Tankless Water Heater Market – Global Industry Size, Share, Trends, Opportunity and Forecast, By Technology (Condensing, Non-Condensing), By Energy Source (Electric, Gas), By End Use (Condominium, Salon/Parlor, Hotels & Resort, Hospitals, Residential, Others), By Sales Channel (Hypermarkets/Supermarkets, Exclusive Stores, Multi-brand Stores, Online, Others), By Region & Competition, 2020-2030F

Market Overview

Global Tankless Water Heater Market was valued at USD 3.78 billion in 2024 and is expected to grow to USD 6.11 billion by 2030 with a CAGR of 8.38% during the forecast period. The global tankless water heater market is witnessing robust growth due to increasing consumer preference for energy-efficient and space-saving solutions. Unlike traditional storage water heaters, tankless systems heat water only when needed, eliminating standby energy losses and reducing operational costs. Their compact design makes them ideal for urban homes, apartments, and commercial spaces with limited space. Technological advancements, such as smart controls and improved heating efficiency, are further enhancing their appeal. Additionally, growing environmental concerns and supportive government incentives promoting sustainable appliances are driving adoption. Rising disposable incomes and modern lifestyle trends are also contributing to the market’s expansion worldwide

Key Market Drivers

Rising Demand for Energy-Efficient Water Heating Solutions

A key driver of growth in the global tankless water heater market is the increasing focus on energy efficiency. Unlike traditional storage water heaters, which constantly heat large volumes of water and incur significant standby energy losses, tankless models operate only when hot water is needed. This on-demand functionality greatly reduces energy wastage and lowers utility costs, making them attractive to both residential and commercial users seeking to reduce carbon footprints and operational expenses. The shift is reinforced by rising environmental awareness and stricter energy efficiency regulations. Many governments now implement efficiency labeling programs and offer tax incentives or rebates to encourage the adoption of eco-friendly appliances. Strengthening this trend, the U.S. Department of Energy, in December 2024, introduced updated efficiency standards for gas-fired instantaneous (tankless) water heaters, mandating roughly 13% higher energy efficiency effectively requiring condensing technology to boost performance and align with long-term sustainability goals.

Space-Saving and Compact Design Appeal

Urbanization is accelerating worldwide, especially in emerging economies, leading to smaller living spaces and a higher demand for compact appliances. Tankless water heaters, with their slim profiles and wall-mounted designs, fit perfectly into modern apartments, condominiums, and small commercial establishments where floor space is at a premium. Unlike bulky storage water heaters that require dedicated installation areas, tankless units can be installed in bathrooms, kitchens, or utility closets without compromising on aesthetics or functionality. This design advantage is particularly relevant in metropolitan regions of Asia-Pacific, Europe, and North America, where housing trends favor minimalism and space optimization. The EU’s Renovation Wave aims to renovate 35 million buildings by 2030, at least doubling annual renovation rates expanding demand for compact, efficient water-heating solutions.

Additionally, architects and interior designers are increasingly recommending tankless systems for new residential and commercial developments, as their unobtrusive nature blends seamlessly with contemporary interiors. This shift in consumer preference toward multifunctional and space-conscious home solutions is driving steady market demand.

Increasing Lifespan and Lower Maintenance Requirements

Another significant driver is the longer lifespan and reduced maintenance needs of tankless water heaters compared to conventional storage models. While storage heaters typically last 8 to 12 years, tankless systems can function efficiently for up to 20 years or more with proper maintenance. This durability reduces the frequency of replacement and provides long-term cost savings for consumers. Furthermore, tankless models are less prone to corrosion and sediment buildup since they do not store standing water. This lowers the risk of leaks, water damage, and other issues commonly associated with traditional systems. Manufacturers are also introducing advanced self-cleaning mechanisms and scale prevention technologies to further reduce maintenance demands. For commercial establishments such as hotels, restaurants, and gyms, the reliability and longevity of tankless systems ensure uninterrupted service, making them a preferred choice. The combination of extended product life and low upkeep costs strengthens the value proposition for both residential and commercial buyers.

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Key Market Challenges

High Initial Purchase and Installation Costs

One of the most significant challenges hindering the widespread adoption of tankless water heaters is their relatively high upfront cost. Compared to traditional storage water heaters, tankless systems can cost significantly more to purchase and install. The installation process is often more complex, requiring specialized labor, additional plumbing adjustments, and in many cases, electrical or gas line upgrades to meet the unit’s operational requirements. For example, high-capacity tankless models may need enhanced venting systems or increased electrical capacity, adding to the total expense. While the long-term operational savings and extended lifespan of tankless units can offset the initial investment, many consumers, particularly in price-sensitive markets, hesitate to switch from conventional systems. This cost barrier is particularly pronounced in developing regions, where consumers prioritize affordability over long-term efficiency benefits. Even in developed markets, some homeowners delay adoption due to the perception that the payback period is too long, despite potential energy savings.

Performance Limitations in High-Demand Scenarios

Another notable challenge is the performance limitation of tankless water heaters during high-demand situations. While these systems are designed to heat water on demand, they have a maximum flow rate capacity that can be exceeded if multiple water outlets are used simultaneously. For example, running a shower, washing machine, and kitchen faucet at the same time may result in reduced water temperature or insufficient hot water supply. This limitation is particularly problematic for larger households or commercial settings with fluctuating, high-volume hot water needs. In such cases, consumers may need to install multiple units or opt for higher-capacity models, which further increases costs and space requirements. Although technological improvements are helping to mitigate these issues, the perception that tankless systems cannot handle peak demand remains a concern among potential buyers. Addressing this challenge requires better consumer education, accurate product sizing during installation, and innovations in flow rate capabilities.

Key Market Trends

Integration of Smart Technology and IoT Connectivity

The integration of smart technology into tankless water heaters is becoming a defining trend in the market. Manufacturers are increasingly equipping units with Wi-Fi connectivity, smartphone compatibility, and advanced digital control panels. These features allow users to remotely monitor water temperature, adjust heating settings, and track energy consumption in real time through mobile apps. Many modern models also include voice control compatibility with popular smart home assistants, enabling hands-free operation. IoT-enabled diagnostics can detect issues early and send alerts for maintenance, reducing downtime and repair costs. This shift toward smart integration not only enhances user convenience but also aligns with the broader global trend of connected, energy-efficient home appliances. In addition, the ability to integrate with home energy management systems allows for automated scheduling of water heating during off-peak electricity hours, maximizing cost savings and reducing grid strain.

Growing Demand for Eco-Friendly and Low-Emission Models

Environmental sustainability is influencing consumer preferences, driving demand for tankless water heaters with reduced emissions and higher efficiency ratings. Governments worldwide are implementing stricter environmental regulations, including energy efficiency standards and carbon reduction targets. As a result, manufacturers are developing models that comply with or exceed these standards, often achieving Energy Star certification. Advanced condensing technology is gaining traction, which captures and reuses heat from exhaust gases to improve efficiency and lower greenhouse gas emissions. In addition, eco-friendly tankless water heaters are increasingly being marketed alongside renewable energy systems such as solar thermal setups, allowing households and businesses to further reduce their carbon footprint. With climate-conscious consumers prioritizing green solutions, the emphasis on low-emission, high-efficiency water heating technology is expected to intensify in the coming years, especially in markets with aggressive decarbonization goals.

Technological Innovations in Heating Efficiency and Durability

Advancements in heating technology are significantly enhancing the performance, durability, and appeal of tankless water heaters. Manufacturers are investing in advanced heat exchangers made from corrosion-resistant materials such as stainless steel, which extend product lifespan and minimize maintenance. New burner and element designs are improving heat transfer rates, allowing for faster water heating and higher flow capacities. Self-cleaning systems and scale-reduction technologies are also becoming more common, reducing the effects of hard water and prolonging unit efficiency. Additionally, hybrid models that combine tankless technology with small storage buffers are emerging to address peak demand limitations, offering the best of both systems. Some innovations focus on adapting tankless water heaters for cold climates, incorporating pre-heating functions to ensure consistent performance even in freezing conditions. These technological advancements not only improve reliability but also broaden the appeal of tankless systems to a wider range of consumers and climates. For instance, in 2024, Rheem introduced its ProTerra Hybrid Electric Water Heater, which combines heat pump technology with a small integrated tank, offering enhanced energy efficiency and performance in various climates.

Segmental Insights

Energy Source Insights

Electric tankless water heaters hold the dominating position in the global market due to their ease of installation, lower upfront costs compared to gas models, and suitability for a wide range of residential and commercial applications. They do not require venting systems, making them ideal for space-constrained settings such as apartments and offices. Additionally, electric models are generally more compact, have simpler maintenance needs, and are compatible with renewable energy sources like solar power. Rising electricity accessibility, combined with increasing consumer demand for energy-efficient and eco-friendly solutions, continues to strengthen the market dominance of electric tankless water heaters worldwide.

Distribution Channel Insights

Hypermarkets/Supermarkets dominated the global tankless water heater distribution segment due to their wide product availability, competitive pricing, and ability to offer consumers direct product comparisons. These retail formats provide extensive display areas where customers can physically examine models, assess features, and seek expert advice from in-store representatives. Many hypermarkets and supermarkets also run seasonal promotions, discounts, and bundled offers, further attracting price-sensitive buyers. Their established supply chains and partnerships with leading brands ensure consistent product availability across urban and semi-urban locations. The convenience of one-stop shopping and trusted retail environments reinforces their leading position in tankless water heater sales.

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Regional Insights

North America dominated the global tankless water heater market, driven by high consumer awareness, advanced infrastructure, and strong demand for energy-efficient home appliances. The region benefits from widespread access to reliable electricity and natural gas, enabling smooth adoption of both electric and gas models. Supportive government policies, rebates, and tax incentives for energy-efficient upgrades further encourage installation. Additionally, the popularity of modern, space-saving home solutions aligns with the compact design of tankless systems. Strong distribution networks, including leading retail chains and e-commerce platforms, combined with the presence of key global manufacturers, reinforce North America’s leadership in the tankless water heater market

Recent Developments

• ​In May 2024, A. O. Smith launched its Zip Digital Tankless Water Heater in Mumbai, offering a compact design, feather-touch display, 5.5 kW heating capacity, automatic power control, and advanced safety features, targeting modern households seeking energy-efficient, stylish, and space-saving hot water solutions.

• In Jan 2025, King Heating Products unveiled the HEET 199 tankless water heater, offering a robust 199,000 BTU output, a stainless-steel single-pass heat exchanger, internal Grundfos pump, water hammer arrestor, safety sensors, and installation-friendly accessories.

• In Sep 2024, A. O. Smith unveiled its compact Point-of-Use Electric Tankless Water Heater, which mounts easily near fixtures without requiring venting, and includes dry-fire protection, leak-alert, and scale-detection safety features.

• In Jan 2023, Bosch Thermotechnology has introduced two new electric tankless models: the Tronic 4000 C, a compact, high-efficiency point-of-use unit ideal for under-sink installation, and the Tronic 6100 C, a sleek whole-home system featuring touch controls and modulating heating elements for consistent hot water delivery

Key Market Players

• Ariston Holding N.V.
• A.O. Smith
• Bosch Thermotechnology Corp
• Bradford White Corporation
• GE Appliances
• Rheem Manufacturing Company
• Whirlpool Corporation
• Rinnai Corporation
• Ferroli S.p.A
• Havells India Limited

Report Scope:

In this report, the Global Tankless Water Heater Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

•   Tankless Water Heater Market, By Technology:

o   Condensing

o   Non-Condensing

• Tankless Water Heater Market, By Energy Source:

o   Electric

o   Gas

• Tankless Water Heater Market, By End Use:

o   Condominium

o   Salon/Parlor

o   Hotels & Resort

o   Hospitals

o   Residential

o   Others

• Tankless Water Heater Market, By Sales Channel:

o   Hypermarkets/Supermarkets

o   Exclusive Stores

o   Multi-brand Stores

o   Online

o   Others

• Tankless Water Heater Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  United Kingdom

§  Italy

§  Germany

§  Spain

o   Asia-Pacific

§  China

§  Japan

§  India

§  South Korea

§  Indonesia

o   South America

§  Argentina

§  Colombia

§  Brazil

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Turkey

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the Global Tankless Water Heater Market.

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Global Tankless Water Heater Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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