Commercial Kitchen Hot Water System Decarbonization Market Needs Study

Commercial kitchens rely on hot water for food preparation, dishwashing, sanitation, and guest bathroom, making water heating a major source of energy use. Electrified water heating technologies have the potential to reduce energy use and greenhouse gas emissions, as California continues to pursue building decarbonization. However, there has been limited adoption in commercial kitchens. This study explored how commercial kitchen stakeholders make decisions about hot water systems and related point-of-use equipment, and identified the factors that influence adoption of energy-efficient technologies. The research team conducted interviews with restaurant owners, kitchen managers, contractors, equipment vendors and manufacturers across California. The interviews asked about equipment replacement practices, purchasing priorities, and the roles of contractors, suppliers, and regulations in shaping technology choices. The findings show that maintaining operations is the primary driver of equipment decisions. When equipment fails, businesses typically replace it with a similar system that fits existing infrastructure to minimize downtime. Upfront cost also outweighs long-term operating savings, particularly for small businesses with limited capital. In addition, contractors and equipment suppliers strongly influence purchasing decisions. If they are unfamiliar with heat pump water heaters or uncertain about installation requirements, these technologies are rarely presented as options. Interviewees also identified regulatory uncertainty and space constraints as barriers to adoption. The results suggest that increasing adoption will require more than financial incentives alone. Utilities and program administrators can support market transformation by reducing upfront costs, expanding contractor training, improving regulatory guidance, and designing programs that reflect the operational realities of commercial kitchens, especially for small businesses.