According to several research reports, the electric heater market is poised to grow at a CAGR of about 7.5% through 2024. In 2015, the market generated annual sales of about $17.5 billion reports GM Insights. Based on the projected CAGR of about 7.5 over the 10-year period, the electric heater market could be valued at $36 billion by the year 2024.
Interestingly, while the storage heaters currently dominate the market, analysts believe that it’s the tankless and non-storage heaters that could drive this growth. In another report published by Research and Markets, the global tankless water heater market is expected to grow at a CAGR of about 8.88%. On the other hand, a report published by Persistence Market Research estimates the figure for 2024 at about $25.5 billion for the tankless water heater market.
The market for tankless water heaters is certainly becoming crowded with several players large and small competing to gain a share. And according to Tankless Water Heater Hub, one of the reasons these heaters have gained popularity over the last few decades is due to their high-efficiency levels, especially when it comes to saving energy.
When we look ahead, growth catalysts are bound to emerge from markets that will experience increased urbanization over the next few years. Therefore, the emerging markets could play a key role in boosting growth in electric heater market.
Why urbanization in the emerging markets will drive growth
Most studies tend to capture only the developed markets when projecting growth in this exciting market solely because it is easier to gather data. This data is then analyzed to determine the future of the industry. North America, Central and Western Europe, are well covered when it comes to electric heaters. Therefore, with the two markets already stretched to the brim, it is unlikely that the main growth catalysts will originate from here.
The next card in play could be in relation to areas that are adversely affected by the chilly weather. However, when you look at such countries, most of them especially in the Scandinavian region and do not have massive populations.
According to research published by Technavio last year, space heating accounts for 60%-70% of the residences’ primary energy consumption in Central and Northern Europe. The report also suggests that increasing penetration in emerging markets will boost the electric heaters market.
In the emerging markets, urbanization in countries like India, Brazil, some parts of Africa, and the Middle East will lead to increased demand for electric heaters as more households move to modern residences. And more importantly, tankless water heater are expected to be at the center of this growth due to their high-energy efficiency levels. Their mobility allows ease of installation, management, and servicing, which makes them ideal for both new and old establishments.
This explains why sales from these types of heaters are expected to experience constant growth over the next 10 years as more markets continue to transition to developed status.
So, which companies stand to gain?
There are several companies involved in the electric heaters market. Most of them are small and privately-held. But there are a few notable giants. US giant General Electric (NYSE: GE) is one of the few that are publicly traded. The company operates in several industries in the energy sector which mean the impact on its top and bottom lines is likely to be insignificant.
However, when you try to picture the impact this growth could have on a small company whose revenue does significantly rely on electric heaters, then it’s possible a windfall could be on the way for the respective shareholders in the foreseeable future.
One such company is EnerCare (TSE: ECI), which trades on Canada’s Toronto Stock Exchange. The company has been constantly increasing its dividend for each of the last ten years, with the latest increase coming in April, this year.
The company upped its monthly dividend to $0.08 per share last month, thereby equating to an annualized rate of $0.96, which based on the stock’s last trading price of about $21.62 translates to about 4.44% dividend yield.
Given the expected industry growth in the electric heaters market, EnerCare could be a clever play for dividend hunters who look for good dividend stocks with a promising growth.
Conclusion
In summary, the technology industry has influenced the development of several industries. The electrical heaters market is one of them, as this has enabled the creation of innovative heating products that have proven to be more efficient both logistically and financially.
It looks as though the days of storage electrical heaters are fading away with the new age tankless water heaters taking the mantle. This development has also proved effective in the emerging markets as urbanization continues to extend to remote areas.
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