Global Tankless Water Heater Market Growth, Share, Size, Trends and Forecast (2025 - 2031)

The global tankless water heater market is segmented by product type into electric and gas-powered models, catering to diverse consumer preferences and regional energy infrastructures. Electric tankless water heaters are favored for their energy efficiency and suitability in areas with reliable electricity supply, offering instant heating without the need for a storage tank. In contrast, gas-powered tankless heaters are popular where natural gas availability is abundant, providing high flow rates and continuous hot water supply ideal for both residential and commercial applications.

Indoor tankless water heaters are designed for residential and commercial spaces where installation inside a building is preferred. These units offer protection from extreme weather conditions, enhancing their durability and efficiency. They are often installed in basements, utility rooms, or bathrooms, providing a continuous hot water supply without occupying much space. Indoor models typically require proper ventilation systems to prevent gas buildup, making installation costs slightly higher. However, they are highly efficient, reducing energy consumption and utility expenses over time. The demand for indoor tankless water heaters is increasing in urban areas where space-saving solutions are essential.

Outdoor tankless water heaters, on the other hand, are installed outside buildings, eliminating the need for complex ventilation systems. These units are ideal for homes and commercial properties with limited indoor space. They are built to withstand varying weather conditions, often equipped with freeze protection to ensure reliable performance in colder climates. Outdoor tankless water heaters are easier to install and maintain since they do not require additional venting, reducing upfront installation costs. Their popularity is growing in regions with mild climates, where extreme weather conditions do not pose significant risks. Additionally, these models are well-suited for applications such as pool heating and outdoor kitchens, enhancing their versatility in residential and commercial settings.

Both indoor and outdoor tankless water heaters contribute to the market's growth by offering energy-efficient and space-saving solutions. Consumer preference between the two largely depends on climate, available installation space, and budget constraints.

Segmented by application, the market serves both residential and commercial sectors. In residential settings, tankless water heaters are increasingly chosen for their compact size, energy savings, and on-demand hot water capabilities, which are particularly appealing to urban dwellers and homeowners seeking space-efficient solutions. In the commercial sector, tankless heaters are used in various applications such as hotels, hospitals, restaurants, and industrial facilities where continuous hot water supply is essential for operational efficiency and customer satisfaction.

The tankless water heater market is segmented into North America, Europe, Asia Pacific, Middle East and Africa, and Latin America. North America and Europe lead in adoption due to stringent energy efficiency regulations, incentives for eco-friendly technologies, and consumer preference for energy-saving appliances. Asia Pacific, driven by rapid urbanization, rising disposable incomes, and increasing awareness of energy conservation, presents significant growth opportunities for tankless water heaters in both residential and commercial sectors. Meanwhile, the Middle East and Africa, along with Latin America, are witnessing growth fueled by infrastructure development and the adoption of modern building codes promoting energy-efficient technologies.

The market dynamics from 2020 to 2030 are shaped by technological advancements, regulatory landscapes, and shifting consumer preferences towards sustainable and cost-effective water heating solutions. Manufacturers are innovating to address installation challenges, improve heating efficiency, and integrate smart technologies for remote monitoring and control. As global awareness of environmental sustainability grows, coupled with regulatory support for energy-efficient appliances, the tankless water heater market is expected to expand significantly across all segments and regions, offering opportunities for manufacturers to innovate and meet diverse consumer needs worldwide.

Global Tankless Water Heater Segment Analysis

In this report, the Global Tankless Water Heater Market has been segmented by Product, Outlook, Application and Geography.

Global Tankless Water Heater Market, Segmentation by Product

The Global Tankless Water Heater Market has been segmented by Product into Electric and Gas.

Electric tankless water heaters are gaining popularity due to their energy efficiency and suitability for smaller residential applications where natural gas availability may be limited or impractical. These units heat water using electric heating elements, offering instant hot water without the need for a storage tank. Electric tankless water heaters are favored for their compact size, ease of installation, and lower upfront costs compared to gas-powered alternatives.

On the other hand, gas-powered tankless water heaters utilize natural gas or propane to heat water, making them well-suited for larger residential homes and commercial applications that require higher flow rates and simultaneous hot water usage. Gas tankless water heaters are known for their faster heating capabilities and higher output, providing continuous hot water supply without the limitations of tank-based systems. These units appeal to consumers looking to meet high hot water demand efficiently and are often preferred in regions with reliable access to natural gas infrastructure.

The market dynamics for electric and gas tankless water heaters vary across different regions. In North America, both electric and gas units are popular choices, driven by consumer preferences for energy-efficient appliances and regulatory incentives promoting the adoption of eco-friendly technologies. Europe also sees significant adoption of both types, with electric units favored in urban areas and gas units prevalent in suburban and rural settings. In Asia-Pacific, rapid urbanization and increasing residential construction are driving demand for electric tankless water heaters, while gas units cater to industrial and commercial sectors with higher hot water requirements.

Opportunities for growth in the tankless water heater market include technological advancements enhancing efficiency and performance across both electric and gas segments. Manufacturers are focusing on developing hybrid models that combine electric heating elements with heat pump technology or condensing systems, maximizing energy savings and operational efficiency. Additionally, integration with smart home technologies allows for remote monitoring and control, enhancing user convenience and energy management capabilities.

The segmentation of the global tankless water heater market into electric and gas products reflects diverse consumer needs, technological advancements, and regional market dynamics. As energy efficiency regulations tighten and consumer awareness grows, both electric and gas tankless water heaters are poised to play integral roles in meeting global demands for efficient, reliable, and sustainable water heating solutions across residential, commercial, and industrial sectors.

Global Tankless Water Heater Market, Segmentation by Outlook

The Global Tankless Water Heater Market has been segmented by Outlook into Indoor and Outdoor.

Indoor tankless water heaters are designed for residential and commercial spaces where installation inside a building is preferred. These units offer protection from extreme weather conditions, enhancing their durability and efficiency. They are often installed in basements, utility rooms, or bathrooms, providing a continuous hot water supply without occupying much space. Indoor models typically require proper ventilation systems to prevent gas buildup, making installation costs slightly higher. However, they are highly efficient, reducing energy consumption and utility expenses over time. The demand for indoor tankless water heaters is increasing in urban areas where space-saving solutions are essential.

Outdoor tankless water heaters, on the other hand, are installed outside buildings, eliminating the need for complex ventilation systems. These units are ideal for homes and commercial properties with limited indoor space. They are built to withstand varying weather conditions, often equipped with freeze protection to ensure reliable performance in colder climates. Outdoor tankless water heaters are easier to install and maintain since they do not require additional venting, reducing upfront installation costs. Their popularity is growing in regions with mild climates, where extreme weather conditions do not pose significant risks. Additionally, these models are well-suited for applications such as pool heating and outdoor kitchens, enhancing their versatility in residential and commercial settings.

Both indoor and outdoor tankless water heaters contribute to the market's growth by offering energy-efficient and space-saving solutions. Consumer preference between the two largely depends on climate, available installation space, and budget constraints.

Global Tankless Water Heater Market, Segmentation by Application

The Global Tankless Water Heater Market has been segmented by Application into Residential and Commercial.

In the residential segment, tankless water heaters are increasingly favored for their energy efficiency and compact design, which aligns well with modern housing trends emphasizing space optimization. Homeowners are drawn to tankless systems because they provide hot water on demand without the standby heat losses associated with traditional tank-based heaters, resulting in lower energy bills and reduced environmental impact. This segment is experiencing significant growth globally as urbanization continues and housing construction emphasizes sustainability and efficiency.

In the commercial sector, tankless water heaters are essential for various applications across hospitality, healthcare, education, and industrial settings where a continuous supply of hot water is crucial. Commercial establishments benefit from the instantaneous heating capabilities of tankless systems, ensuring reliable hot water for diverse needs such as kitchen operations, guest amenities, and manufacturing processes. Additionally, the compact size of tankless heaters allows for flexible installation in commercial buildings with limited space, contributing to their popularity in retrofitting projects and new construction alike.

The residential segment dominates the global tankless water heater market due to widespread adoption in developed regions like North America and Europe, where energy efficiency regulations and consumer preferences drive market growth. These regions prioritize eco-friendly home solutions, encouraging the adoption of tankless heaters to reduce carbon footprints and energy costs. In contrast, the commercial segment is expanding rapidly, particularly in emerging markets of Asia-Pacific and Latin America, driven by rapid urban development and increasing demand from hospitality and healthcare industries.

Opportunities for the tankless water heater market lie in further penetrating emerging markets, where urbanization and infrastructure development present untapped potential. Manufacturers are focusing on developing advanced tankless technologies, including hybrid systems and smart-connected solutions, to enhance efficiency and convenience for both residential and commercial users. Moreover, partnerships with energy providers and governmental initiatives promoting energy-efficient appliances offer avenues for market expansion and adoption.

The segmentation of the global tankless water heater market into residential and commercial applications underscores the versatility and growing demand for energy-efficient water heating solutions across diverse sectors. As technological advancements and regulatory support continue to drive innovation, the market is poised for sustained growth, catering to the evolving needs of consumers and businesses worldwide.

Global Tankless Water Heater Market, Segmentation by Geography

In this report, the Global Tankless Water Heater Market has been segmented by Geography into five regions; North America, Europe, Asia Pacific, Middle East and Africa and Latin America.

Global Tankless Water Heater Market Share (%), by Geographical Region, 2024

The global tankless water heater market displays a diverse distribution of market share across different geographical regions, driven by varying consumer preferences, regulatory frameworks, and infrastructure developments. North America holds a significant portion of the market share, primarily due to widespread adoption in both residential and commercial sectors. The region's emphasis on energy efficiency and sustainability, coupled with incentives promoting the use of eco-friendly technologies, has propelled the demand for tankless water heaters. Moreover, technological advancements and the preference for space-saving solutions contribute to their popularity in North American markets.

Europe also commands a notable share of the global tankless water heater market, driven by stringent energy efficiency regulations and increasing retrofitting activities in residential and commercial buildings. Countries such as Germany, the UK, and Scandinavia lead in adoption, spurred by government initiatives and consumer awareness regarding energy conservation. The market in Europe benefits from continuous innovations in heating technology, including the integration of smart controls and condensing systems, which enhance efficiency and performance.

Asia-Pacific is emerging as a fast-growing market for tankless water heaters, driven by rapid urbanization, expanding middle-class populations, and increasing disposable incomes. Countries like China, Japan, and South Korea are witnessing a surge in demand for efficient water heating solutions, driven by the need for modernization and urban infrastructure development. The region's market growth is further supported by government initiatives promoting energy efficiency and the adoption of green technologies to address environmental concerns.

In Latin America and the Middle East & Africa regions, the tankless water heater market is gradually expanding, driven by infrastructure development and rising consumer awareness of energy-efficient solutions. These regions present opportunities for market growth as urbanization accelerates and housing construction activities increase. However, market penetration in these regions is influenced by factors such as economic stability, consumer affordability, and regulatory support for energy-efficient technologies.

The global tankless water heater market is characterized by regional dynamics shaped by regulatory landscapes, technological advancements, and consumer preferences for energy-efficient appliances. North America and Europe lead in market share due to established regulatory frameworks and consumer demand for sustainable solutions. Asia-Pacific is poised for significant growth driven by urbanization and government initiatives, while Latin America and the Middle East & Africa offer potential opportunities for market expansion as infrastructure development progresses.

This report provides an in depth analysis of various factors that impact the dynamics of Global Tankless Water Heater Market. These factors include; Market Drivers, Restraints and Opportunities

Drivers, Restraints and Opportunity

Drivers

• Increasing Demand for Energy-Efficient Solutions
• Technological Advancements in Heating Technology

• Growing Urbanization and Residential Construction: The trend of growing urbanization and increased residential construction is significantly influencing the global tankless water heater market. Urbanization involves the rapid expansion of cities and towns, leading to higher population densities and increased demand for housing and infrastructure. As more people move into urban areas, there is a corresponding rise in residential construction to accommodate this population growth.

  In the context of tankless water heaters, urbanization plays a pivotal role due to the space-saving benefits these systems offer. Traditional water heaters with large storage tanks can be cumbersome and occupy valuable space in urban homes and buildings, which are often compact. Tankless water heaters, being smaller and more compact, are ideal for urban settings where space is at a premium. This characteristic makes them increasingly attractive to builders, developers, and homeowners seeking efficient water heating solutions without sacrificing living or usable space.

  The construction of high-density residential buildings and complexes in urban areas presents a significant market opportunity for tankless water heaters. These buildings require efficient and reliable water heating solutions that can serve multiple units simultaneously while conserving energy and reducing operational costs. Tankless water heaters are well-suited to meet these demands by providing on-demand hot water without the limitations of storage tank systems, thus aligning with the needs of modern urban living and construction trends.

Restraints

• Higher Initial Cost Compared to Traditional Water Heaters
• Installation Complexity and Retrofitting Challenges

• Limited Hot Water Flow Rate for Simultaneous Uses: One of the constraints in the tankless water heater market is the limited hot water flow rate for simultaneous uses. Unlike traditional tank-based water heaters that store and distribute a large volume of hot water, tankless water heaters heat water on demand. This on-demand heating process can sometimes lead to limitations in the flow rate of hot water when multiple fixtures or appliances require hot water simultaneously within a household or commercial setting.

  The challenge arises because tankless water heaters have a finite capacity to heat water at a given flow rate. While modern tankless models are designed to meet the hot water demands of average households, the simultaneous use of multiple high-flow fixtures like showers or washing machines can strain the heater's capacity. This can result in fluctuations in water temperature or reduced flow rates, affecting user experience and convenience.

  To address this constraint, manufacturers are continually improving tankless water heater technology. Innovations include optimizing heating elements, enhancing heat exchanger designs, and developing models with higher flow rates to better accommodate simultaneous hot water demands. Additionally, advancements in hybrid tankless water heaters, which combine the benefits of tankless technology with a small storage tank, aim to mitigate flow rate limitations by providing a reservoir of hot water for immediate use during peak demand periods

Opportunities

• Expansion into Emerging Markets
• Integration with Smart Home Technologies

• Development of Hybrid and Condensing Tankless Water Heaters: The development of hybrid and condensing tankless water heaters represents a significant advancement in the market, addressing key challenges and enhancing the efficiency of water heating systems. Hybrid tankless water heaters integrate heat pump technology with traditional tankless systems, offering improved energy efficiency by extracting heat from the ambient air or surrounding environment. This innovation reduces energy consumption and operating costs while maintaining a continuous supply of hot water. Hybrid models are particularly advantageous in climates where air temperatures are moderate, making them suitable for both residential and commercial applications seeking to reduce environmental impact and energy bills.

  Condensing tankless water heaters utilize advanced technology to capture and reuse heat from exhaust gases, typically found in gas-fired units. By recovering heat that would otherwise be wasted, condensing models achieve higher energy efficiency ratings compared to non-condensing counterparts. These units are ideal for applications where gas is readily available and are favored for their ability to lower operating costs over the long term. The development of condensing tankless water heaters underscores the industry's commitment to sustainability and energy conservation, appealing to consumers and businesses alike looking to minimize their carbon footprint.

  As technological advancements continue to drive innovation in the tankless water heater market, hybrid and condensing models are expected to play a pivotal role in meeting increasing demand for energy-efficient solutions. Manufacturers are focusing on refining these technologies to improve performance, reliability, and affordability, thereby expanding their market penetration globally. Furthermore, partnerships with energy providers and government incentives promoting energy-efficient appliances present additional opportunities for the widespread adoption of hybrid and condensing tankless water heaters in residential, commercial, and industrial sectors.

Key players in Global Tankless Water Heater Market include.

• A. O. Smith
• Rheem Manufacturing Company
• Rinnai Corporation
• Bradford White Corporation
• Robert Bosch LLC
• EcoSmart Green Energy Products, Inc
• Stiebel Eltron Inc
• Takagi
• Noritz America
• Navien Inc

In this report, the profile of each market player provides following information:

• Company Overview and Product Portfolio
• Key Developments
• Financial Overview
• Strategies
• Company SWOT Analysis