A practical guide for facilities managers, M&E engineers and specifiers deciding between direct and indirect hot water cylinders for commercial buildings.

What the Terms Actually Mean

A direct cylinder heats water using a heat source built into the cylinder itself, almost always an electric immersion heater. There’s no separate boiler, no coil, no external plant to tie into. Water goes in cold, the immersion element heats it, and it sits there at temperature until it’s drawn off. Simple, self-contained, and it works anywhere there’s a mains electricity supply.

An indirect cylinder does something different. Instead of heating the water directly, it has one or more coils running through it, and hot water or a heat transfer fluid from an external source, usually a boiler, but increasingly a heat pump or solar thermal array, passes through that coil to heat the stored water. The cylinder itself is pure storage. All the actual heating happens somewhere else in the plant room.

It sounds like a small distinction. In practice it changes almost everything about how the system behaves, what it costs to run, and where it makes sense to use one over the other. If you haven’t already, it’s worth reading the complete guide to commercial hot water cylinders first, this post picks up on one specific decision within that broader picture.

When Indirect Makes Sense

Indirect cylinders dominate larger commercial buildings for one simple reason: a single boiler, or bank of boilers, can serve multiple cylinders and space heating loads from the same plant room. That’s the standard setup in hotels, schools, care homes and healthcare premises, anywhere there’s already a central heat source doing space heating and it makes sense to lean on it for hot water too rather than running a second, parallel system.

A 1500 litre indirect cylinder in a hotel plant room, fed from the same boiler serving guest room radiators, is a completely different proposition to a small direct unit in a single occupancy flat. The economics work in indirect’s favour at scale because the marginal cost of heating more water through an existing boiler is low, whereas running enough electric immersion capacity to match that output would mean a serious electrical supply upgrade. Non domestic gas consumption in Great Britain fell 8.8% between 2022 and 2024, and now sits 38.7% below 2005 levels (GOV.UK, Subnational electricity and gas consumption summary report 2024), so the direction of travel is toward less gas overall, but for buildings that already have gas fired plant, indirect systems remain the pragmatic choice while that transition plays out.

Indirect is also the natural fit where a heat pump is, or will be, part of the picture. UK heat pump sales hit a record 125,037 units in 2025, up 27% on 2024, with domestic hot water heat pump sales alone growing 36% year on year (Heat Pump Association), and an indirect cylinder with a properly sized coil is what makes that integration work. That said, the pace of change on the ground is slower than the sales figures suggest, with gas boiler fittings still outnumbering heat pump connections by more than 15 to 1 (CIPHE). Most commercial buildings specifying an indirect system today are still, in practice, specifying it against a gas fired boiler, even if a heat pump sits somewhere on the roadmap. A heat pump delivers heat at a lower flow temperature than a boiler, so the coil surface area and cylinder volume both need to be larger to get the same litres up to temperature in a reasonable time. That’s a specification detail worth getting right before committing, not something to retrofit later.

When Direct Works

Direct cylinders earn their place in smaller, standalone applications. A hairdresser, a small retail unit, a standalone office without a central boiler, anywhere the hot water demand is modest and there’s no existing plant to tie into. Installing a direct electric cylinder means no gas connection, no flue, and a much simpler installation overall, which matters where the building doesn’t already have gas infrastructure or where running a coil back to a distant boiler isn’t practical.

The efficiency argument for direct systems is genuinely strong at the point of use. Electric immersion heaters convert virtually all the electricity they draw directly into heat, close to 100% efficient at the point of use, while even the best condensing gas boilers cap out at gross efficiencies of 90 to 95% (Flexiheat UK). On paper, that looks like an easy win for electric. In practice, the running cost tells a different story, and that’s where the specification decision actually gets made.

Running Cost Implications

This is the bit that catches people out. Business electricity rates in the UK currently average 27.0 to 30.0p per kWh, while business gas rates sit at 9.0 to 9.5p per kWh (MoneySuperMarket, Bionic panel data, June 2026), a gap of roughly three to one. That single fact does more to explain why indirect, gas fed systems dominate larger commercial buildings than any efficiency percentage does. A slightly less efficient gas boiler heating water at a third of the unit cost of electricity still comes out well ahead of a perfectly efficient immersion heater on the actual bill. Domestic scale numbers make the point clearly too: running an electric boiler typically costs around £1,700 a year, against £620 to £1,260 for an A rated condensing gas boiler covering the same demand (Boiler Guide). Scale that up to commercial volumes and the gap in absolute terms gets a lot bigger, not smaller.

None of that makes direct electric the wrong answer everywhere. Where demand is genuinely small, where there’s no gas supply and getting one connected would be disproportionately expensive, or where the building is being run on a renewable electricity tariff for other reasons, direct can still make sense. It just needs to be a considered decision based on actual demand and actual unit costs, not a default because it was simpler to install.

Installation Considerations

Direct cylinders are the simpler install on paper, mains water in, mains electricity in, done. But commercial direct systems still need adequate electrical supply capacity, and that’s not always a given in an older building where the incoming supply was sized for lighting and small power, not for heating water at volume. Get the electrical capacity checked before assuming a direct system is the easy option.

Indirect systems bring a different set of considerations. Pipework runs back to the boiler plant, coil sizing has to match the heat source, and if the cylinder is unvented, which most commercial indirect systems are, Building Regulations Approved Document G3 requires it to be installed, commissioned and notified by a competent, qualified person where the storage volume exceeds 15 litres (GOV.UK, Approved Document G). That’s not a box ticking exercise, unvented cylinders operate under mains pressure and the safety devices, expansion vessel, combination valve, temperature and pressure relief valve, all need to be correctly specified and commissioned together.

Legionella control sits on top of both system types. HSE guidance requires stored hot water to be kept at 60°C or above, and to reach outlets at 50°C, or 55°C in healthcare premises, within one minute (HSE, Hot and cold water systems). Direct and indirect systems both have to hit that target, but the practicalities differ. A direct system’s immersion heater needs to be sized and controlled to maintain 60°C reliably at the top of the cylinder, while an indirect system’s coil and boiler flow temperature need to be checked against the same benchmark, particularly where a heat pump is supplying lower flow temperatures than a boiler would.

Twin Coil and Dual Coil Variants

Where a building has more than one heat source, a boiler and a solar thermal array, or a boiler and an air source heat pump, a twin coil cylinder lets both feed the same storage vessel. The renewable source typically does the bulk of the day to day heating, with the boiler picking up the shortfall on high demand days or when the renewable source can’t keep pace. This setup shows up most often in hotels and leisure facilities, where hot water accounts for roughly 30 to 35% of total energy use, rising further with laundry and spa facilities on site (nzero), and where the cost case for a renewable first, boiler backup arrangement is strongest.

Dual coil is sometimes used as another name for the same thing, though some manufacturers use it specifically for two coils feeding the same source for redundancy rather than for fuel switching between two different sources. Worth confirming with your supplier which configuration they mean before it goes on a spec sheet, because the two setups are commissioned differently and behave differently under fault conditions.

Which One for Your Building?

For most buildings above a certain scale, a hotel, a school, a care home, a health centre, anywhere with an existing central boiler plant, indirect is the default and for good reason. It leans on infrastructure that’s already there, it handles higher volumes more economically at current UK energy prices, and it scales cleanly as demand grows. England and Wales’ non domestic building stock covered by government energy data runs to 1,755,000 buildings (GOV.UK/DESNZ, ND-NEED 2024), the vast majority of which fall into exactly this category.

Direct earns its place at the smaller end, where demand is modest, where there’s no existing plant to tie into, or where a gas connection genuinely isn’t viable. The decision isn’t about which technology is inherently better, it’s about matching the system to the building’s actual heat source, actual demand, and actual energy costs. Get that match right and the cylinder does its job quietly for years. Get it wrong and you end up either overpaying on the energy bill or under delivering on hot water, and neither of those is a good place to be standing when the complaints start.