U.S. Heat Pump Water Heater Market Size, Share & COVID-19 Impact Analysis, By Type (Air Source and Geothermal), By Capacity (Less than 10 kW, 10 kW to 30 kW, and Greater than 30 kW), and By End-user (Residential, Commercial, and Industrial), and Country Forecast, 2023-2030

The U.S. heat pump water heater market size was worth USD 468.22 million in 2022 and is projected to grow at a CAGR of 5.90% during the forecast period. 

Heat pump water heaters use electrical energy to transfer heat from one source to another rather than producing heat directly. The technology is energy-efficient and can be two to three times more energy-effective than traditional electric-resistance water heaters. Heat pumps work similarly to an inverted refrigerator to transport heat. They are progressively known as a critical technology for heat decarburization and have received targeted policy support in several countries in recent years. The U.S. sales of heat pump water heaters doubled from 2016-2020. It is an energy efficient technology and is driven by the benefits and the push for greater adoption by manufacturers, utilities, and governments. This leads to an increase in the growth of the market.

The COVID-19 pandemic hampered market growth due to the lockdown, which halted production activities, resulting in a shortage of raw materials and labor. In addition, the resource chain was also disrupted. Due to the lockdown measures and labor shortage, installation and maintenance work was postponed. Although activities have started, post-lockdown, installation and maintenance activities are not back on track, mainly due to high dependency on exports from other countries.

U.S. Heat Pump Water Heater Market Trends

Increasing use of Alternatives to Fossil-Fuels-Based Boilers Stimulates Demand for Heat Pump Water Heaters

Hot water is an everyday requirement for modern living. Traditionally, water is heated through burning fossil fuels or using electric heaters. These methods of water heating work at an energy efficiency of less than 1, which means that the heating delivered is less than electrical energy or fuel used. Increasing energy prices of gas or oil heating systems and the need to meet and reduce carbon emissions targets have caused a growing interest in dedicated heat pumps.

Installing heat pumps as an alternative to fossil‐fuels‐based boilers considerably decreases greenhouse gas radiations in all main heating system markets, even with the existing electricity generation mix. This advantage will surge further as electricity systems decarbonize. There are several U.S. manufacturers of residential HPWHs, including Bradford White (the third-largest

supplier to the overall U.S. water heater market), Vaughn, and Nyle Systems. U.S.-manufactured HPWHs appear to be primarily sold through the wholesale channel. The largest source of U.S. for these water heaters is imported, which appears to be Mexico, where A. O. Smith and Rheem have heat pump water heater industrial plants.

U.S. Heat Pump Water Heater Market Growth Factors

Supportive Government Initiatives and Development to Boost Market Growth

Electricity consumption and output will increase when heat pumps, both air-to-water and ground-source, are used as heat sources in new dwellings compared to heating solutions that do not use electricity. The demand for these heaters in residential sectors and buildings is increasing tremendously as high-performance insulation reduces the hourly peak power in various buildings compared to the minimum insulation. The requirements for commercial hot water systems can be greater and more demanding than for residential systems. Some manufacturers are bringing these heat pump systems to the market with higher performance, favoring the U.S. market growth.

In the U.S. The Better Energy, Emissions and Equity Initiative (E3 Initiative) will focus on advancing research, development and nationwide adoption of cleaner heating and cooling systems. These include heat pumps, advanced water heaters and refrigerants with low or no global warming potential, and smarter HVAC. Diagnostic tools in residential and commercial buildings depend on the type of business. There are specific resources for evaluating options, such as commercial resources from the Department of Energy and the Environmental Protection Agency.

Some domestic built-in water heaters can connect to the electricity provider via a device supporting the Eco-Port communication standard. This has not yet been widely adopted for larger commercial built-in water heaters. A corresponding alternative has not been established. These could be controlled via a building automation system and programmed to respond to demand signals from a utility. The government has a long-term vision for decarbonizing the power grid, which will require market transformations for both the residential and commercial sectors. Such initiatives are expected to favor industry expansion in the coming years.

RESTRAINING FACTORS

Higher Costs of Installation May Hinder Product Usage Impeding Market Expansion

In the U.S., every building has unique barriers. While some buildings may be fully electrified and capable of a simple swap, many buildings require an upgrade to become fully electrified. Upgrading the switchboard and wiring to support electrical equipment will be a common requirement, particularly in older buildings that support limited electrical equipment. Another obstacle is that many homes, apartments, and condos do not have adequate space for heat pumps or heat pump water heaters and require creative solutions. Additional concerns include the local utility's distribution infrastructure, such as power lines and transformers, which may require capacity expansions to meet the increased power demands of an all-electric home. Therefore, if the need for these additional measures is considered, the upfront investment costs for heat pumps increase, which varies according to the property type depending on the existing energy efficiency.

U.S. Heat Pump Water Heater Market Segmentation Analysis

By Type Analysis

Based on type, the market is segmented into air source and geothermal. The air source segment holds the highest market share.

• The air source type segment propels the market growth. It provides the versatility of installation for heat pump water heaters. They are installed in various locations, such as utility rooms or outdoors, as long as sufficient air circulation exists. This flexibility makes it easier for homeowners to integrate heat pump water heaters into their existing infrastructure without requiring significant modifications.

By Capacity Analysis

Based on capacity, the market is segmented into less than 10 kW, 10 kW to 30 kW, and greater than 30 kW.

• The 10kW to 30kW capacity is the dominating segment, and the 10kW to 30kW capacity is majorly preferred for generating heat directly. This capacity range are used for the commercial applications. As the handling capacity is more as compared to previous one they can handle the higher demand of hot water, making suitable for larger households, business and commercial use including hotels, restaurants and small scale industrial facilities. Along these systems can handle the high hot water demand associated with commercial kitchens and ensure a constant supply of hot water.

However, less than 10kW are commonly used for residential applications. These systems are designed to meet the hot water needs of small household apartments or individual units or buildings.

By End-user Analysis

Based on end-user, the market is segmented into residential, commercial, and industrial.

• The residential segment holds the largest U.S. heat pump water heater market share among other segments.  These water heaters are highly energy efficient compared to traditional electric water heaters. They can reduce water heating costs by up to 50% or more. Heat pump water heaters can be used in various residential settings, including single-family homes and apartments. They are available in different sizes and capacities to meet the hot water demands of different households.

List of Key U.S. Heat Pump Water Heater Market Companies

Growing Investment through Companies and Developing Heater Appliances are Flourishing Market

Several companies compete in the U.S. market, which has grown immensely over the last few years. Major companies are coming forward with new advanced developments for better use. However, leading companies STIEBEL ELTRON GmbH & Co, Daikin Industries Ltd, Glen Dimplex Group, Rheem Manufacturing Company, American Water Heaters, and others have invested heavily in developing their water heaters and many appliances. This has allowed companies to build up a strong brand and reputation for quality and reliability, which has helped them win over many U.S.

LIST OF KEY COMPANIES PROFILED:

• STIEBEL ELTRON GmbH & Co. (Germany)


• Daikin Industries Ltd. (Japan)


• Glen Dimplex Group (Ireland)


• Panasonic Corporation (Japan)


• Samsung Electronics Co. Ltd. (South Korea)


• LG Electronics (South Korea)


• Rheem Manufacturing Company (U.S.)


• Ariston Holding N.V (Italy)


• Bradford White Corporation (U.S.)


• Rinnai Corporation (Japan)

KEY INDUSTRY DEVELOPMENTS:

• June 2023: Samsung Electronics Co. Ltd and SMA have started interlinking their communications, thus making it possible to integrate Samsung heating systems into SMA´s home energy management system. To do this, the two companies use an innovative cloud-to-cloud solution that also enables the integration of PV systems with SMA inverters into Samsung's SmartThings smart home ecosystem. Users benefit from the uncomplicated integration of heat pumps into their domestic energy systems, making them less dependent on rising energy prices.


• April 2023: Rheem Manufacturing Company, a worldwide manufacturer of water heating products, manufactured a heat pump water heater that could sustain and provide an efficient solution in cold climates. The company holds the potential to develop the latest heat pump technology with various leading products already in the market.


• February 2023: LG Electronics introduced an air source heat pump with a capacity to heat 200 to 300 liters of domestic water. R134a is used as a refrigerant, and the pump has a coefficient of performance of up to 3.85. The company has presented a new line of water heating heat pumps for residential applications. They can be installed in garages, kitchens, laundry rooms, or bathrooms.

REPORT COVERAGE

The market research report provides a detailed analysis of the market. It mainly focuses on various manufacturers' technological trends and recent developments, including the company overview. It also includes the developing and restraining factors by type, capacity, and end-user. The leading segments elaborate on reasons, technological advancement, and sustainable technologies. New product launches, key industry developments such as mergers, partnerships, and acquisitions and the impact of COVID-19. Besides this, the report also offers insights into the market trends and the leading segments with the highest market share and highlights key industry dynamics. In addition to the aforementioned factors, it encompasses several factors that have contributed to the growth of the market over recent years.

Report Scope & Segmentation