Tankless Water Heater Market Growth Driven by Smart City Expansion & Energy Efficiency Trends

Global Tankless Water Heater Market to Reach $12.3 Billion by 2031 at 6.9% CAGR 🏠💧

WILMINGTON, DE, UNITED STATES, September 10, 2025 /EINPresswire.com/ --

The global tankless water heater market is on track to expand from $6.3 billion in 2021 to $12.3 billion by 2031, registering a robust CAGR of 6.9%, according to a recent report by Allied Market Research. Tankless water heaters, known for heating water on demand without storing it in large tanks, are increasingly preferred in both residential and commercial sectors due to their compact size, energy efficiency, and cost-saving benefits.

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🔧 What is a Tankless Water Heater?

Unlike traditional water heaters, tankless models use electricity or gas to instantly heat water as it flows through the heating unit. Equipped with water flow sensors, these systems activate automatically, offering hot water without energy wastage. The technology is widely used in solar heating systems, power plant storage, and off-grid applications.

✅ Key Takeaways

The condensing type dominates the market due to its high efficiency and larger capacity.

The electric energy source is the most popular, growing at a CAGR of 7.3%.

Industrial and commercial sectors continue to lead demand.

Asia-Pacific and Europe remain critical regions, with Europe having the highest market share in 2021.

🌱 Sustainable Energy Storage Fuels Market Demand

Governments globally are actively promoting energy-efficient solutions and sustainable infrastructure. This strong push for green energy solutions fuels demand for tankless water heaters, as they reduce reliance on coal, oil, and other fossil fuels. Additionally, the market offers employment opportunities and attracts new investments, further boosting global economic growth.

⚡ Market Segmentation Insights

By Type: The condensing segment accounted for the largest share in 2021 (about 62.7%) and continues to lead due to its high efficiency and ability to meet continuous hot water demands. Condensing tankless water heaters are preferred in applications like apartment buildings, nursing homes, and hotels.

By Energy Source: The electric tankless water heater segment leads with a 56.7% market share, driven by rising residential, commercial, and industrial demands. These models offer benefits such as high efficiency, lower operating costs, long lifespan, and minimal standby energy loss.

By Energy Factor: The 0.91 to 0.99 EF (Energy Factor) segment commands the largest share (71.7%) due to growing consumer interest in highly efficient water heating solutions that offer lower utility costs and sustainability.

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🏢 Commercial Sector Drives Market Growth

The commercial segment dominates revenue share, expected to grow at a CAGR of 7.1%. Rapid urbanization and development of hotels, warehouses, educational institutions, offices, food services, and healthcare facilities contribute to this surge in demand for efficient and reliable hot water solutions.

🌍 Regional Outlook

Europe led the global tankless water heater market in 2021, accounting for over 31.4% of total revenue. Factors such as high electrification rates, rising disposable incomes, and smart city projects contribute to Europe’s leadership. The region is projected to grow at the fastest CAGR of 7.4% during the forecast period.

🏭 Leading Players in the Market

Key industry players profiled include A.O. Smith, Bradford White Corporation, EcoSmart Energy Products, General Electric, Noritz Corporation, Navien, Inc., Robert Bosch GmbH, Stiebel Eltron, Westinghouse Electric, and V-Guard Industries Ltd. Strategic moves such as business expansions, mergers, and acquisitions help these companies stay competitive.

🦠 Impact of COVID-19

The pandemic negatively impacted the tankless water heater market in 2020. Lockdowns and social distancing measures delayed construction projects, leading to lower demand. Supply chain disruptions and labor shortages further challenged the industry, especially in Europe. However, recovery began by the second quarter of 2021, with growing demand for efficient infrastructure solutions.

💡 Future Outlook

The tankless water heater market holds a promising future, driven by rising smart city investments, government incentives, and growing environmental awareness. Condensing and electric models will remain the most sought-after solutions, especially in commercial applications.

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As the energy landscape evolves, the global tankless water heater market stands as a vital player in the shift toward sustainable energy solutions. By providing on-demand hot water with minimal energy loss, tankless water heaters contribute to both operational cost savings and environmental conservation. 🌱🏢

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About Us

Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Portland, Oregon. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of "Market Research Reports" and "Business Intelligence Solutions." AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.

Pawan Kumar, the CEO of Allied Market Research, is leading the organization toward providing high-quality data and insights. We are in professional corporate relations with various companies and this helps us in digging out market data that helps us generate accurate research data tables and confirms utmost accuracy in our market forecasting. Each and every data presented in the reports published by us is extracted through primary interviews with top officials from leading companies of domain concerned. Our secondary data procurement methodology includes deep online and offline research and discussion with knowledgeable professionals and analysts in the industry.

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Allied Market Research
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