It’s a story common enough to any plumber who fields emergency calls. One night, returning home from a 30-hour flight, Sri Deivasigamani found his basement flooded from the tank failing on his home’s water heater. After mopping up, the robotics engineer began troubleshooting the problem and by morning had developed the seed of an idea that would grow to become the world’s first, on-demand, commercial tankless water heater.
Deivasigamani is today the founder and CEO of Intellihot, a manufacturer of gas- and electric-powered water heaters employing more than 100 workers in Galesburg and Chicago, IL. The company has made a name for itself for its innovative designs and currently holds more than 60 patents.
CONTRACTOR spoke with Deivasigamani about the state of the hydronics industry, and what regulation, technology and the market might mean for the future.
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CONTRACTOR: Government regulations—both state and federal—continue to push for ever-higher levels of efficiency in water heating products. What are some of the challenges Intellihot faces as a manufacturer in meeting those efficiency levels?
Deivasigamani: At Intellihot, all of our water heaters are tankless, providing tremendous efficiencies over tanked systems. We also just introduced the industry’s first tankless heat pump water heater, combining tankless technology with the efficiency of heat pumps for healthy hot water production. We are well positioned for the trends of efficiency, decarbonization and safety. If anything, we would ask the Biden administration’s condensing commercial water heating standard to be in effect today rather than 2026. We are already there!
As we introduce new technology to an industry that is often slow to change, we’ve needed to educate and motivate engineers and contractors to go beyond the status quo for their customers. The advantages of our high efficiency units can be shocking to some long-term users of legacy water heaters.
We recently had a customer in disbelief that our three million BTU tankless water heater was small enough to fit in a service elevator. This unit replaced a huge boiler and a thousand-plus gallon water storage tank. Our customers save about 35% of their utility costs, while meeting the hot water needs of their facility with a reliable modular solution in a fraction of the space needed previously.
C: Hand-in-hand with efficiency is the push towards electrification. While Intellihot offers both gas- and electric-fired products, do you think electric will come to dominate the market? And if so, how quickly do you think things will change?
Deivasigamani: We believe natural gas will remain the key fuel for water heating until around 2045, at which point electric will overtake gas systems. We expect our new Electron series to play a significant role in the growth of electric units, but we also expect gas heaters to be powered by hydrogen or a blend in many markets.
Thus, even Hydrogen-powered water heaters can become zero emission devices. Electric water heaters and more specifically, heat pump water heaters will continue to improve and become perfect replacements for most traditional gas heaters.
As far as an exact timeline goes, the phasing out of gas also depends on the pace of regulations and policy changes. Moreover, the building trades industry also needs to adapt quickly to standardizing heat pump water heaters so that they can be adopted with higher ease by engineers and contractors.
C: What kind of opportunities do you see for water heating professionals doing specification and installation work in this evolving environment?
Deivasigamani: We can’t solve the CO2 emissions problems without addressing our built environment. At 26%, they are the largest consumer of energy. I see a world of rapid and exciting change that will be an opportunity for every engineer and contractor to grow their careers and businesses much like the Internet revolution. In this case, they will also be contributing to the greater good. The early adopters and pioneers of heat pumps are going to be the winners and leaders in their businesses.
There are huge opportunities for forward-thinking engineers and contractors to specify systems that are well positioned for the future. Leaning into the federal government’s Inflation Reduction Act, seeking out local government and utility rebates and incentives will also help secure lots of new jobs for contractors and other specifiers.
C: Do you see greater growth on the residential or the commercial side in the coming 5-10 years?
Deivasigamani: That’s a great question and a tough one to answer. Certainly, commercial and industrial facilities use more energy than residential buildings on a per unit/building basis, making them better targets for larger efficiency gains. But the sheer number of residential water heaters versus commercial heaters tips the scale in the favor of residential growth. Currently, Intellihot is focused solely on commercial/industrial water heaters, but we may have news soon on other fronts.
C: During the pandemic, supply chain issues were a pain point for many manufacturers. Have those problems resolved themselves? Have manufacturers been forced to expand/diversify their supplier networks?
Deivasigamani: Through a mixture of good fortune and strong planning, Intellihot has not had the supply chain problems of other companies, making this a particular strength of our company. As an example, we worked with a restaurant in the Northeast that had a tanked water heater fail at 4:00 PM on a Friday. Our rep received the call Friday evening, and by 7:30 on Saturday, they had installed a 1.0M BTU Intellihot tankless water heater, and the restaurant was back up and running.
Our supply chain has delivered for us, and our distributors stock the units that are needed. It’s a win-win for everyone and this restaurant has already documented significant energy savings with their new tankless water heater.
