WATER HEATER MARKET ANALYSIS

The global water heater market is estimated to account for US$ 33.94 Billion in terms of value in 2023 and is expected to grow at a CAGR of 12.4% during the forecast period from 2023-2030. A water heater or storage water heater is a domestic water heating appliance that uses a hot water storage tank to optimize heating capacity and provide prompt hot water whenever needed. Conventional storage water heaters use a variety of fuels namely electricity, oil, propane, natural gas, and oil. However, unconventional heaters use solar energy to provide hot water. Solar water heater has been adopted widely around the world since it clean, renewable, and cost-efficient. The selection of proper water solar depends upon several factors such as availability of fuels, type of building that it is being installed, fuel cost, requirements of household, and user safety. Water heaters are used for residential as well as commercial purposes.

 Global Water Heater Market: Regional Insights

North America is the largest market for water heaters, the growth of the market in North America is driven by increasing demand for hot water in residential and commercial applications. The U.S. is the largest market for water heaters in North America, followed by Canada. The U.S. and Canada are the largest contributors to market growth. The region is in increasing demand for energy-efficient and environmentally friendly hot water solutions. Instantaneous water heaters are gaining popularity due to their energy efficiency and compactness.

Europe is the second largest market for water heaters. Market growth in Europe is driven by increasing demand for domestic and commercial application use for hot water. Germany, England, and France are the largest European heater markets. Europe has a mature water heater market characterized by the increasing adoption of energy-efficient technologies. The focus on reducing carbon emissions and increasing the use of renewable energy sources has increased the demand for heat pump water heaters and solar water heaters.

The Asia Pacific region is witnessing significant growth in the water heater market. Rapid urbanization, population growth, and rising disposable incomes are driving the demand for water heating solutions. China, India, Japan, South Korea, and Southeast Asian countries are the major contributors to market growth. The market is dominated by electric storage water heaters, although there is increasing demand for solar water heaters and heat pump water heaters.

The water heater market is growing steadily in Latin America. Countries such as Brazil, Mexico, Argentina, and Chile are major markets in the region. Demand for water heaters is driven by increasing urbanization, rising living standards, and the replacement of traditional hot water systems with more energy-efficient options.

The water heater market is growing in the Middle East and Africa region. Countries such as Saudi Arabia, the United Arab Emirates (UAE), South Africa, and Nigeria are seeing increased demand for hot water solutions. Abundant solar resources and government incentives have made the use of solar water heaters a hot topic in the region. Efficient water management systems are driving the adoption of modern agricultural machinery in the region.

Figure 1: Global Water Heater Market Share (%), By Region, 2022

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Global Water Heater Market Drivers:

High growth construction and manufacturing industry is expected to drive growth of the global water heater market during the forecast period

Water heater has been extensively used in manufacturing as well as construction industries, owing to efficient distribution supply, ample raw material supply, and other factors. Both construction and manufacturing industries have witnessed significant growth in the recent past, especially in developed countries. Moreover, the increasing development of the construction industry in emerging economies such as India and China is expected to boost the demand for water heaters during the forecast period. Furthermore, longer product life, easy reimbursement and replacement, and efficient aftermarket service are expected to drive the global water heater market growth during the forecast period. For instance, on May 16, 2022, GE Appliances, an U.S. home appliance manufacturer, established new water heaters rolling off the line at GE Appliances’ Camden, SC plant for the production of high-tech water heaters.

Growing urbanization across the world is expected to propel the global water heater market growth over the forecast period

Increasing urbanization worldwide has led to consumers buying household appliances. For instance, water heater appliances have gained significant traction in the market in terms of revenue contribution and product demand. Urbanization has led to an increase in the population of cities, increasing the construction of houses, apartments, and skyscrapers. With the expansion of urban areas, the demand for water heaters is increasing to meet the needs of the growing urban population. City dwellers require water heaters for bathing, washing and other household purposes, which is driving the market growth. For instance, on September 26, 2022, Rheem Manufacturing Company, a leading global manufacturer of water heating and heating, ventilation, and air conditioning (HVACR) products, unveiled the enhanced Rheem professional prestige smart electric water heater with leak guard and demand response. Providing homeowners with advanced electric solutions designed to comply with new energy regulations, Rheem now offers seamless connections to the electric grid.

Global Water Heater Market Opportunities:

Use of renewable energy instead of conventional fuel sources

Consumers are increasingly shifting towards renewable energy, owing to growing awareness regarding the benefits of renewable energy, cost-efficiency, and better results. Solar heaters are widely installed in residential as well as commercial buildings, in order to reduce electricity bills. Moreover, governments of various countries offer low-interest loans and subsidies for solar heater installation, which in turn, is expected to increase the adoption of solar water heaters in the near future. For instance, on August 2, 2022, Rheem Manufacturing Company, a leading global manufacturer of water heating and HVACR products, announced the launch of Rheem IKONIC a super high-efficiency condensing gas tankless water heater. This new product line elevates the industry standard for energy-efficient, environmentally friendly water heating products while offering homeowners smart control.

Advancement in existing technologies is expected to offer significant opportunities for market players

Although water heater has been widely used, manufacturers are focused on introducing novel technologies and features in their upcoming products. Manufacturers are focused on introducing water heaters with higher wattage for quicker heating of water, auto supply, pre-set time supply, manual control of water, larger storage tanks, energy-efficient design, etc. Consumers prefer energy-efficient water heaters and are shifting towards automated appliances. This, in turn, is expected to offer excellent growth opportunities for market players in the near future. For instance, on December 15, 2021, Noritz the premiere tankless water heater manufacturer for gas tankless water heaters and propane tankless water heaters, Noritz China launched a new series of residential gas water heaters with the O₃ water generation function in China.

Global Water Heater Market Trends:

Development of hybrid solutions

Key companies in the market are focused on introducing hybrid water heater solutions, in order to cater to constant consumer demand for energy efficiency and high performance. Hybrid water heaters combine different technologies such as heat pumps, electric heating elements, and solar panels to optimize energy efficiency. Ambient air, geothermal energy, and solar energy can be used to heat water, reducing reliance on traditional energy sources. By using renewable energy or waste heat energy, hybrid water heaters significantly reduce utility costs compared to conventional water heaters.

Replacement of old tanks

Energy efficiency is an important consideration for consumers and businesses looking to reduce energy consumption and lower operating costs. Older water heater tanks are often less efficient than newer models. Replacing the old tanks with energy-efficient options such as instant water heaters and heat pump water heaters can provide significant energy savings over the long term.

Global Water Heater Market- Impact of Coronavirus (Covid-19) Pandemic

COVID-19 has changed consumer preferences and priorities. As consumers spend more time at home, there is a growing focus on home improvements and energy efficiency. This changing preference has led to increased interest in energy-efficient water heaters, smart home integration, and sustainability features. The water heater industry, like many others, is experiencing supply chain disruptions due to lockdown measures, travel restrictions, and factory closures. These disruptions have impacted the availability of raw materials, parts and finished goods, causing delays in manufacturing and delivery.

Global Water Heater Market Restraints:

Constant struggle to meet quality and energy efficiency standards

Water heater manufacturers must ensure that their products meet quality and energy efficiency standards. According to Coherent Market Insights analysis, domestic hot water consumption is the second highest, accounting for about 20% of global residential HVAC energy consumption. In addition, insufficient energy efficiency, durability, and insulation are also factors impeding market growth in the near future.

Limited availability of specific fuels, low awareness among the populace, installation challenges, and cost limitations

Water heaters operate on a variety of energy sources, including electricity, natural gas, propane, and solar power. The availability and cost of these fuels may vary by geography and infrastructure. In some regions, the availability of certain fuels may be limited or expensive, which can affect hot water system choice and affordability. Water heater installation can be difficult, especially in older homes or buildings. The process of installation can be affected by the availability of space, access to adequate ventilation, and compatibility with existing plumbing systems. In addition, certain water heating systems, such as solar water heaters, may require particular installation considerations, such as suitable roof suitability and sun exposure.        

Figure 2: Global Water Heater Market Share (%), By Product Type, 2022

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Global Water Heater Market Segmentation: By Product Type

Storage Water Heaters

The global water heater market has been dominated by storage water heaters as a major product type. Hot water storage tanks are traditionally the most used and widely used hot water systems in the world. These are conventional tank-type water heaters that heat and store water. They come in a variety of sizes and fuel types, including electric, gas, and oil. Storage water heaters use heating elements (electric) or burners (gas or oil) to heat water stored in an insulated tank. The heated water stays in the tank until needed. Storage water heaters are available in different sizes and capacities to meet different hot water needs. Tank capacity is typically 20-120 gallons (75-450 liters) or more, depending on model and manufacturer.

Tankless Water Heaters

Tankless Water Heaters also known as on-demand water heaters, these systems heat water directly without the need for a storage tank. It provides instant hot water and is available in electric or gas models. Tankless water heaters are known to be energy efficient. It heats water on demand, eliminating the standby heat loss associated with keeping large volumes of water warm in storage tanks. This saves energy compared to traditional water heaters.

Hybrid Water Heaters

A hybrid water heater, also known as a heat pump water heater, is a type of water heating system that combines the technology of a heat pump with that of a conventional electric water heater. Hybrid water heaters combine heat pump technology with electrical resistance heating to heat water. It extracts heat from the air surrounding the unit and transfers it to the water, providing an energy-efficient heating method. Hybrid water heaters also have an electric resistance heating element as a backup.

Other categories also include specialty water heaters that do not fit into the three types above. These may include solar water heaters, heat pump water heaters, condensate water heaters, or other niche products. Trends in this category vary depending on the specific technology and its relevance in the market.

Global Water Heater Market: Key Developments

On January 31, 2022, GE Appliances, a Haier company, Air and Water Solutions, is set to exhibit for the first time as a new division at AHR Expo booth N8106. The division is a dedicated solutions provider of residential and light commercial water heaters, water filtration, HVAC, and ductless heating and cooling solutions for professional contractors and wholesale distributors.

In September 2022, A. O. Smith, a water heating and water treatment industry leader, announces the addition of the Voltex AL (anti-leak) hybrid electric heat pump water heater to its residential product line. The Voltex AL model leads the water heating industry in efficiency, with the 66-gallon unit having the highest overall Uniform Energy Factor (UEF) of 4.02 and the 50-gallon unit having the highest UEF of 3.8. It's also available in an 80-gallon version.

On January. 4, 2023, Bradford White Water Heaters, an industry-leading US manufacturer of water heaters, boilers, and storage tanks, introduces Bradford White Connect, an external adapter providing app-driven monitoring technology for the AeroTherm heat pump water heater (HPWH) series.

On March 20, 2023, Bradford White Water Heaters, an industry-leading American manufacturer of water heaters, boilers, and storage tanks, announces that its Infiniti® GS and GR tankless water heaters and select eF Series Ultra High Efficiency commercial tank gas water heaters have been certified by the Green Restaurant Association (GRA), the leading voice within the Green Restaurant movement, for use in GRA-certified restaurants.

On February 21, 2023, Rheem Manufacturing Company, a leading global manufacturer of water heating and HVACR products, is introducing Rheem Maximus, a super high-efficiency gas water heater designed with a powerful, efficient burner.

Global Water Heater Market: Key Companies Insights

The water heater market is highly competitive. This is attributed to the continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on a regional as well as global basis.

Some of the key players in the Global Water Heater Market are A. O. Smith Corporation, Zhongshan Inse Group Co, Ltd., Haier Electronics Group Co., Ltd.Himin Solar Co., Ltd., Ariston Thermo Group, Genrui, Bajaj Electricals Ltd., Rheem Manufacturing Company, Jiaxing Jinyi Solar Energy Technology Co, Ltd., Noritz Corporation, SIEMENS AG, Bradford White Corp., Venus Home Appliances (P) Ltd., Havells

*Definition: A water heater is an appliance or device designed to heat and provide hot water for various purposes such as bathing, cleaning, and domestic use. It is an important part of plumbing systems in residential, commercial, and industrial environments.