The U.S. Department of Energy (DOE) recently unveiled a comprehensive set of regulations aimed at improving the energy efficiency of water heaters and boilers. This article outlines the specifics of the rules and the implications for industry stakeholders.

Commercial Water Heaters: On July 28, 2023, the DOE released a Final Rule for commercial water heaters. Under this rule:

  • Storage water heaters need to achieve a thermal efficiency (TE) of at least 95%.
  • Tankless water heaters, including volume heaters, must hit a TE of 96% or higher.

These regulations are no longer open to public comments, and we anticipate their publication in the Federal Register shortly. However, to allow businesses time to adapt, these standards won’t be enforced until the fall of 2026.

Residential Water Heaters: The DOE has proposed a set of rules concerning energy efficiency in residential water heaters:

  • Electric storage water heaters should meet heat pump efficiencies. However, certain lowboy models are exempted.
  • Gas storage water heaters will require enhancements like a flue damper or fan assistance.
  • For gas tankless water heaters, the DOE suggests a condensing standard of 0.91 UEF for medium draw bin and 0.93 UEF for high draw bin.

This rule is currently a proposal, and feedback will be accepted by the DOE until September 26, 2023. Following a court settlement with environmental proponents, the rule must be finalized by April 30, 2024. The actual enforcement of this rule will likely be around early-to-mid 2029.

Residential Boilers: The DOE’s proposal for gas-fired hot water residential boilers requires:

  • An all-condensing standard, meaning these boilers must have an Annual Fuel Utilization Efficiency (AFUE) of 95% or more.
  • Distinct efficiency standards for steam boilers.

Feedback on this proposal is open until October 13, 2023. There is currently no stipulated deadline for this rule’s finalization. Once finalized, stakeholders will have a five-year adjustment period before it takes effect.

Conclusion and Implications for Business Owners:

The proposed and finalized regulations underscore the DOE’s commitment to environmental sustainability and energy efficiency. For business owners, especially those in the HVAC and water heating sectors, this presents both challenges and opportunities.

Challenges: Companies must invest in redesigning, manufacturing, and marketing products that align with these new standards. Training and upskilling of staff to understand, install, and service these new products is also essential.

Opportunities: Early adoption and strategic marketing can position businesses as leaders in offering energy-efficient solutions. This can enhance brand value, build customer trust, and potentially lead to increased market share.

For businesses to navigate these regulatory shifts successfully, staying informed is crucial. Engaging with industry associations, attending workshops, and partnering with technology providers can offer valuable insights. The BWC’s Government and Regulatory Affairs team remains a valuable resource in this domain, and they’re committed to keeping the industry updated.


The U.S. Department of Energy (DOE) has introduced new energy efficiency standards for commercial and residential water heaters and boilers. For commercial heaters, a thermal efficiency of 95-96% will be required by fall 2026. Proposed rules for residential heaters include heat pump efficiencies for electric heaters and higher standards for gas heaters, set to be finalized by April 30, 2024, and likely enforced by 2029. Residential boilers will need to meet a 95% efficiency standard. These changes pose challenges for businesses in redesigning and marketing products but also offer opportunities for leading in energy-efficient solutions. Businesses are advised to stay informed and consider resources like the BWC’s Government and Regulatory Affairs team for guidance.