[Research Report] The Commercial Water Heater Market size is expected to grow from US$ 6.91 billion in 2022 to US$ 11.23 billion by 2031; it is estimated to grow at a CAGR of 6.3% from 2022 to 2031.

Analyst Perspective:

The commercial water heater market has witnessed significant growth in recent years, driven by the evolution of Industry 4.0 and growing investment in smart city projects. Increasing smart city projects in countries like India, Japan, Germany, France, Singapore, Norway, and the Netherlands, among others, are boosting the market. Stringent rules and regulations imposed by the government for the installation of energy-efficient equipment are driving the market growth. Ongoing expansion of the real estate industry and rapid construction of high-rise buildings are creating opportunities in the market. The development of existing infrastructure is fueling the global commercial water heater market.

Commercial Water Heater Market Overview:

The commercial water heater is the equipment used to heat large volumes of water. It is capable of heating water at a faster pace by exhibiting a fast recovery time. A water heater is a closed vessel in which water is heated with the combustion of fuels and electricity to provide a continuous supply of hot water. The water is heated by a heat transfer process that uses electricity, solar, and oil as an energy source to heat water above its initial temperature.

The commercial water heater is equipped with a wide range of equipment such as a temperature valve, drain valve, pressure relief valve, thermostats, tank, and anode rod that heats potable water for purposes other than space heating. These heaters are designed for various applications such as corporate places, restaurants, institutes, and industries that require a larger amount of hot water. Furthermore, the growing demand for energy-efficient heaters for commercial applications is driving the market.

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Commercial Water Heater Market: Strategic Insights

Market Size Value in	US$ 6.91 billion in 2022
Market Size Value by	US$ 11.23 billion by 2030
Growth rate	CAGR of 6.3% from 2022 to 2030
Forecast Period	2022-2030
Base Year	2022

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Commercial Water Heater Market Driver:

Rising Water Heating Installation in Public Areas and Buildings is Driving the Market

Growing demand for hot water in commercial buildings is associated with the building’s total energy consumption, which is significantly driving the market. Commercial buildings such as hotels, motels, offices, buildings with industrial processes, commercial laundries, dormitories, or other high-density housing facilities use water heaters to perform day-to-day activities effectively. Rising demand for hot water, especially from hospitality, travel, tourism, entertainment, and other industries, is driving the market. Moreover, growing customer interest in heating appliances and various initiatives for installing water heaters is projected to boost the market in the near future. For instance, in Mexico City, Claudia Sheinbaum invested US$ 8 billion for 750,000 square meters of solar thermal panels to promote the Energy Sustainability Strategy of 2021 to 2024. These solar thermal panels are dedicated explicitly to commercial water heating. Similarly, the government of Kuwait has already started using solar water heating in public complexes and buildings to reduce the import of natural gases and improve the reliability of electricity.

The electrification in complexes and buildings includes substituting electric technologies for water heating by the end uses. Solar heaters partially electrify industries in the commercial sector. These hybrid-heat commercial heating systems can automatically switch fuels depending upon their price and availability, which closely links this business with energy consumption and CO2 emission, which increases the use of highly efficient water heaters to reduce the environmental impact significantly. Rising environmental concern among consumers across the globe motivates market players to take significant steps to prevent global warming through their business operations and promote the adoption of energy-efficient and sustainable products. For instance, Rinnai Corporation is promoting to convert tank-less heaters in North America. The tank-less heaters are more efficient and ease the impact on the environment globally. Moreover, the company is also promoting the use of gas-powered heaters over electric-type heaters to support the rising demand for high-capacity and highly efficient gas heaters, which is positively supporting the expansion of commercial gas water heaters.

Commercial Water Heater Market Segmental Analysis:

Based on storage capacity, the market is segmented into below 500 liters, 500-1000 liters, 1000-3000 liters, 3000-4000 liters, and above 4000. The below 500 liters segment is projected to expand during the forecast period. Below 500 liters, the storage capacity of commercial water heaters is capable of recovering the large quantities of hot water required in a short duration of time. This type of storage tank capacity is commonly used in salons and SPAs, sports complexes, cafes for hot water, and commercial offices. Moreover, the low-cost availability and easy installation benefit provided by below 500-liter storage capacity-based commercial water heaters are driving the segment in the near future. This commercial water heater provides an ample amount of hot water, making it suitable for low hot water requirements in small commercial applications. Small commercial water heaters of below 500 liters capacity are highly demanded in the hospitality sector, especially in motels and holiday homes, to ensure the interruption-free availability of hot water for bathing, personal laundry, and other applications, thus driving the segment.

Commercial Water Heater Market Regional Analysis:

The Asia Pacific commercial water heater market was valued at US$ XX billion in 2022 and is projected to reach US$ XX billion by 2031; it is expected to grow at a CAGR of XX% during the forecast period. The market in Asia Pacific is expected to dominate in the near future owing to the growing usage of renewable energy and energy-efficient products among consumers. The presence of several leading players in the region such as A. O. Smith Corporation, Rinnai Corporation, Ariston Holding N.V., Rheem Manufacturing Company, DAIKIN INDUSTRIES, Ltd., Mitsubishi Heavy Industries, Ltd., and Bosch Thermotechnology Corp., is driving the market. These players have their manufacturing facilities in countries such as China, India, and Malaysia. These economies are witnessing increased investments in their commercial sectors. For instance, according to Kotak Mahindra Bank Limited, in March 2022, the office space occupied in metro areas has doubled from 5.43 million to 11.55 million square feet, representing a tremendous pace for growth in India. The country is likely to receive an international investment of 1 billion in Grade-A office space as rental property by 2031. The growth in the commercial spaces is creating opportunities in the market during the forecast.

Moreover, the increasing adoption of commercial water heaters in the region is associated with its compact design and partial development of other units. The growing installation of gas pipelines and rising demand for highly efficient and high-capacity products are expected to boost the demand for gas-type commercial heaters in China. Additionally, technological advancement has shifted player's business models to design applications that provide real-time information on water heaters. For instance, in January 2021, NORITZ Corporation created an account on the LINE app that provides daily information on suitable replacement heater models. This helps customers consider product features before purchasing a new, economical, or more convenient replacement, which will boost the market in the near future.

Commercial Water Heater Market Key Player Analysis:

The commercial water heater Market analysis consists of players such as A. O. Smith Corporation, Noritz America Corporation, Danfoss, Ariston Holding N.V., Rheem Manufacturing Company, Rinnai America Corporation, DAIKIN INDUSTRIES, Ltd., Mitsubishi Heavy Industries, Ltd., Lennox International Inc., and Bosch Thermotechnology Corp. among the key market players profiled in the report.

Commercial Water Heater Market Recent Developments: 

Inorganic and organic strategies such as mergers and acquisitions are highly adopted by companies in the commercial water heater market. A few recent key market developments are listed below: 

• In September 2023, A. O. Smith Corporation acquired Water Tec of Tucson to expand its presence on the West Coast by supporting its growth strategy.
• In August 2023, A. O. Smith Corporation acquired Atlantic Filter, a water treatment solutions provider to expand its presence and capabilities in Florida.
• In January 2023, Bosch Thermotechnology Corp. launched Tronic 4000C and Tronic 6100C to expand its electric tankless water heater lineup. The company introduces two new additions to its electric tankless water heater family. Both products are compactly designed to deliver 100% electric, high-efficiency, and on-demand hot water for significant energy and space savings.
• In August 2022, Rinnai America Corporation launched the RE Series Tankless Water Heater with Smart-Circ Intelligent Recirculation. RE series tankless water heaters are a new line of advanced non-condensing tankless water heaters featuring a non-condensing unit with a built-in pump and Smart-Circ Intelligent Recirculation. RE series tankless water heaters offer enhanced reliability, serviceability, and usability and are easy to install
• In February 2022, Mitsubishi Heavy Industries, Ltd. launched Heat2O, an all-electric domestic hot water heating system for commercial application. Heat2O is designed to reduce energy consumption by improving sustainability in multifamily buildings and large-scale commercial facilities. 
• In August 2021, A. O. Smith Corporation introduced Cyclone XL to expand its commercial gas water heating line. The new cyclone XL adjusts the firing rate, which provides greater efficiency and more cost savings benefits to the customers. The Cyclone XL is an ideal solution for commercial applications including healthcare facilities, hotels, convection venters, and housing complexes.
• In June 2021, A. O. Smith Corporation launched 20 new commercial heat pump models to support engineers, contractors, and architects. The new commercial heat pump models provide an innovative, energy-efficient, and reliable solution for large commercial applications.