ET25SWE0021 - Wastewater Energy Transfer (WET) Heat Recovery Systems Market Study
This project is a market study that will explore commercial and industrial (C&I) and agricultural market potential and assess how Wastewater Energy Transfer (WET) heat exchangers and heat pumps can decrease energy consumption and demand, decrease operating costs and increase building energy resiliency. The project will investigate the potential of WET systems and applications commercially available and in use at C&I and agricultural buildings in California.
This project will explore WET system market potential and associated individual technologies to better understand the landscape and program impacts and scale the market. This project will investigate emerging WET heat pump technology will vet the systems for C&I and agricultural space cooling, space heating, water heating, and process heating applications within California, and analyze highest potential technologies to identify market barriers and intervention strategies to address these barriers.
WET systems make cooling systems more efficient and reduce barriers to decarbonization by lowering life-cycle costs of electrifying buildings (ex. installing new heat pump systems for space heating or water heating) by incorporating heat recovery to reduce system energy consumption. Many California electric grids do not have enough capacity to supply power to electrified buildings. WET uses heat recovery to recycle waste heat from wastewater to reduce the electrical demand of heat pump HVAC, hot water heating, and process heating systems to overcome grid constraints. Many WET systems can also be leveraged to reject heat from building systems to wastewater, reducing load on cooling towers and other heat rejection equipment.
In this proposed CalNEXT project, which could be the first of two studies, WET technology will be assessed to examine the range of products currently on the market, the current state of advancement of the technologies, and how they can be integrated within existing programs. A market study will investigate the percentage of buildings using WET systems, market penetration of technology, and energy, demand, and greenhouse gas savings potential for increased adoption of WET technology. The assessment will leverage literature review, surveys, interviews with experienced practitioners, and site visits to assess potential for energy efficient technologies that can achieve significant energy savings in new and existing buildings. The project deliverables will identify cost-effective energy efficiency measures for WET heat recovery systems in the non-residential sectors.
In a potential future CalNEXT study, field demonstrations could deploy and study WET technology to power space cooling, space heating, water heating, and/or process heating systems of C&I or agricultural buildings to inform work paper development and go to market strategies for existing program channels.
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.
