Growing awareness toward new technologies and product diversity along with rising demand for instant hot water supply across care centers, offices and hospitals will enhance the U.S. commercial water heater market, according to a study by Global Market Insights. In fact, this market segment is expected to grow to $95 million by 2025 at a CAGR of 6%, the firm says.
“Energy and space savings (the consumer’s awareness for green products) is still the No. 1 trend for tankless water heater systems in commercial applications,” says Chia Lin, product manager — water heaters, Navien. “This is followed by an increased demand for smart water heaters, and ability to cascade multiple units together along with ready-link racks to meet higher volume demands of large commercial applications.”
According to Matt Schulz, senior manager for commercial new product development at A. O. Smith, commercial water heating has evolved over the past several years.
“Lately, we are seeing increased market interest in higher Btu tank-type condensing models,” he says. “These units are extremely popular in the HRI segment, as well as new specifications. Building managers are always looking for ways to reduce the mechanical room footprint, and these high input models offer a large advantage when looking to decrease size and increase efficiency. Contractors also value technology and connectivity.
“The need for instant and continuous hot water drives many businesses like healthcare facilities, hotels and restaurants, but they can lack mechanical room space, so designing solutions that fit a small footprint and still deliver results is a top priority,” Schulz continues. “Additionally, most customers are striving towards solutions that offer carbon reduction and the highest levels of efficiency in every application.”
Connectivity and efficiency are key
Connectivity is becoming an important feature in water heaters, Lin notes.
“Remote monitoring — whether if it’s an error alert, operational usage/status, or control of temperature settings — the ability for owners to have access to their water heating system in a commercial application is critical and valuable.”
Scott Cohen, senior product manager, Rheem, says system connectivity is the No. 1 trend in the commercial water heating market today, followed by smart features and advanced tools and training for plumbers.
“Remote connectivity is an important feature within commercial water heating systems because it gives end-users the ability to monitor systems from any location,” Cohen says. “Connected systems have led to a shift from responding to unexpected issues to the water heater alerting end users before problems arise. This allows commercial end users plan service around opening hours or peak hours to minimize disruption to business operations. End users do not have to waste valuable time troubleshooting and can swiftly schedule a plumbing contractor onsite for servicing as needed. Connected water heaters also allow plumbers to run system diagnostics and solve complex issues while on the job.”
Shulz agrees that connectivity is becoming increasingly important for most customers.
“Before the IoT revolution, contractors and business owners had to rely on programmable water heaters that required a user to be physically present to change settings on a touchscreen. All the data was stored locally, but now status and settings live in the cloud where they can be easily accessed on a mobile app, such as the optional iCOMM app, which interacts with connected products to provide real-time updates and flexibility in diagnostics and maintenance.”
David George, product manager, Lochinvar, has seen a consistent move to high-efficiency condensing technology over the past decade.
“This was recognized early in the hydronic and boiler side of the business, but now the trend is taking off on the water heating side,” he says. “Less space in mechanical rooms, the desire for simplified installation, and lower cost drives many of the market trends. Customers also are focused on the most cutting-edge technology and flexibility to enhance installation and maintenance.
“Accessibility and efficiency are two of the most important aspects in product design,” George adds. “For many commercial applications, whether new or retrofit, the engineers at Lochinvar strive to create products that offer enhanced efficiency not only in product performance, but also space-saving design. Products like the ARMOR Condensing Water Heater come in both wall- and floor-mount models to offer a solution for any customer.”
Efficiency will continue to be a key focus over the next few years; however, manufacturers will also shift attention to reducing carbon emission and carbon footprint, Lin notes.
“Products that focus on green and smart technology will continue to thrive,” he adds.
According to Schulz, decarbonization efforts will continue to grow, driving interest in electric products — most notably heat pumps.
“Efficiency is prioritized in every product in the A. O. Smith portfolio, and we work closely with industry leaders like ENERGY STAR to ensure that all standards are met with the highest efficiencies,” he says.
George agrees, saying, “The industry will continue to evolve with an emphasis on electrification and enhanced focus on sustainability. At Lochinvar, we pride ourselves on creating energy-efficient solutions that meet the needs of our customers. Decarbonization efforts will continue to be top-of-mind as our product portfolio evolves and expands. Lochinvar’s recent partnership with Danish company EC POWER to launch the XRGI25 combined heat and power system has created a new achievement in efficient design in commercial applications, allowing simultaneous production of hot water and supplemental electricity from the same fuel source.”
However, if there is an extended downturn in the market because of COVID-19, cost saving strategies will become even more important, Cohen notes.
“There are several ways companies might look to save costs in water heating,” he says. “The first way of doing this is by investing in longer-lasting products to extend the replacement cycle. A second way to save is by investing in high-efficiency products. The Rheem Triton is up to 98% efficient, meaning less wasted energy and lower monthly utility bills. Then, a third way is by using modular systems where components can be replaced or serviced individually. For example, the Rheem Commercial Tankless System is made up of several individual tankless units that offer redundancy and can be serviced or replaced without shutting down the system, eliminating the risk of downtime.”