On Oct. 6, 2026, new energy conservation standards for commercial water heaters, approved by the U.S. Department of Energy (DOE) back in 2023, will come into effect. The new standards will force a significant change from the products that are currently on the market today, calling for all commercial gas water heaters to utilize condensing technology in all installations.

Specifically, the DOE rule will require manufacturers to produce only commercial gas storage water heaters that meet or exceed a 95% Thermal Efficiency (TE) and can meet more stringent Standby Loss requirements if they are offered for sale in the U.S. market. This is an increase in stringency from the 80% minimum TE that is currently in place for these products today. It is important to note that if products do not meet these requirements, but are manufactured before Oct. 6, 2026, they can still be installed after that date. Additionally, commercial gas storage products that are currently installed will still be permitted to be serviced in the field and do not have to be replaced before the end of their useful life.

Similarly, commercial gas tankless water heaters will see more stringent minimum energy conservation standards as a result of this rule. These products, which include volume water heaters, will be required to meet or exceed a 96% TE if they are intended for sale in the U.S. market. Like their storage counterparts, products that do not meet this requirement, manufactured prior to Oct. 6, 2026, can still be installed after that date and product already installed in the field can still be serviced to prolong their useful life.

The new rule will also impact residential-duty, or light-duty commercial gas-fired water heaters. DOE requires these products to be rated with a more complex, Uniform Energy Factor (UEF) metric. For that reason, the required minimum efficiencies for these products are not as straightforward as they are for other commercial gas products. However, the new UEF minimums will also require manufacturers to produce only these types of water heaters that use condensing technology after Oct. 6, 2026. A gas water heater is considered by DOE to fall into the residential-duty commercial category if it meets all three of the following criteria:

• Has a storage volume of less than 120 gallons
• Has an input between 75,001 and 105,000 BTU/h
• Heat water at less than 180˚ Fahrenheit

As for commercial electric water heaters and commercial oil-fired water heaters, the DOE rule has no impact on these products. All types of these products being manufactured today are permitted to continue rolling off production lines onto the U.S. market even after the rule takes effect on Oct. 6, 2026.

If you have any questions about any of the provisions in this upcoming rule or have any information about government and regulatory affairs activity in your area, BWC Government and Regulatory Affairs staff would like to hear from you. Please do not hesitate to reach out to us directly at BWCGovReg@bradfordwhite.com.