Commercial Water Heaters


ENERGY STAR certified commercial water heaters include gas-fired storage and gas-fired instantaneous (also referred to as tankless) units that use around 15 percent less energy than conventional commercial units by employing more efficient heat exchangers. The ENERGY STAR label is now available for electric heat pump water heaters as well. These units transfer ambient heat to the water using a refrigerant-based system, using less than half the energy of an electric resistance unit. On an annual basis, an ENERGY STAR commercial electric heat pump water heater would be expected to save at least 10 MWh with an emissions savings equivalent to removing 1.5 cars from the road per year. If all commercial water heaters sold in the U.S. were ENERGY STAR certified, the energy cost savings would grow to nearly $890 million and more than 17 billion pounds of annual greenhouse gas emissions would be prevented.

Related Information:

How Heat Pumps Work

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Below we provide some guidance on buying, installing, and operating commercial water heaters:

  • Electric heat pump water heaters (HPWH) use less than half the energy of a conventional electric resistance water heater. Most commercial HPWHs are used as pre–heaters, in combination with a regular water heater and tank, but some are designed to satisfy entire hot water loads. A Federal test method was established for commercial HPWHs in 2016 and these products are now included in the ENERGY STAR program!
  • Electric heat pump water heaters are ideal for facilities with hotter ambient conditions (at least 40°F year-round) and large hot water loads such as a kitchen environment or laundry facility. If your facility currently heats water with an old electric resistance storage water heater and uses 600 or more gallons of hot water over the course of a day, you should consider installing an electric heat pump water heater. Aside from providing efficient water heating, HPWHs also provide space cooling, thus reducing costs associated with both water heating and air-conditioning.
  • In 2014, the Electric Power Research Institute (EPRI) installed and measured the field performance of a commercial heat pump water heater, with a backup electric resistance unit, in a condominium building for San Diego Gas & Electric (SDG&E)[1]. The performance of the commercial HPWH was compared to that of the baseline electric resistance water heater (ERWH) that was previously installed in the building. Results of this year-long study showed considerable savings:
    • 52% energy savings over baseline ERWH
    • 10,000 kWh annual energy savings
    • 3.2 to 4.4 year payback under SDG&E commercial rate structure, even with the significant upfront cost to install the HPWH
  • More and more restaurants are moving to tankless water heaters. For example, 10,000 square foot Drago’s Restaurant in Metairie, Louisiana replaced their 150 gallon storage tank unit with 3 tankless water heaters. The restaurant:
    • Could refill their 80, 60, and 40 gallon kettles with 160 degree F water, since tankless units can provide an endless supply of hot water.
    • Saved space by moving the tankless units outdoors.
    • Manifolded together two tankless units to meet the overall water needs and be able to supply hot water if one of the units failed. The third unit was dedicated to the kettles.
  • ENERGY STAR certified commercial gas water heaters are condensing, and need a drain line to dispose of condensate. Some combustion byproducts cause this condensate to be acidic, which can be corrosive to certain materials. Plastic piping typically used in new construction is not affected by this. However, acidic condensate can damage cast iron piping, which may be present in some existing facilities. In these facilities, you must either replace the drain lines with plastic or some other material immune to the effects of the acid, or install a neutralizer. A neutralizer is a device containing a base material (e.g., limestone chips) that counters the acid and eliminates the corrosive effects of the condensate. In commercial food service facilities, cleaning agents used during the dish washing process are known to neutralize acids. A neutralizer is not necessary in this situation as long the condensate line from the water heater is connected downstream from the dishwasher.
  • ENERGY STAR certified gas water heaters are not compatible with natural draft vent systems. When a standard efficiency gas water heater is replaced with a condensing model such as those meeting ENERGY STAR standards, the existing vent system will not work properly. Condensing water heaters are typically power–vented and include a fan that can exhaust combustion gases up to 60 feet horizontally through plastic pipes. The end cap of this exhaust must be above the snow line or other obstructions. The vent also must be sloped toward the water heater so that any condensate formed is directed back toward the drain and does not freeze on the end cap, which could block the exhaust.

Be sure to look for the ENERGY STAR when shopping for a commercial water heater

Current Specification Effective Date:  October 1, 2018

The ENERGY STAR Commercial Water Heater specification covers high-efficiency gas-fired storage, gas-fired instantaneous, and electric heat pump water heaters.

Commercial Water Heater Key Product Criteria: ENERGY STAR

Learn How a Product Earns the Label

[1] Electric Power Research Institute. 2015. Commercial heat pump water heaters: Evaluation of field performance for San Diego Gas and Electric (SDG&E). Retrieved from

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