Commercial Water
Heating Market
Assessment: Gas Heat
Pump Technology
Heat Pump Water Heaters (HPWH)|Heat Pumps|Heating & Cooling|Water Heaters
Commercial + Industrial|Natural Gas
As an active member of the North American Gas Heat Pump Collaborative (the Collaborative), a group of natural gas utilities and energy efficiency organizations working across the U.S. and Canada to advance gas heat pump technologies, the Northwest Energy Efficiency Alliance (NEEA) supported this study of the commercial gas heat pump market across select member territories in North America. Sponsored by the Collaborative, the study aimed to update the group’s understanding of current conditions in the commercial water heating market and to identify barriers and opportunities to inform future program development. With the support of Collaborative members, NEEA is publishing the report on its website.
The report finds it is technically feasible to replace equipment responsible for approximately 8% of commercial natural gas consumption in the U.S. and Canada with gas heat pump water heating solutions. Additionally, report findings indicate that converting all commercial natural gas water heating systems to gas heat pumps where technically feasible could reduce commercial natural gas consumption by about 19% in the U.S. and 17% in Canada.
More than half of the total technical opportunity for gas heat pumps is concentrated in multifamily, lodging, office, and retail buildings. While the technology presents significant potential, the market for gas heat pumps is nascent. More than a quarter of surveyed market actors were unfamiliar with gas heat pump water heating solutions, and among those familiar with the technology, 80% had never specified or installed one.
The report identifies several opportunities to accelerate adoption, including prioritizing retrofit applications and providing interventions that directly address first-cost barriers, particularly for hybrid deployments that pair new gas heat pump equipment with existing gas water heating systems. The report also highlights the need for workforce training, demonstration projects, and broader dissemination of performance and cost data to increase market awareness and confidence.