are just a few of the commercial settings where water heaters are employed. In the food service industry, hot water is crucial since it is needed for cooking, cleaning the kitchen floor, and washing dishes and cutlery. Hot water is necessary for cooking, cleaning, and showering in commercial facilities, including hotels, vacation rentals, and motels. The demand for hot water is increased when tourists visit North America or Europe in the winter when the temperature is below zero Celsius. Hotels, motels, and vacation houses are expected to have a greater need for water heaters.
Top Key Players
A.O. Smith
Robert Bosch LLC
Ariston Thermo SpA
Rheem Manufacturing Company
Rinnai Corporation
Bradford White Corporation
NORITZ Corporation
Whirlpool Corporation
Westinghouse Electric Corporation
Bajaj Electricals Ltd.
Others
