Global Water Heating Market Shifts Gear: Renewables Surge, Traditional Systems Sputter

The current energy crisis has added pressure on governments to accelerate their green initiatives in space and water heating technologies. It will therefore come as no surprise that our analysis of the global water heating markets found that heat pumps, electric storage, and instantaneous water heaters recorded the biggest growth in 2023 and the forecasted period.

2023 saw traditional water heating systems grow by 1.5% globally, whereas water heaters powered by renewable sources (i.e. heat pump water heaters) reported an impressive growth of 21.3% (vs 2022). Our analysis showed that end-users are increasingly replacing gas systems with electricity storage or instantaneous units, given the ever-growing spark gap in most economies. Oil-fuelled water heaters are declining, as they are banned from most markets, with some exceptions for remote areas off the gas grid. Nonetheless, there are certain countries that still permit oil water heaters, but they do so under the condition that a renewable source of heating works alongside them; hence ensuring partial sustainable output.

The above graph depicts the CAGR % for each water heating system from 2022 to 2030. Besides oil-fuelled systems that are in decline, gas storage water heaters note the lowest growth (below 1%). Middle East and Africa still rely on these types of systems, so slight growth is seen in this region. Electric storage water heaters also note a CAGR of 4.5%. However, in Europe gas storage systems are forecasted to decline by almost 5% by 2030 and electric storage water heaters note a marginal growth of 1.3%, for the same period.

Instantaneous water heating systems show a different global picture. In all researched regions, we found that electric instantaneous water heating systems are growing at a faster rate than gas instantaneous systems. The Americas show a 3.3% CAGR (2022-2030) for EIWH and 2.1% for GIWH. Europe’s CAGR for EIWH is marked at 2.7% yet GIWH are in decline with CAGR -2.9% for the same period.

Heat pump water heaters note the biggest potential globally, with almost 17% CAGR for the period 2022-2030. The Americas and Asia & Oceania hold the biggest participation in this market, with over 20% CAGR, whilst Europe notes a 12% CAGR, albeit representing the most advanced market worldwide when it comes to renewables and sustainable sources of energy. Middle East & Africa are not regions we find heat pumps established, as they still rely on traditional systems to heat space and water.

Solar-Thermal water heating saw a slight growth in 2023 versus 2022; however, the future outlook seems much more promising with an overall CAGR 2022-2030 at 3%. Middle East & Africa are the regions that invest the most in ST systems, benefitting from the local climate.

Author: George Laganas