High efficiency natural gas water heaters

Upgrade to a high efficiency natural gas water heater, otherwise known as a condensing water heater, to qualify for an incentive and reduce your commercial water heating costs by up to 30 per cent.

Condensing water heaters

Condensing water heaters, which are capable of achieving thermal efficiencies up to 96 per cent, use an enhanced or secondary heat exchanger to capture residual heat from the combustion gases that would normally be vented outside. Condensing water heaters use that additional captured heat energy to preheat the incoming cool water before it reaches the primary heat exchanger.


  • reduced heating costs;
  • improved first-hour heat recovery;
  • more hot water per input BTU;
  • not impacted by negative air pressure due to sealed combustion;
  • reduced CO2 emissions.


Incentive = water heater input capacity x $ / MBH

  • $6 / eligible MBH input for storage tank water heaters;
  • $3.50 / eligible MBH input for tankless water heaters.

Example: A 400 MBH condensing tank water heater is installed: Incentive = 400 x $6 = $2,400

Typical annual savings

On average, upgrading to a condensing water heater will:

  • save you more than $500 on your annual energy bill;
  • save you more than $6,000 in life cycle costs over the 12-year operating life;
  • realize an average 2 to 5 year payback;
  • reduce GHG emissions by 3 tonnes (equal to taking a car off the road each year).

The examples below apply to a 40-suite apartment building and assume the existing system will be replaced with 2 200,000 BTU/h condensing water heaters.

Examples Annual Savings Rebate Payback with Incentive
*Includes one-time cost of piping natural gas to the water heaters.
Existing system: 2 x 250,000 BTU/h Natural Gas Standard Efficiency $2,260 $2,400 2 years
Existing system: 2 x 54 kW Electric Water Heater $7,000 to $13,000 $2,400 < 2 years*

Compare operating costs of natural gas and electric water heating systems.


  • Natural gas fired storage tank water heaters with input ratings of greater than 75,000 BTU/h must be certified to CSA 4.3 and have a Thermal Efficiency of > 90 per cent.
  • Natural gas fired tankless water heaters:
    • With input ratings of less than or equal to 250,000 BTU/h must be certified to CSA P7 and have an Energy Factor of > 0.90;
    • With input ratings of greater than 250,000 BTU/h must be certified to CSA 4.3 and have a Thermal Efficiency of > 90 per cent.
  • Per unit input capacity between 75,000 and 500,000 BTU/h.
  • Water heaters must operate for a minimum of 700 annual full load hours. Documentation demonstrating full load hours must be provided upon request.
  • Incentives are available for retrofit projects only.
  • Water heating applications that are not eligible:
    • Space heating and combination space/water heating applications.
    • Closed loop applications such as; swimming pool.
    • Industrial process loads.

Eligible Storage Tank Water Heaters (PDF, 30 KB).

Eligible Tankless Water Heaters (PDF, 43 KB).

How to take part

Pre-approval is not required. To apply:

  • Install your energy efficient measures.
  • Your natural gas permit must pass inspection.
  • Within 90 days of installing your water heater, submit your completed documentation:
  • An incentive cheque will be mailed to you.