Wastewater Energy Transfer (WET) Heat Recovery Systems Market Study

The Wastewater Energy Transfer (WET) Market Study CalNEXT project explored WET market potential in California investor-owned utility territory and assessed how WET can reduce the barriers to energy efficiency and electrification. The project aimed to achieve this by decreasing energy consumption and demand, decreasing operating costs, and increasing building energy resiliency across nonresidential (commercial, industrial, and agricultural) customer segments. This project assessed WET technologies and their relevance to the California nonresidential buildings market to better understand the landscape and program impacts and how to scale the market for nonresidential WET systems.WET technology leverages the heat energy in wastewater for useful purposes. Sanitary wastewater is typically at least ambient room temperature and can serve as a heat sink or heat source. WET systems use heat exchangers and/or heat pumps to enhance efficiency of cooling systems by rejecting heat from building systems to wastewater, and reducing load on cooling towers and other heat rejection equipment to enhance efficiency of cooling systems. WET systems also recover heat from wastewater to preheat water or other fluids for water heating, space heating, or process loads. This market assessment investigated WET adoption, technology penetration, and energy savings potential using a literature review, stakeholder surveys, interviews, and site visits. Based on the findings, the project team calculated energy savings for space cooling, space heating, and domestic hot water heating end uses at the building level for the two most promising applications for WET in California: office and multifamily housing.Site visits conducted September 2025 through October 2025 further characterized the market and increased the accuracy of the California investor-owned utilities WET market energy savings potential estimate. The site visits explored the feasibility of WET systems in four commercial and industrial buildings within three California climate zones, the results of which we used to uncover solutions for barriers to WET system installations in California investor-owned utilities territory.