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No single appliance in modern society is more essential than a water heater. And although taken for granted today, it wasn’t long ago that households and businesses across North America relied on a stove or open fire to heat their water before using it for cooking, bathing or cleaning. We’ve come a long way indeed, but today’s manufacturers have no intention of slowing down innovation or meeting the consumer appetite for it.
“Manufacturers are not only focusing on developing innovative product features but also efficiently developing sales and distribution systems,” notes Persistence Market Research (PMR). “Rising consumer focus on online product research before making a purchase will increase the opportunity for manufacturers.”
In its 2022 report on tankless water heaters, the research firm estimates that global demand for tankless water heaters is poised to expand at a healthy compound annual growth rate of close to 6 percent over the next 10 years and cross a valuation of $6.3 billion in 2031 (https://bit.ly/3t0ySFF).
We spoke to several tankless water heater manufacturers — A. O. Smith, Aerco, Bosch Heating and Cooling, Bradford White, Bradley Corp., Diversified Heat Transfer (DHT), Essency, Intellihot, Navien, Noritz, Rheem, Rinnai and Stiebel Eltron — to get their views on industry trends and where they see the tankless industry going in the future.
More specifically, we started by asking what their market outlook is for this year and next, and what contributes to that view. The response was overwhelmingly positive for both residential and commercial markets.
Disposable Income, Housing Construction Drive Market Growth
A few of the manufacturers we spoke with cited an uptick in how consumers are spending as a result of pent-up consumer demand, fueled by a healthy housing market. “Growing disposable income of the middle-class urban population and rising aspirations toward better lifestyle are some of the major factors estimated to drive demand for tankless water heaters,” notes PMR
“As new housing construction is on the rise, the market outlook for tankless water heaters also will see increased steady growth for 2022 and 2023,” says Chia Lin, product manager at Navien. He adds that, in fact, many manufacturers are struggling to keep pace with demand.
Andrew Tran, marketing manager at Noritz America, agrees: “We’re still anticipating a great finish to the 2022 year in terms of residential due to the real estate market being so hot and tankless being a complimentary purchase.”
Regarding the commercial market, David Federico, senior director of marketing at Rinnai America Corp., says that continued recovery from declines caused by the COVID-19 pandemic results in additional investment in their facilities.
Chris Bove, DHT’s national sales manager of business development, adds: “Due to COVID-19 and current government leadership, government spending has infused capital, allowing the large-scale rebuilding of plumbing infrastructure of government-owned housing complexes and large expansions in health care.”
However, it’s not only about disposable income or a hot housing market. Consumers have been pushing for higher-efficiency appliances for a long time now, and things are coming to a head in terms of placing action behind their words. It’s not surprising, considering that 20 percent of the energy used inside of a home goes toward heating water, notes the U.S. Department of Energy’s Energy.gov site. The percentage varies within commercial settings but is still significant.
“With growing significance on stringent energy efficiency norms and increasing consumer awareness, demand for tankless water heaters is expected to register significant growth,” PMR says.
Energy-Efficiency and Decarbonization Drivers
Almost all the manufacturers we spoke with pointed to consumer awareness and demand around energy efficiency as the driving force within the industry.
Dan Moffroid, director of product management at Bosch Heating and Cooling North America, notes that the adoption of tankless water heaters significantly rose in 2021, and there is “no indication” that the demand will be different this year and in 2023.
“Part of the reason for this rise in adoption is because, in the past few years, the education and understanding among contractors and homeowners about the benefits of a tankless water heater have gained traction,” he explains. “More people than ever in North America have actively embraced what tankless water heaters are, how they work, how they can be used in a home, why they are more efficient, and why they can dramatically impact their monthly expenses.”
Madison Phillips, Rheem’s senior manager of global product management, believes this trend will continue into the foreseeable future, especially as tankless water heaters are more than just energy-efficient, they’re also a “convenient and economical solution for homeowners and business owners, alike.”
More states and municipalities will likely embrace tankless technology over the next five years to save on fossil fuels and reach their savings and sustainability goals, explains Tony Clouse, industrial business development specialist at Bradley Corp.
“When we talk with plumbers in the field, they are stressing their requirements for gaining job efficiencies,” he says. “Specifically, some need to cut energy consumption by 40 to 50 percent, which further makes a case for using tankless water heaters.”
Although making a better world for all is aspirational, it ultimately comes down to saving money.
“We see a push for indirect products to support boiler and heat pump applications because they provide higher operating efficiency and cost benefits,” says Nicholas Lane, product manager of hydronic solutions at Aerco.
But this begs the question — which is more efficient: gas or electric? Our manufacturers fell on both sides of the coin.
“The tankless water heater market will grow as more homeowners and contractors continue to convert to higher efficiency gas units that provide endless hot water,” notes Robert Aldrich, residential segment development director at A. O. Smith.
Amy Turner, Intellihot’s director of marketing, agrees, adding: “The gas tankless market grew more than 30 percent last year to more than 1.1 million pieces. It is believed a sizeable amount (10 to 20 percent) of these units are installed in commercial applications for redundancy, space savings and energy savings. With climate change at the forefront of concerns for many businesses and property owners, we expect continued growth in both segments.”
Dongtaek Lee, senior product manager of specialty products at Bradford White Corp., also agrees, noting: “We have continued to see growth in the tankless market, particularly in the high-efficiency condensing category. Throughout this year and next, we will see increased demand as design, efficiency and regulations impact buying decisions.”
However, other manufacturers see electric-powered tankless water heaters as the path to greater efficiency.
“Electric tankless is part of the green revolution, especially as renewable technologies become a greater source than the use of fossil fuels for electric generation,” says Julius Goodman, head of marketing at Stiebel Eltron. “In addition, more consumers realize the energy-saving benefits of eliminating a tank, and the water savings, if they can keep from enjoying too much of the endless hot water that tankless provides.”
The question is whether homeowners and business owners are looking to remove gas from their properties. And if they are, what is driving their decision-making? While there isn’t one direct answer, a lot of focus is on state and local regulations.
Lane points out that regulations favoring electrification or decarbonization have affected tankless water heaters in many states. “Some regions ban the use of natural gas or propane for new installations; thus, electric and indirect units have become more attractive options,” he explains.
Regulations Steer the
On Jan. 1, 2020, California’s Title 24, Building Energy Efficient Standards, went into effect, effectively pushing through several different bills to phase out natural gas in homes and businesses. Effective Jan. 1, 2023, Title 24 will go even further and do more to promote electric heat pump water heaters over gas, affecting the level at which consumers and contractors use gas-fueled tankless products, explains Eric Truskoski, Bradford White’s senior director of government and regulatory affairs.
Some manufacturers believe similar regulations will take effect across the country — and even though they may be in favor of the outcome, they caution that it is happening too quickly.
“Many state and local codes are coming forward with bans on new construction that are hooked up with natural gas, with some being implemented and some being challenged in court,” Moffroid says. “The intent here is to force a shift away from fossil fuels and go fully electrified. The truth is the world needs to move to a decarbonized future. We understand this issue and are working diligently to help make that a reality. How it will happen, in a way that is economical and allows for an appropriate transition, is still in discussion.”
The challenge, he adds, is that the nation’s electrical grid cannot manage that high level of demand.
“We continue to see certain parts of the country moving toward electrification,” notes Renee A. Eddy, Rinnai’s vice president of innovation. “We are actively monitoring and engaging in the legislation and regulations with the goal of creating a balanced message for decarbonization and will continue to promote the many benefits of leveraging gas appliances as part of a consumer’s choice of energy-efficient products.”
Other manufacturers are completely on board with moving toward the electrification of tankless water heaters.
“With a growing number of places banning new gas connections, it’s evident that heat pumps for space- and water-heating will play a huge role in reaching aggressive climate goals,” notes Scott Isaksen, U.S. sales director at Essency Water Heaters.
All the manufacturers note that they continue to work toward more energy-efficient products because it will be to everyone’s benefit to do so — regulations or not.
Product Innovation Meets Consumer Demand
We asked manufacturers what specifically they are working on when it comes to product innovation.
“Our indirect products use plate heat exchangers, designed to efficiently transfer heat and improve the efficiency of a boiler or primary water heat source,” Lane says. “We also added a flow meter and pressure transducers to our newest indirect model — the SmartPlate EV — to improve temperature control, log hot water demand and monitor scale buildup.”
Aldrich states: “With the implementation of X3 scale prevention technology, A. O. Smith is striving to improve both efficiency and energy savings for all customers. Models that feature X3 technology are Energy Star-certified, feature a UEF of 0.93, and comply with ultra-low NOx regulations. These units perform especially well in homes with hard water because the scale prevention technology provides a built-in defense against hard water damage.”
“Bosch Thermotechnology’s Greentherm 9000 Series has an EZ minimum function,” Moffroid notes. “It means our burner — once it is activated to heat the water — can pulse to allow it to reduce the minimum power to a level of 9,000 BTU/hr. This is extremely important in a tankless water heater because the user may not need to heat a large volume of water without overheating the water.”
Bradford White recently introduced its Infiniti L tankless gas water heater, which includes a built-in recirculation pump that provides for instant delivery of hot water. “With its top water connections that aid retrofit installation and the added value of recirculation and field gas convertibility, this Energy Star-certified tankless water heater meets the needs of a variety of customers,” Lee says. “This latest model will support energy, water and cost savings.”
Bradley’s electric tankless water heaters powered by Keltech have used state-of-the-art technology for years, but one advanced feature is especially noteworthy.
“Our TepidGuard anti-scald feature is standard on all SNA-Series safety shower heaters,” Clouse explains. “This overshoot purge will automatically open and purge excess temperature water. It actively monitors temperature within the heater while operational and passively monitors water temperature while the heater is inactive. This is beneficial for outdoor installations where sun and weather can cause water temperatures to exceed ANSI standards.”
DHT offers a sub-cooling heat exchanger option that reduces operating costs and increases system efficiency by up to 14 percent. notes, “The new advanced electronic PID controller with touchscreen user interface is compatible with building management systems via Modbus IP or built-in BacNet IP, and there is no need for an external gateway,” explains Peter Rimassa, vice president of engineering and product management. “Features include data and fault logging, trending and performance graphing, and a safety alarm system.”
“As the U.S. looks to California, New York, Washington, Massachusetts, and others for their aggressive climate goals and policy, it’s clear that electrification and energy efficiency are incredibly important,” Isaksen shares. “Essency has an on-demand tank water heater that, because of the way it transfers energy, can save a customer up to 10 percent in utility costs over a similarly sized residential electric tank. With thoughtful use of our user-selectable heating modes and quick functions such as vacation and water-saver mode, an owner can save even more.”
He adds that the current EXR model platform will be used for future heat pump and solar water heating products.
Turner shares that Intellihot has rolled out hot water services such as Hot Water 365 and tellibot_ai failure forecaster bots to give businesses peace of mind when it comes to their hot water systems.
“In addition, we have devoted a lot of thought and resources into building a large and knowledgeable contractor network, adding many new positions to our team of national trainers, territory managers and IntelliPRO contractors,” she adds. “And Intellihot’s latest product, iN199, was specifically designed and engineered to be drop-in-ready by matching the connection locations for the most popular-sized commercial tank-type gas water heater. Slide it in place of the existing tank, make the connections, and you are good to go.”
Lin says that Navien is always making improvements and adding new features to its products.
“The latest features include higher turndown ratios, UEF up to 0.96, built-in pump, buffer tank and on-demand recirculation,” he explains. “Navien units have even more
built-in features, such as the new EZNav control panel that uses multi-line text for easier setup and troubleshooting. This new control panel eliminates the need for dipswitches that are common with tankless water heaters, allowing for a quick and easy setup. And NPE2 water heaters come with built-in HotButton, allowing for on-demand activation of the built-in pump or an external pump.”
“Noritz has been working to create more-efficient burners in the system to modulate the heating time as well as a better internal gas mixing system to create more efficient combustion in the unit,” Tran says. “Most of our technology lies within the manufacturing processes of creating more durable heat exchangers so we can warranty them longer and give customers better peace of mind.”
Phillips notes that Rheem has made its mark in the commercial space with tankless options that provide business owners enhanced controls, greater flexibility and additional cost savings compared to traditional tank-type water heaters. Its commercial condensing tankless water heater is designed with a thermal efficiency of up to 96 percent and can be easily scaled with the EZ Rack System.
“On the residential side, the Rheem Prestige Series condensing tankless water heaters are packed with features,” she says. “All models are Energy Star-certified with efficiencies of up to 0.93 UEF and include pre-wired remote-control, exclusive built-in condensate neutralizer to help simplify and expedite the installation process, and Hot Start Programming, designed to minimize cold water bursts.”
Federico states: “The introduction of Smart-Circ Intelligent Recirculation helps to deliver hot water when it is needed, minimizing when the pump runs and the wait time for hot water. Rinnai’s newest noncondensing tankless water heaters, the RE Series, will have models that include a built-in circulation pump.”
Goodman notes that, with electric tankless water heaters already near 100-percent energy efficiency, it is difficult to make them even more efficient.
“However, the addition of Advanced Flow Control with Stiebel Eltron’s new Plus models can be argued to be more efficient,” he explains. “With this new technology, a smaller kW model may be able to provide the comfort of a larger kW model that meets most of the hot water demand. For the few times the demand is too much for the smaller water heater, Advanced Flow Control will still maintain the desired hot water temperature. It’s a clear case of doing more with less, a classic example of efficiency.”
The focus on innovation on the part of the manufacturers is remarkable — especially as the public becomes more informed about the benefits of tankless water heaters. The cycle will continue to push for even more innovation. But even with innovation, what else can keep the market going strong?
Keeping the Tankless Message Clear
We wanted to know if there were anything manufacturers wanted engineers, distributors and contractors to talk more about when it came to educating consumers and providing key takeaways about a tankless water heater.
Bove says it is critical to continue discussing the features and benefits of tankless water heating. Other manufacturers agreed that ongoing education is instrumental in keeping the momentum going in the industry — whether you’re an engineer, distributor or contractor.
“I think many engineers are a little shy about specifying tankless water heaters due to the fear of not having enough hot water capacity for commercial projects,” Tran says. “With tankless systems installed in rack systems, in many cases, they can outperform standard commercial tank installs as well as provide failure redundancy and space savings.”
Clouse adds: “When it comes to plumbing systems, customers are increasingly finding that space is expensive and using tankless water heaters helps to minimize and optimize space allocation. Facilities are also starting to monitor more of their utility uses — more so than in previous years — so engineers understand the benefits of tankless. For instance, if they go tankless, they can reduce their utility expenses by a substantial amount. Tankless technology also helps achieve green building/sustainability goals for the facility.”
Goodman cautions that much confusion still exists about the differences between tank and tankless systems, especially when it comes to sizing.
“A popular question is, ‘Which model tankless electric do I need for x amount of people?’” he explains. “This is a proper question for a tank water heater, not for a tankless water heater. It relates to the number of gallons of hot water available in the tank and the limit of how many people can be served before the tank runs out. A tankless water heater never runs out, so the limit is how many people need to be served at the same time, not how many people can it serve in total.”
Phillips states: “Many factors can impact the performance of tankless water heaters, including product location, outdoor climate and altitude. To find the best tankless gas or electric water heater for a home, plumbing contractors can calculate the temperature degree rise based on location. The average water supply inlet temperature varies by location; the ideal tankless water heater in the south will not perform to the same standards in most northern climates. Information like this is critical when discussing options with consumers.”
Application use is a primary consideration when selecting a water heater.
“Tankless is not a one-size-fits-all solution; there are many applications better served using other approaches to water heating such as a heat pump, a boiler/indirect tank combination, commercial direct fired products, etc.,” Lee notes. “Engineers, distributors and contractors need to properly evaluate the demands of the hot water system in addition to specs and size of the area at the customer location before selecting the type of water heater.
“They should apply the best solution not only based on upfront cost and space but on anticipated life-cycle cost of the equipment — which includes service and maintenance costs.”
Speaking of maintenance, a few manufacturers brought it up as a point of discussion. Bove says it is important to always discuss maintenance and how it will impact the performance of a tankless water heater.
Moffroid adds, “Tankless water heaters need maintenance because as water flows through them, the minerals will build up and calcify. Tankless water heaters should be flushed out to break up the calcification. Once per year is usually adequate; this will help maintain the efficiency they had on day one.”
However, Aldrich notes that once scale forms, scale removal maintenance can be performed, but the water heater will never return to peak efficiency: “Without scale removal, the heat exchanger piping will eventually leak. Technicians need to be cognizant of scale buildup in the units they service to ensure their long-term performance.”
So, we know that education, innovation and persistence lead to continued growth in the marketplace — but how can we help all those that make the industry flow continue their own personal growth?
Training, Resources for Engineers, Wholesalers and Contractors
We asked manufacturers what new resources — including training and other initiatives — they offer to support engineers, wholesalers and contractors to spec, stock and install tankless water heaters.
“We support our rep network with drawings, guides and manuals that help in the design and installation of our products, so our reps are an excellent knowledge resource,” Lane says. “There is also a bounty of information on www.aerco.com.”
“In recent years, A. O. Smith has evolved its virtual training courses offered through A. O. Smith University,” Aldrich notes. “Thanks to the state-of-the-art broadcast studio, instructors can provide real-time, full-scope demonstrations on a range of its products, allowing attendees to continue receiving the benefit of hands-on training while in a virtual environment.”
Classes are taught on a two-way meeting platform, he adds, with a 50-person cap placed on all sessions to ensure participants have a high level of engagement with instructors and can ask questions. In addition, the manufacturer launched a new monthly live talk show, “In Our Element.” It is hosted by Jerry Winslet, A. O. Smith’s senior technical trainer, on the company’s YouTube channel. Each episode features a new topic and guest.
Moffroid states: “It all points to training. Bosch highly emphasizes product training with a focus on proper installation safety to make sure the product is understood and installed according to the manual. We have a central training center as well as mobile training units to go to the contractor to do training, which is a proven key success factor for the safety, efficiency and longevity of our gas products. To complement our in-person training, we also have a library of videos for installation and specific service aspects.”
Bradford White’s SpecLink is a useful tool to help engineers when specifying its products.
“It joins the suite of tools currently available to Bradford White pros, including RightSpec, REVIT and Deltek Specpoint,” Lee explains. “We also have our For the Pro Training Academy, where we offer e-learning training modules for our tankless products, including the Infiniti K and L, in addition to other useful tools and resources to support our customers. And lastly, we have expanded our field sales and support team to meet the growing demand for these products.”
Bradley offers a full line of training, including Lunch & Learns — in person or via video. “Bradley has a very educated staff in tepid water systems, including a highly experienced master plumber that can talk the language of the engineers and contractors,” Clouse states.
The company also offers help with layout and design for all tepid water systems and an online sizing tool for its tankless water heaters at www.bradleycorp.com/water-heater-sizing.
“DHT understands the importance of training and provides ongoing classes via webinar and classroom style to our manufacturer reps, engineers, contractors and end-users on our products and technology,” Bove states. “We also have Diverisize, an online platform that our reps can use to size, price and create a submittal online. DHT stands behind this program and provides a ‘Sizing Guarantee’ that the domestic water heater sized will satisfy the specified application load requirements.”
Isaksen notes that having just launched in late August 2021, everything is new for Essency: “We’ve been fortunate to have a great relationship with Ferguson, and we’ve been introduced to a select number of key contractors who are a great fit. If you join one of our field training sessions, you’ll be able to try out a wall-power demo heater. And if you’re interested, you can throw on the Oculus goggles and take a virtual reality tour inside the EXR.”
The company’s website includes a touchscreen simulator, installation videos and parts replacement videos. And Isaksen adds that the company’s 2022 goal is to spend more time with MEP firms and the engineering and architecture community on design submittals.
“Intellihot is on pace to nearly double our staff this year, with a strong emphasis on training, sales and support,” Turner notes. “Our new corporate headquarters boasts a state-of-the-art training center. And we have added a mobile training center that will travel nationwide to provide training and support for our representatives, wholesalers and contractors.”
Lin says: “Training is very important here at Navien, whether it’s in person, online or via videos. We offer a variety of different training programs aimed at educating our customers by increasing product awareness, proper installations and correct sizing of tankless water heating systems. In addition, readily available online videos are quite popular with homeowners, contractors and specifiers wanting to know more about Navien products and accessories, and tankless water heaters in general.”
Tran invites engineers to reach out to Noritz “at our training website (training.noritz.com) to schedule training, learn more and ask questions to better familiarize themselves and gain more comfort in recommending tankless.”
“Last year, Rheem developed the ProPlumber loyalty program as an extension of our commitment and continued support to our plumbing partners,” Phillips says. “And Rheem’s P2P (plumber-to-plumber) training program delivers in-depth product training; it was developed specifically for plumbers in the field. These sessions are hosted by Rheem’s nationwide team of plumbing support managers, each of whom is a certified master plumber with previous experience managing plumbing businesses across the country.”
“Rinnai’s goal is to not only ensure our customers are trained on our products, but to partner with them to help them profitably grow their business,” Federico says. “Training is a key component, and we continue to expand our offerings to include both online and live training. Additionally, we are expanding the marketing resources that we can offer to our Pros to help them affordably advertise for their business within their local markets.”
Goodman notes: “Our regional sales managers continue to work hard to keep manufacturer’s representatives abreast of all the information they need to reach out to their customers.”
All the tankless water heater manufacturers were clear about one thing: the market is hot. They’re ready to not only meet the demand but to keep pushing forward — with innovation, education and a commitment to excellence.
Thank you to all the manufacturers that spoke to us for this report — we appreciate all that you do!