To prevent any issues with any possible warranty issues, follow the manufacturers minimum clearances stated in the manual.

For practical purposes such as ease of servicing, 3' would be a good distance. If the retaining wall is taller than the unit, I would be 3' or more.

Is your retaining wall built with a combustible material like wood or a non-combustible material like stone? The type of material used may affect the mfr’s recommended clearance.

If you need to pull a permit for the install, check with your town’s building department to see what their clearance requirements are.

The retaining wall is made of cinder blocks. Our contractor did not indicate if any permits are needed for the install, just the final equipment check, but I’ll ask him again. Thanks to you and @Mystic Pools for their responses.

Building departments generally defer to the manufacturers installation requirements. as they are not versed on any specific piece of equipment.