Trends shaping the HVACR industry in 2025

Nabil Shahin, Managing Director of the Air-Conditioning, Heating, and Refrigeration Institute, and Vikram Murthy, AHRI India Representative, recently shared their insights on the transformative growth expected in the HVACR industry in 2025. A shift toward sustainable solutions is bringing enormous change in the sector. Renewable energy, low-GWP refrigerants, and the integration of AI and IoT will shape the future of energy-efficient and eco-friendly climate control systems. Decarbonisation, the adoption of renewable energy, and a push toward net-zero building designs will dominate the agenda.

Please share your views on the HVAC industry outlook for 2025.

Vikram Murthy: The outlook for the HVAC industry in 2025 is bright across India and Asia. Governments and the private sector in every corner of India have rapidly expanded infrastructure development and housing, which fuels the demand for HVAC equipment. To the East, Indonesia is building a new Capital with large opportunities. Many district cooling installations are planned for India and neighbouring southeast Asia. 

AHRI has plans to address these developments in India. A focused outreach to manufacturers that certify under AHRI’s Chiller, Cooling & Heating Coil, Air Handling Unit, Room Fan Coil and Liquid Heat Exchanger Programs shall be given additional guidance to test and offer their equipment for large HVAC and District Cooling projects that typically need specific design conditions and performance parameters for such equipment. AHRI plans to educate manufacturers who export to the MENA and North American regions of AHRI’s specific Certification programs and test parameters that will enable their path of export compliance.

Nabil Shahin: The HVAC industry is ready for substantial growth in 2025, driven by increased regulatory stringency on energy efficiency and environmental impact. The regions, like the Middle East, are aligning standards with ASHRAE 90.1-2022, focusing on sustainable solutions like SEER-compliant technologies, inverters, and high ambient equipment. Decarbonisation, the adoption of renewable energy, and a push toward net-zero building designs will dominate the agenda. Industry collaboration with regulators is increasing through manufacturing associations like AHRI, offering opportunities to harmonise standards and reduce trade barriers. The demand for 3rd party equipment performance verification and certification and market surveillance will increase to cover many types of equipment and ensure that products arriving at the market meet the minimum performance set by the regulatory bodies.

What advancements are happening within the HVAC industry?

Nabil Shahin: The HVAC industry has been advancing in several areas. Significant work is underway to evaluate refrigerants suitable for high ambient regions, focusing on Kigali Amendment compliance to reduce global warming potential (GWP). IoT and AI are transforming HVAC systems, enabling Smart HVAC systems to leverage AI for predictive maintenance, energy optimisation, and demand-based performance adjustments.

Another development is innovative cooling technologies; a new AHRI workgroup is developing standards for evaporative cooling, which reduces energy consumption. Finally, the industry is addressing decarbonisation with the development of new standards. All of these address embedded and operational carbon in all HVAC equipment to minimise the carbon footprint of HVAC systems.

Vikaram Murthy: Advancements have occurred in digital control, the application of AI and data analytics in HVAC management, higher energy efficiencies, the application of Heat Pumps and innovation in refrigeration products, as well as the introduction of very low GWP and zero GWP Refrigerants. 

How can AI and IoT technologies improve HVAC efficiency?

Vikaram Murthy: AI and IoT have numerous applications in HVAC&R that emerge from existing direct digital control technologies that lend themselves easily to be upgraded to IoT and self-diagnostic applications.  AI is implemented by the availability of multitudes of affordable sensors, the collection of hundreds of data points and rapid computing power for data analytics. These export into algorithms that adapt and alter performance and aid operation efficiencies. 

How does renewable energy improve HVACR sustainability?

Vikaram Murthy: The application of on-site generated renewable energy like solar, wind, and biofuel energy frees dependence on fossil fuel grid power and drives up decarbonisation while simultaneously and effectively providing sustainable building operations. 

How do low-GWP refrigerants impact greenhouse gas emissions?

Vikaram Murthy: Low GWP refrigerants, such as fossil fuels, are a part of greenhouse gas emissions. Introducing low and zero GWP Refrigerants and phasing down higher GWP Refrigerants such as HFCs directly reduces climate change.  These actions must become mandatory, implemented progressively per national guidelines and regulated in the coming periods. 

Nabil Shahin: Low-GWP HFO refrigerants reduce the environmental impact by reducing the impact on the environment and dissipation time from the atmosphere compared to traditional HFC refrigerants like R-410A.

Many HFC refrigerants are flammable, so many factors must be considered in the design, testing, installation, and changes to the current safety and performance codes and standards.

How does the green transition meet environmental goals?

Vikaram Murthy: A green transition involves several steps to be taken by the building mechanical systems designer, architect, developer, building operator and occupants. These include passive reduction in heat ingress such as cool roofs, shading, high emissive walls and roofs, and low plug loads inside the building.

Daylighting is used to maximise natural light. Low solar gain glass helps reduce heat absorption. Insulation materials and coatings are applied generously to improve energy efficiency. Operating temperature set points are adjusted to maintain comfort. The building operation controllers are introduced to enhance occupant comfort. The controllers take advantage of diversities and varying schedules of operation.

With the above steps, a green transition shall evolve without compromising occupant thermal comfort and simultaneously achieve set environmental targets. 

How can design and technology improve the building environment?

Nabil Shahin: Improving building environments through design and technology involves several innovative approaches. Passive designs, such as incorporating shading, natural ventilation, and insulation, help reduce energy loads while improving indoor comfort. Smart controls through building management systems provide precise control over temperature, lighting, and energy control.

Adopting variable-speed drives in inverter and VRF systems and district cooling ensures energy-efficient cooling and heating. Furthermore, digital twinning technology uses software to simulate building design, insulation equipment type, and efficiency to achieve optimum building efficiency.

Vikaram Murthy: Innovation and transformational design lead to efficient, more reliable, resilient products. Continuous research and development is taking place by manufacturers to demonstrate meritocracy and a higher share of the market. This path continually raised targets set by India’s Energy Regulator, the BEE (Bureau of Energy Efficiency).  AHRI works with regional regulators like BEE to help them implement market surveillance that supports Minimum Efficiency Performance Standards (MEPS) programs.  In turn, this leads to continuous progress in achieving building environment goals as a part of newly introduced ESG targets mandated for Indian Companies. 

What are your suggestions for decarbonisation in the HVAC industry?

Vikaram Murthy: Decarbonization has multiple steps for manufacturers, namely the Three Scopes of Decarbonization. Manufacturers must plan and implement a decarbonisation process: Firstly, to continuously reduce carbon in the materials consumed and in the manufacturing process. Secondly, to cut dependence on grid fossil fuel-consumed energy. Lastly, to ensure every vendor decarbonises their supplied goods and services.

What opportunities do you see for 2025?

Vikaram Murthy: I see opportunities for AHRI to emerge in 2025.  BEE (Bureau of Energy Efficiency) plans to implement performance regulations for HVAC Equipment other than Chillers that are already verified for their Compliance with BEE’s labelling program by AHRI. Some of these new BEE Regulatory products are Variable Refrigerant Flow Air Conditioners and Air Handling Units. AHRI shall plan a path of compliance for these BEE regulatory programs in conjunction with AHRI’s Certified Program Partners.

On a broader perspective, I see a wealth of opportunities in 2025—some of which are manufacturing higher-efficiency equipment, district cooling, not non-kind cooling such as Radiant Cooling and Evaporative Cooling, natural and passive cooling systems, and retrofitting inefficient operating systems.