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issue: September 2005 APPLIANCE Magazine

Appliance Industry - Tokyo Report
Japanese Heat-Pump Water Heater Market Growing

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Due to increased manufacturing requirements to reduce CO2 emissions and achieve better energy savings as a result of the Kyoto Protocol, heat-pump water heaters are increasing in popularity in Japan. Nearly 30 percent of the total energy consumed in Japanese homes is used for heating water, so energy savings in this area has been a major focus. The Japanese governments support program has been reinforced with the goal of increasing the total number of heat-pump water heater installations to 5.2 million units by 2010.

The industry is currently using the term ECO CUTE to describe heat-pump water heaters that use CO2 refrigerant. Although the trademark is registered under Kansai Electric Power, nine Japanese electric power companies have agreed to use it as a unified brand name.

Manufacturers developing ECO CUTE water heaters are benefiting from the national subsidy system, which has helped the market expand steadily. For 2004 alone, more than 5 billion yen (approx. U.S. $44.6 million) was budgeted for subsidies. Along with the ECO CUTE boom, demand for heat-pump water heaters using HFC refrigerant, which do not benefit from any subsidy, has also increased.

Emerging Business

If the penetration of ECO CUTE reaches the expected 5.2 million units by 2010, it will form a market size of about 1 million units per year, creating increased business. Heat-pump water heater manufacturers and suppliers expect the increased business to create a market comparable to the residential air-conditioning (RAC) market. As a result, many manufacturers are planning to reinforce the development of new products to focus on heat-pump water heaters.

Expansion of the ECO CUTE market will cause significant changes in the central water heater market. Traditionally, gas water heaters have occupied an overwhelmingly large share of the market, and electric water heaters have had about a 6-percent share. In 2004, however, shares of electric water heaters exceeded 10 percent. If the ECO CUTE market continues to expand, the share of electric water heaters will continue to increase, possibly reaching 30 percent or more of the central water heater market by 2010.

Many of the manufacturers participating in the heat-pump water heater market are home appliance/residential equipment makers. While the market size is in the order of 100,000 units, there are more than 10 brands in the product segment, and competition is intensifying. Some of the major players include Mitsubishi Electric Corp. (Melco), Hitachi H&L, Sanyo Electric, Daikin, Matsushita, Corona, and Toshiba.

To tap new demand, manufacturers are implementing a wide range of product strategies such as improving the COP, widening the variation of tank capacities tailored to meet various applications, offering multiple functions by combining units with floor heating systems, or proposing an instantaneous water heater system that doesnt use a hot water tank at all.

This report is filed by Wasaku Ishida, Japan correspondent, APPLIANCE magazine, and president, JARN (Japan Air Conditioning, Heating & Refrigeration News).


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