Water heaters continue to be a niche requirement, with the country’s climate being more tropical and hot for most months of the year.
Water heaters are emerging as technologically advanced and innovative products, and stylishly designed globally. Though the global market is almost saturated, continuous innovation on the part of manufacturers is making a difference. While traditional water heaters were huge in size and consumed high energy, their modern counterparts are compact, energy efficient, and more consumer savvy. As consumers’ preferences on finish, design, energy consumption, and technology are shifting, manufacturers and their design teams are responding with equal alacrity.
The Indian electric water heaters market in 2016–2017 is estimated at `1630 crore, and by volume as 2.97 million in numbers, a 10 percent increase since 2015–2016. The electric storage heaters dominate the segment. According to the India Water Heater Market Outlook 2021, though electric water heaters are currently dominating the market, solar water heaters have also gained prominence among Indian consumers over the past few years and are expected to grab a share of 40 percent by 2021, currently estimated at `245 crore, and 15 percent of the value of electric water heaters market. Growth in this segment is expected on account of rising awareness among consumers, pertaining to the benefits of solar water heaters both in terms of energy-efficiency and being
eco-friendly. The demand for water heaters has been increasing over the last few years on account of growth in the construction sector and increasing disposable incomes and is expected to reach `2880 crore by 2022, which translates to a mere annual increase of 12 percent.
Roughly 30 percent of the household electricity consumption is accounted for by water heaters. Consumers are becoming more aware and conscious of this, hence they look for products that have a good BEE star rating. This trend has ensured that manufacturers invest in R&D and bring out products that are beneficial to the end consumers.
In the solar segment of the water heater market the story takes a turn where the market is firmly in the hands of unorganized manufacturers or local manufacturers, thanks to the cheaper Chinese imports. The unorganized players target the price sensitive customers as the basic models they have to offer in the solar segment cost roughly around `8500 which is almost half the price as compared to the branded ones that go up to `15000. The established players in the segment are Emmvve, Anu Solar, Tata BP, and V-Guard which has minimal share in the market as compared to the local manufacturers.
Water heaters are strongly affected by seasonality, and are dependent on the weather. They continue to be a niche requirement, with the country’s climate being more tropical and hot for most months of the year. But with winter season setting in, particularly in the Northern and Northeastern regions, the demand for heating appliances is considerably high, resulting in a strong focus on the product by retailers and manufacturers.
As manufacturers look forward to better sales over the next couple of months and gaining market share, they are ramping up their production capacity, devising aggressive marketing strategies, and introducing new products.
Online retailing has become an important channel for the sale of retail goods and services. It offers water heaters at relatively low prices, with safe and secure online ordering facilities and 24×7 customer service centers. Heavy discounts and end-of-season sales also contribute largely to the online retail market.
Electric Water Heaters
Electric heaters provide an edge over traditional fuel-based heaters in terms of costs, product design, and shelf life. Additionally, these heaters can be efficiently installed pertaining to space conditioning loads and require lesser maintenance, which is set to grow at an annual rate of 7.5 percent over 2016–2024.
Electric water heaters are currently one of the most popular water heaters among consumers. Models falling between the range of 120 V and 240 V are extensively used. Though the electric water heaters market is moving toward maturity, continuous innovation on the part of manufacturers is driving the growth. The market is anticipated to witness growth owing to increasing number of residential housing and commercial projects worldwide. Middle-income homes are the highest consumers of electricity for heating water. Growing demand for tankless water heaters and rise in disposable income is further fuelling the global electric water heaters market. Additional factors such as energy efficiency, improving environment sustainability, and temperature control are anticipated to accelerate the market. Rising infrastructure investment in rural areas is also expected to open a window of opportunity for market players. The electric water heaters market will observe a lucrative upsurge, primarily driven by growing demand across wide in domestic application such as cooking, bathing, and cleaning, as well as from commercial end use such as hospitals and hotels.
Electricity shortages and fluctuation coupled with popularity of alternate fuels such as solar power and adoption of hybrid products may prove to be a restraint for global electric water heaters growth. Rising electricity prices, changes in government regulations, and volatile raw material prices are few other challenges. Asia-Pacific is anticipated to dominate the global electric water heaters market followed by North America. With increasing investment in infrastructure development, China and India are expected to be major contributors to drive the demand of electric water heaters market in the region.
On an average, water heating accounts for nearly 20 percent of the energy costs of a residential unit. Taking this into account, the new energy efficiency standards enacted by the governments across the globe are expected to curb the utility bills by 30–40 percent depending upon the electric water heater capacity and technology deployed. Global awareness regarding limited fuel supply has stimulated the demand for electric-powered alternatives.
Companies are focusing on strengthening their regional presence, primarily through R&D activities. Leading companies are also concentrating on product differentiation to score a competitive edge over their rivals in the business. The rising government pressure on companies for reducing carbon footprints has led to major corporations striving to develop low cost, eco-friendly, and efficient electric water heaters. Such strict norms coupled with changing consumer preferences toward electric products are sure to impel the industry share.
Storage-based heaters. Storage-based/tank-type electric water heaters are set to grow globally at an annual growth rate of
6.8 percent, driven by the product’s increased requirement across residential applications. Internet connectivity has become a significant technological trend in tank products because homeowners and facility managers want additional control over their hot water and real-time monitoring. More storage-based water heaters are now changing to accommodate electronic controls with more Internet-ready interfaces as manufacturers have put an increased focus on the user experience.
Tankless heaters. Non-storage-based (tankless) electric water heaters global market is anticipated to grow at a CAGR of 8.7 percent over the next five years, driven by the high product adoption subject to rising consumer incomes and the requirement of periodic upgradations. Growing awareness for automated temperature control, energy efficiency, and environmental sustainability are estimated to favor the tankless heaters demand especially in developed economies. However, increasing government initiatives to improve rural infrastructure and rising awareness of uninterrupted electricity availability in these areas are expected to provide new opportunities for market growth in developing economies.
As the availability of high-efficiency alternative water heating technology continues to spread, these models will continue to receive more consideration from homeowners and contractors. Properly sized and selected, tankless offers the peak gallons per minute (gpm) required and savings desired for high-volume water users. In the residential space, endless and consistent hot water temperature has understandably become the priority of end users when seeking a tankless water heater application – while energy and space savings follow a close third and fourth in reasons for wanting to go tankless.
Appearances have changed, especially in the consideration of residential units. These changes are not just an effect of the regulations, but also a result of the changes in technology. High-efficiency, condensing, tankless water heaters have reduced stack temperatures so that they can now vent through PVC pipe. The addition of internal bypass valves has increased temperature stability of many tankless water heaters, making large temperature fluctuations a thing of the past. Location also has an impacted the aesthetic of water heaters. Tankless cabinet looks have become more attractive, allowing their location to be placed in visible spaces. Fronts are sleeker looking and often incorporate advanced control panels.
Gas Water Heaters
Global gas water heaters market size for 2016 was valued over USD 8 billion and is set to exceed 30 million units by 2024. Stringent government norms toward integration of energy efficient products coupled with growing demand for refurbishment of existing heating pipelines and systems will drive the gas water heaters market size. Strong economic factors including initial costs and payback periods will positively influence the industry landscape. Residential market in 2016 was valued over 25 million units. Ongoing residential establishments across developing countries favored by rising infrastructural investments will stimulate the product demand. Advancing real estate sector coupled with growing demand for refitting of existing infrastructure will foster the product penetration. Rapid technological advancements along with increasing measures to reduce product standby losses will further thrust the industry growth.
Regulatory reforms pertaining to enhanced product efficiencies along with increasing consumer awareness toward emission control will further enhance the industry outlook. Ongoing technological advancements including digital temperature control and electronic thermostats coupled with increasing emission control measures will foster the market growth. Extreme climatic conditions along with rising concern toward energy conservation will further complement the industry.
By-product. The storage gas water heaters market is predicted to witness a growth over 1 percent owing to lower initial costs and ease-of-replacement when compared to their counterparts. The product integrates preheating and holding capacity which further amplifies its penetration pertaining to the availability of optimum warm water quantity. Tankless in 2016 accounted for over 75 percent of the global gas water heaters market share. Durability, longevity, endless supply, and comparatively small size are some of the imperative parameters which will embellish the business growth.
By region. Developing regions across APAC, MEA, and Latin America will witness higher product penetration owing to rising demand for lower standby losses and cost-effective products. Developing economic scenario on account of rampant commercialization and residential establishments will boost the product demand across the Asia-Pacific region. The United States accounted for over 70 percent of the North America gas water heaters market share owing to ongoing replacement of the traditional heating systems. Increasing adoption of customized products along with smart control heating facilities will positively influence the business landscape. Government mandates toward adoption of energy efficient products along with increasing demand for replacement of existing heating systems across North America and Europe will augment the gas water heaters market size.
High-end research initiatives toward the development of energy efficient and cost-effective appliances are the prominent strategic measures adopted by the leading industry players. The industry has witnessed intense competition from its available counterparts over the years subject to low initial cost.
Solar Water Heaters
The global solar water heaters market will grow at a CAGR of 6.78 percent during the period 2017–2021. Conventional water heaters either use electricity or nonrenewable energy sources. With the rising prices of these energy sources, end users are increasingly adopting solar water heaters.
The electric water heaters dominate the market as they come with low ownership cost and lower maintenance; however, solar waters have started picking up slowly. The global solar water heaters market is incentivized by various governments across the world. Through campaigning, various government agencies are educating consumers about the benefits of using solar water heaters over conventional methods. The government is also trying to convert the already installed water heaters to be converted to solar type water heaters. As the population is increasing, so is the demand for power leading to the consumption of more electricity. With the depletion of existing nonrenewable energy, the renewable energy comes out to be the only solution. Therefore, it is expected that the market for the solar water heaters will lead the water heaters market globally. In many countries, such as China, Germany, and Japan, the respective governments have mandated the installation of solar water heaters in new buildings and constructions.
The only factor that dents the solar segment is high cost of ownership from the organized market and lower quality from the unorganized market that in turn increases the maintenance cost. The industry is filled with large numbers of unorganized as well as organized manufacturers. The market has shown immense growth potential resulting in the continuous improvement in the products by the organized as well as unorganized segment. The unestablished business units enjoy more than half of the solar water heater market share, as they are able to offer the products at highly competitive price. The major organized players in the segment have a significant share in the market, but the lion’s share in the segment is acquired by the huge unorganized segment.
Today, the potential for lower solar water heaters costs lies mainly in equipment and manufacturing. These can be improved by economies of scale, simpler designs, development of more manufacturing capacity, and use of better techniques, including automation. While the initial cost is higher, operating costs for SWH are much lower, even when electricity is used as a backup. Developing countries represent more than 90 percent of the growth in water heating demand over the next 25 years. This is particularly true in areas with a combination of significant solar resources and underdeveloped electricity infrastructure. Governments will need to take advantage of falling costs and enact policies that encourage renewable heating if the second chapter of renewable energy is to be written in time to meet global climate goals.
Asia-Pacific solar based water heaters market is anticipated to grow at a robust CAGR of 6.9 percent during 2017–2024. Giant population and high adoption rate of solar-based devices are expected to be the dynamic factors which are likely to foster the growth of solar-based water heaters market in this region. Additionally, economies such as India and China are envisioned to be the key contributors to the growth. China is the major contributor to the growth of Asia-Pacific solar based water heaters market. Further, China is projected to capture more than 50 percent share. Further, India is the second leading market for solar-based water heaters. Factors such as large potential of solar power generation and government supports are expected to fuel the growth of solar based water heaters market in India. Additionally, Japan is also expected to witness remarkable growth owing to growing use of renewable energy and high adoption rate of advanced technologies in this country.
Another latest trend gaining momentum in the market is emergence of hybrid water heaters. These are a mix of solar and conventional water heaters, which are manufactured to overcome the drawbacks of normal water heaters. Hybrid water heaters are more energy efficient and effective than conventional water heaters and standard solar water heaters. They use the latest technology and consume lesser energy than conventional water heaters.
Residential Electric Heat Pump Water Heaters
Electric heat pump water heaters have also been introduced in the market. The market is forecast to grow at a CAGR of more than
11 percent through 2017–2021. The residential sector dominated the market with close to
53 percent of the market share in 2016. Highly efficient, the heat pump water heaters are great for the environment and savings are quickly realized in as little as two years or less.
A new NRDC study shows that water heaters that use high-efficiency heat pump technology, the same process that keeps refrigerator cold, can cut the amount of electricity used to heat water by half or more, saving significant amounts of energy and money on your household electricity bills. Heat pump water heaters use the same technology as refrigerators, but in reverse. Instead of removing heat from inside the refrigerator and releasing it into the room, heat pump water heaters move heat from the air into the water tank. Heat pump water heaters are most efficient in warmer climates, but even in cold climates states, heat pump water heaters still use only half as much electricity as conventional electric water heaters. Pure heat pump water heaters are more efficient than hybrid models that use back-up resistive heating elements. They are more expensive to buy and install than conventional electric water heaters. However, because they are so much more efficient, the lower electricity bill will more than cover the difference. Over the typical 13-year life of a water heater, total cost for purchase, installation, and operation of a 50-gallon hybrid water heater can be up to 60 percent lower than for a conventional electric water heater depending on electricity rates and the co-efficient of performance.
Virtually every appliance and solution within the home is being outfitted with a series of connected features, so smart water heaters comes as a logical next step in the shift toward the fully connected home. Water heaters consume high levels of energy in households, often exceeding domestic activities such as cooking, refrigeration, and lighting. Therefore, the development of smart water heaters is beneficial in bringing about energy efficiency in water heaters. A water heater can now have Bluetooth and Internet connectivity and interact with smartphones, allowing homeowners more control and contractors easier diagnostic capabilities and some also offer touchscreen operation. Smart devices communicate with users by means of a cell phone application and learn hot water usage schedules. Customers can switch the equipment on or off through the cell phone application. The controller works with electric water radiators and gas models equipped with electronic control valves. It is also designed to report energy utilization and other data.
Smart water heaters now come equipped with various sensors and options, such as:
Remote temperature adjustment. Smart water heaters connect to the Internet, allowing the user to adjust the temperature from an app on the phone. Heat can be turned down while away at work for the day to save energy by having a lower temperature the heater must maintain for water in the storage tank.
Pattern learning. Some smart water heaters feature programs that learn the user’s water use habits over time. Once the system records the pattern, it uses that information to shift into energy saving mode during times when you are less likely to need hot water.
Mechanical self-diagnosis. Sensors allow smart water heaters to monitor for and diagnose mechanical problems, sending the user a notification and giving valuable information to fix problems before they become major failures.
Leak detection. Smart water heaters use sensor technology to detect water leaks and sound the alarm to keep a small drip from becoming a damage-causing flood.
Self-cleaning. One of the biggest causes of wear and tear on water heater units is build-up of sediment. Smart water heaters can monitor sediment levels and activate self-cleaning features to remove sediment and extend the lifespan of the unit.
Water heaters with remote controls allow individual consumers or utility companies to turn the water heater off or on depending on energy supplies. Thus, the evolution of electric water heaters into smart devices may lead to considerable savings in terms of electricity consumption. Many major manufacturers are joining the smart water heaters market with the latest innovations. There are even smart devices that can be retrofit to an existing water heater to add some smart technology features until it is time to replace the unit.
Developments in new energy saving technologies, enhanced comfort algorithms, and improved display technology will drive growth. Demographic shifts such as numerous small households and surging disposable income will prove beneficial for replacement demand on a global scale. The consumer is doing more research and engaging more in the selection process. Water heating remains one of the top energy expenses in the home, and homeowners and businesses are looking for smart investments that create value by reducing monthly bills. Consumer preferences have shifted toward demand for high-end devices as a direct result of higher purchasing power and evolving lifestyle. To find those savings, they are asking for more innovative products. With reduced models offered, physically larger tanks, and added cost of units, tankless water heaters have become more attractive. For residential hot water systems, high-efficiency alternate technologies will continue to gain traction with homeowners and residential contractors. Vendor focus lies on ensuring quality control, improving lead time and productivity, employing eco-friendly materials, and maintaining customer satisfaction. They also focus on M&As to offer innovations and better technologies in their products. Manufacturers are still diligently working to further improve their product lines.