HVAC Equipment Market Analysis

HVAC equipment is an indoor and vehicular environment comfort technology that offers thermal comfort and adequate indoor air quality. HVAC plays a major role in residential structures such as apartment buildings, senior living facilities, hostels, single-family homes, medium to large industrial buildings, hospitals, skyscrapers, airplanes, trains, cars, submarines, and ships. Heating equipment provides the necessary heating environment in a cost-effective manner. The HVAC industry is aiming to provide cost-effective equipment to cater to the energy needs of industrial and commercial customers and meet green technology/process requirements. HVAC players are introducing eco-friendly equipment by phasing out chlorofluorocarbons, hydro chlorofluorocarbons (CFCs and HCFCs), and other harmful refrigerant-based equipment.

The global HVAC equipment market is estimated to be valued at US$ 145.09 billion in 2021 and is expected to exhibit a CAGR of 7.7 % over the forecast period (2021-2028).

Recent Developments:

• In July 2021, Hitachi, a Japan based multinational company launched first modular side throw VRF air conditioning system.
• In June 2021, Energy Efficiency Services Limited, is an energy service company of the Government of India and is the world's largest public ESCO signed partnership with Indian Society of Heating, Refrigerating and Air Conditioning Engineers (ISHRAE) for energy efficient solutions in heating, ventilation, AC industry.
• In April 2021, LG electronics, a South Korean based electronics company launched TVC featuring LG DUALCOOL air conditioner for their customers. The AC has one-of-a-kind DUAL Inverter Compressor for faster cooling.
• In February 2020, Panasonic Corporation, a Japan based multinational company launched futuristic range of connected air conditioners.

Statistics:

Figure 1. Global HVAC Equipment Market Value (US$ Mn), by Region, 2020

APAC Region held dominant position in the global HVAC equipment market in 2020, accounting for 51.5% share in terms of volume, followed by North America and Europe, respectively.

Market Dynamics- Drivers

Strict regulatory norms are expected to drive growth of the global HVAC equipment market during the forecast period. Governments in different countries have imposed stringent regulations, in order to protect the environment and stabilize greenhouse gas levels in the atmosphere. There are 83 signatories and 192 member countries which have signed or accepted the Kyoto Protocol. A similar treaty, the Montreal Protocol, has achieved universal ratification (in 1999), and signatories had signed the protocol with a willingness to protect the depleting ozone layer and implemented the regulations in their respective countries. Such regulations are expected to boost the demand for HVAC equipment. Conventional equipment, which emits harmful gases such as chlorofluorocarbons (CFCs) and hydro chlorofluorocarbons (HCFCs) are needed to be replaced. Furthermore, there are other regulations that are boosting the adoption of HVAC equipment including LEED (Leadership in Energy & Environmental Design) certified projects and mandatory SEER (Seasonal Energy Efficiency Ratio) ratings (SEER of 13.0 and above in the U.S.) for HVAC systems.

Constant climate variations are expected to propel the global HVAC equipment market growth over the forecast period. Climate change is boosting the demand for HVAC equipment systems. There have been significant climate variations in the last two decades due to rising greenhouse gas effects. This, in turn, is leading to increased demand for efficient HVAC systems, in order to meet changing climatic variation. As a result of this, the demand for HCAC equipment is expected to accelerate.

Market Opportunities

Rising trend of smart homes can present lucrative growth opportunities in the global HVAC equipment market. The home automation market globally is growing at a robust pace, with average annual growth of 38.4%. This growth is primarily driven by energy management and security systems. As a result of this, HVAC systems manufacturers are focused on solutions that can be integrated with smart technologies. Therefore, there is a gradual shift towards smart building designs, which in turn, is boosting the demand for HVAC systems.

Growing use of green technologies can provide major business opportunities in the global HVAC equipment market. The HVAC equipment market still has low penetration in developing countries and the use of HVAC equipment is still restricted to urban areas. A key reason behind this is the inconsistent power supply to remote or rural areas. However, with the development of green products such as solar-powered HVAC systems, this challenge can be resolved, and new potential opportunities can be explored.

HVAC Equipment Market Report Coverage

Report Coverage	Details
Base Year:	2020	Market Size in 2021:	US$ 135.85 Bn
Historical Data for:	2017 to 2020	Forecast Period:	2021 to 2028
Forecast Period 2021 to 2028 CAGR:	7.7%	2028 Value Projection:	US$ 243.61 Bn
Geographies covered:	North America: U.S. and Canada Latin America: Brazil, Argentina, Mexico, and Rest of Latin America Europe: Germany, U.K., Spain, France, Italy, Russia, and Rest of Europe Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, and Rest of Asia Pacific Middle East: GCC Countries, Israel, and Rest of Middle East Africa: South Africa, North Africa, and Central Africa
Segments covered:	By End-use: Residential, Commercial, Industrial By Product Type: Heating, Air Conditioning, Ventilation
Companies covered:	United Technologies Corporation (Carrier), LG Corporation, Daikin Industries. Ltd., AB Electrolux, Haier Inc., Lennox International Inc., Samsung Electronics, and Panasonic Corporation
Growth Drivers:	Strict regulatory norms Constant climate variations
Restraints & Challenges:	High consumption of energy Lack of skilled workers

Market Trends

Unitary air conditioning systems are anticipated to show strong growth across the Asia Pacific region and in Latin American countries such as Brazil where the construction activities are expected to remain high over the forecast period. Smart air conditioning systems across residential and commercial applications are gaining popularity. Features such as air conditioner operation through smartphones, Wi-Fi technology, and advanced sensing are being incorporated in the air conditioners presently.

HVAC equipment is anticipated to build truly high-efficiency units; unfortunately, increased efficiency would not come without increased cost and complexities. HVAC equipment is anticipated to build truly high-efficiency units; unfortunately, increased efficiency would not come without increased cost and complexities. Usage of net-zero energy facility is gaining momentum; in such a facility any building will produce as much energy as it consumes.

Figure 2. Global HVAC Equipment Market Share, By End-use, 2020

Key Takeaways of the Graph:

• The Commercial segment held dominant position in the market and accounted for 41.6% share in the global HVAC equipment market in 2020. The segment is expected to reach US$ 92.34 billion in 2028, owing to rising infrastructure development and increasing urbanization across major regions, creating a demand for more office spaces. Commercial HVAC units require large space and are therefore installed on rooftops of big restaurants, shopping malls, theaters, and other commercial spaces.
• In 2020, the Air conditioner segment accounted for the largest share of 2% in the global HVAC equipment market and is expected to be valued US$ 160.09 billion by 2028. This is owing to changing climatic conditions in the Middle Eastern and Asia Pacific regions are expected to fuel the need for cooling units.

Market Dynamics- Restraints

High consumption of energy is expected to restrain growth of the global HVAC equipment market during the forecast period. Major entities in the commercial segment such as retail complexes, hostels, entertainment centers, and others typically rely on centralized HVAC systems for space conditioning. According to the International Energy Agency (IEA) and the U.S. Department of Energy, around 25-35% of electricity consumption is due to HVAC systems. According to the same source, a large part (20% - 60%) of this energy consumption is contributed by parasitic energy use (energy used to power fans and pumps used for the transfer of heating and cooling). Thus, centralized HVAC systems have burdened energy bills despite being more efficient (in terms of energy units consumption per unit area of space conditioned) as compared to unitary systems.

Lack of skilled workers is expected to hinder the global HVAC equipment market growth over the forecast period. Designing and manufacturing HVAC equipment requires major craftsmanship and skilled labor. Currently, there is a lack of skilled workers in the HVAC industry, which is expected to hinder the global HVAC equipment market growth over the forecast period.

Competitive Section

Major companies operating in the global HVAC equipment market are United Technologies Corporation (Carrier), LG Corporation, Daikin Industries. Ltd., AB Electrolux, Haier Inc., Lennox International Inc., Samsung Electronics, and Panasonic Corporation.

Key Development

1. Major companies are focused on product launches, in order to expand the product portfolio. For instance, in January 2017, Carrier Global Corporation introduced new digital solution for commercial HVAC system Carrier SMART Service.
2. Key market players are involved in product launches, in order to gain a competitive edge in the market. For instance, in August 2019, Haier Inc. introduced PuriCool, a range of air conditioners with built-in air purifier.