Rising demand for energy-efficient HVAC systems

Advancements in HVAC technology are steering the industry towards highly intelligent, fully automated, and environmentally friendly systems. Next-generation AI-based automated solutions for heating and cooling, along with smart HVAC incorporating IoT technology, play a promising role in enhancing the functioning and overall performance of HVAC systems, including the rising demand for energy-efficient HVAC systems.

The global heating, ventilation, and air conditioning (HVAC) market is primarily fuelled by escalating temperatures resulting from global warming and the expansion of the construction industry, particularly in the Asia Pacific region. Technological advancements are driving innovations in HVAC systems to optimise their operations. The market is characterised by a pursuit of highly intelligent, fully automated, and environmentally friendly HVAC systems. Integrating Internet of Things (IoT) sensors into HVAC systems enables real-time data collection and enhances system efficiency. Smart HVAC solutions leverage IoT technology, significantly improving the functionality and overall performance of HVAC systems.

The market is experiencing growth due to several factors including the rising demand for energy-efficient HVAC systems, the trend towards smart homes, government incentives, and increased investment in the construction sector. The HVAC Systems Market, which was valued at USD 218.32 Billion in 2024, is projected to reach USD 338.62 Billion by 2031, with a compound annual growth rate of 6.40 percent during the forecast period from 2024 to 2031.

HVAC systems are essential in residential and commercial buildings. They maintain comfortable and healthy indoor environments by controlling temperature, humidity, and ventilation. In modern buildings, these functions are usually combined into one or more HVAC systems, covering design, installation, and operation.

In smaller buildings, contractors usually evaluate the size and type of HVAC system needed, along with selecting appropriate components and refrigerants, before designing it. In larger structures, mechanical or building services engineers assess, design, and specify HVAC systems. Due to their potential energy usage, it’s essential to minimize demand and consider passive systems whenever feasible.

Regulatory influence and focus on indoor air quality

Regulations influence and shape the market dynamics, particularly environmental and sustainability regulations. Governments worldwide are implementing stricter standards regarding energy efficiency and refrigerant usage. The industry’s adoption of environmentally friendly refrigerants, such as hydro-fluoro-olefins (HFOs), exemplifies its response to regulatory pressures.

There is an increased emphasis on improving indoor air quality, particularly in commercial and residential buildings. To address IAQ concerns, HVAC systems are incorporating advanced air filtration, UV-C sterilisation, and ventilation solutions. For instance, high-efficiency particulate air (HEPA) filters and UV-C light systems are integrated into HVAC setups to eliminate airborne contaminants.

Climate change and sustainable practices

Climate change and global warming are primary drivers behind the increased adoption of indoor temperature control systems such as heating, ventilation, and air conditioning. In HVAC systems, the temperature of the environment in which the system is placed can be manipulated according to the user’s needs. The HVAC system functions through the manipulation of temperature through cooling and heating. Some systems can also manipulate the humidity in a certain environment by controlling air movement within an area. HVAC systems are also known to be able to purify the air due to their constant air circulation; the system is used in various types of buildings such as commercial, residential, institutional, and industrial buildings.

Furthermore, the increasing focus on sustainable construction practices has a direct impact on the HVAC market. Green building certifications, such as LEED (Leadership in Energy and Environmental Design), encourage the adoption of energy-efficient HVAC systems. Ground-source heat pumps, solar-powered HVAC solutions, and other sustainable technologies are gaining traction.

Rising demand for energy-efficient HVAC systems, the trend towards smart homes, and government initiatives, combined with increasing investments in the construction sector, are driving market growth in the projected period. Several advantages of HVAC systems, such as the energy efficiency that the system provides, the efficiency of the system, and the ease of implementation, are driving the market for HVAC systems. The rise in urbanisation and the development of energy-efficient HVAC systems also contribute to the market’s growth.

Segment growth 

The Air Filter segment is expected to undergo significant growth in the forecasted period, driven by changing climatic conditions due to the rise of urbanization and industrial development. Similarly, the heat pump segment is expected to grow, particularly in the Europe region, due to rising demand.

The cooling segment is expected to lead the worldwide market, driven by increased demand from commercial industries and changing climatic patterns across different regions. The room or unitary air conditioners segment is projected to maintain a considerable market share. This can be attributed to increased investments in residential construction.

HVAC systems are widely utilized in the commercial sector. The commercial segment is anticipated to dominate the global HVAC systems market in the foreseeable future. Specifically, the office segment is poised to hold the largest share, as HVAC systems play a vital role in maintaining optimal temperature and ventilation in office spaces.

Industry developments and product launches

The U.S. EPA plans to prohibit using R-410 refrigerant in HVAC systems nationwide by 2024 and encourage the transition to a new type of refrigerant, known as A2L, in these systems by 2025. Such changes are expected to boost the replacement activities of existing HVAC systems with new ones or update them. This is anticipated to contribute to market growth.

During September 2021, Carrier Transicold introduced two fresh additions to its Citimax unit range, namely, the Citimax 1000 and Citimax 1100 units, designed to cater to heavy-duty refrigerated trucks equipped with high-roof cabs.

In August 2021, Johnson Controls collaborated with Apollo Global Management to provide sustainability and energy efficiency services to assist customers in achieving their building decarbonisation and cost-saving objectives.

In May 2021, Carrier announced the availability of evaporative pre-cooling technology in Carrier’s AquaForce 30XV product line.

Market players and regional trends

Prominent players in the market are launching a substantial number of products, motivated by factors like expanding their product reach and enhancing accessibility across diverse geographic regions.

The key players adopting this strategy to achieve organic growth include Carrier Corporation, Rheem Manufacturing Company, Hitachi Ltd., Daikin Industries, Ltd., and Samsung. Other major players contributing to HVAC system growth include Daikin Industries Ltd., Ingersoll Rand PLC, Johnson Controls, Inc., Nortek, Inc., United Technologies Corp., Electrolux AB, Dixell- Emerson, Honeywell International Inc., Lennox International Inc., and LG Electronics. 

The Asia Pacific region is projected to capture a big market share, propelled by increasing income levels and a growing recognition of energy-efficient products. Moreover, the expanding real estate sector, driven by population growth, will further boost demand for these products.

Additionally, promoting smart building solutions and government initiatives endorsing the adoption of energy-efficient and cost-effective systems are expected to boost regional market expansion in future.

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