Condensing boilers are water heaters typically used for heating systems that are fueled by gas or oil. When operated in the correct circumstances, a heating system can achieve high efficiency (greater than 90% on the higher heating value) by condensing water vapour found in the exhaust gases in a heat exchanger to preheat the circulating water. This recovers the latent heat of vaporisation, which would otherwise have been wasted. The condensate is sent to a drain. In many countries, the use of condensing boilers is compulsory or encouraged with financial incentives. For the condensation process to work properly, the return temperature of the circulating water must be around or below, so condensing boilers are often run at lower temperatures, around or below, which can require larger pipes and radiators than non condensing boilers. Nevertheless, even partial condensing is more efficient than a traditional non-condensing boiler. In a conventional boiler, fuel is burned and the hot gases produced pass through a heat exchanger where much of their heat is transferred to water, thus raising the water's temperature. One of the hot gases produced in the combustion process is water vapour (steam), which arises from burning the hydrogen content of the fuel. A condensing boiler extracts additional heat from the waste gases by condensing this water vapour to liquid water, thus recovering its latent heat of vaporization. A typical increase of efficiency can be as much as 10-12%. While the effectiveness of the condensing process varies depending on the temperature of the water returning to the boiler, it is always at least as efficient as a non-condensing boiler. The condensate produced is slightly acidic (3-5 pH), so suitable materials must be used in areas where liquid is present. Aluminium alloys and stainless steel are most commonly used at high temperatures. In low temperature areas, plastics are most cost effective (e.g., uPVC and polypropylene). The production of condensate also requires the installation of a heat exchanger condensate drainage system.

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