HVAC Market, 2024 and beyond
HVAC Market Overview
The global HVAC system market size is expected to be valued at USD 281.7 billion in 2024 and is projected to reach USD 389.9 billion by 2029, growing at a CAGR of 6.7% during the forecast period from 2024 to 2029
The market has been surging due increasing demand for energy-efficient and sustainable buildings across different sectors, which include residential, commercial and industrial properties that require climate control and good indoor air quality.
Moreover, climatic changes have made the need for both cooling and heating systems even more serious. Hence forth intelligent HVAC technologies with real-time monitoring and energy saving analytics drive market growth. Climate changes have also impacted on the demand for climate control systems.
Nevertheless, the lack of knowledge about advantages associated with HVAC systems remain as an obstacle to their adoption.
HVAC System Market Trends
Increasing demand for energy-efficient and sustainable buildings is expected to spur growth in the HVAC system industry. Heating, cooling or climate control technologies are used in residential, commercial and industrial buildings for ensuring comfort and indoor air quality. There has been a greater need for heating and cooling systems as climate changes occur. Higher energy consumption for meeting the needs of building cooling has caused additional pressure on air conditioners. The energy consumed by these systems varies with temperature and humidity.
In the United States alone, air conditioning contractors of America (ACCA) annually replace heating as well as cooling systems worth USD 3 million, while spending USD 14 billion on HVAC services or repairs. In a typical home, heating and cooling accounts for about half of total energy usage; hence efficient HVAC systems are crucial for energy management and cost savings both at individual level, as well as nationally.
An energy storage system for HVAC units was developed by Oak Ridge National Laboratory in Tennessee in collaboration with Georgia Tech and IntelliChoice Energy. The system seeks to minimize total consumption of electricity used in air conditioning systems through use of waste heat that would have been discarded otherwise.
Absence of technical knowledge among building owners and operators as well as shortage of skilled labor for HVAC system installation, maintenance and repair are the major limitations in the HVAC industry. Building owners and operators frequently lack enough technical expertise for proper maintenance and operation of HVAC systems. This will produce poor performance, low efficiency in the system and high energy consumption. Additionally, since HVAC systems continue to be more intricate and specialized, a greater degree of technical proficiency is required for their setup and servicing.
Another limitation stems from the lack of qualified personnel who specialize in installing, maintaining or repairing HVAC systems. Several factors can cause this situation including: an aged workforce, inadequate training programs and rivalry from other sectors. Because there is not enough skilled labor available in this field, there is likely to be increased repair or maintenance periods, costs as well as poor performance on equipment. In order to confront this challenge that hampers development efforts, educational courses for owners and operators could be created which would help them get more information about refrigeration units' working techniques. Moreover, making course programs for technicians will provide them with advanced knowledge to enhance expertise among workers in HVAC field. Furthermore, companies can utilize technology together with automatic systems so as to cut down manual workload thus improving efficiency at the same time.
In the HVAC industry, loT technology has allowed for designing intelligent HVAC systems which can be remotely controlled, supervised and managed through one central system. Transformation of loT in the HVAC sector is happening quickly and with several opportunities for growth and development. First of all, the loT enabled HVAC systems provide real-time information about energy consumption, temperature, humidity among other environmental factors which enable more accurate and effective control of HVAC systems. This data can help in improving performance of HVAC systems thereby minimizing their energy usage resulting into cost saving by the owners or operators of buildings.
In an analysis done by US Department of Energy on technology, residential buildings make up 74% of electrical consumption while commercial ones account for 40% total primary energy use in US with HVAC systems being responsible for up to 60% within buildings’ overall energy use.
Rising awareness about energy management in Europe has led to increased need for building automation as it is seen that more people are now concerned about this aspect than before. The European Union's National Energy and Climate Plan states that EU will strive towards achieving 32.5% increase in energy efficiency by 2030. The EU countries also have a long-term strategy on how to effectively manage their energy consumption in Europe.
An enormous challenge faces the HVAC sector because many individuals, particularly those from developing countries, do not know its merits. People from developing countries lack adequate understanding of HVAC systems and their capability to provide comfortable and salubrious indoor spaces. Therefore, they tend to go for traditional cooling or heating methods that may prove less effective or might even be categorized as wasteful; besides, such options seem expensive.
This lack of knowledge has one quick reason which is insufficient availability of information and education on HVAC systems in most developing nations. Governments and private institutions have not invested greatly in the infrastructure plus training initiatives that could have promoted HVAC installations across various regions. Henceforth, a significant portion of the population in these countries does not possess any concept on how best they can select an appropriate system. In addition, these systems tend to be quite costly hence hardly accessible financially particularly for individuals living there; this usually is what discourages people from acquiring them initially. Furthermore energy-efficient HVAC systems face additional disadvantages due to absence of subsidies by governments or financial assistance programs associated with them that increase efficiency levels.
HVAC Ecosystem and Segmentations
The HVAC system ecosystem comprises equipment manufacturers, control providers, system integrators, and distributors. HVAC end users include residential, commercial, and industrial. Across the commercial segment, HVAC systems are used across offices, government organizations, airports, healthcare facilities, educational institutions, and retail shops.
o Residential
o Commercial
o Industrial
Based on Application type, the Commercial segment to hold the highest market share during the forecast period.
HVAC systems are often required for commercial buildings. The most significant energy costs are usually caused by HVAC loads in commercial buildings. The most substantial factor is location; buildings located far north or south on the globe usually incur high heating expenses. HVAC systems are the largest energy consumers in commercial spaces, which account for about 30% of total energy use in businesses. A sophisticated, energy-efficient HVAC system can replace a conventional one, thus helping to save a lot of energy in this industry.
An integral part of commercial structures due to rising global temperatures and pollution caused by heavy construction works, HVAC systems have become popular recently. In order to address issues related to environment and rising cost of power, use of energy efficient HVAC systems has become a must for commercial spaces. This is supported by governments from different countries who encourage the adoption of such systems into their industries. Sub-segments include healthcare, education, government offices, airports and retail outlets.
o New Construction Buildings
o Retrofit Buildings
Based on Implementation type, the new construction building to hold the highest market share during the forecast period
Government plays a crucial role in HVAC market since there are more buildings being installed with HVAC systems because of rising urbanization across many nations and equipment must conform to certain rules and regulations.
The governments are making steps towards green’ structures so as to make them environmentally friendly.
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In addition, several companies are also investing in energy-efficient HVAC systems for new construction projects.
o Installation Services
o Maintenance and Repair Services
o Upgradation/Replacement Services
o Consulting Services
Based on Service type, the Installation services to hold the highest market share during the forecast period
The HVAC industry provides a wide range of services for ensuring comfortable and healthy indoor environments in residential and commercial buildings. These services include installation, maintenance, and rehabilitation of heating, ventilation, and air conditioning systems. Among the segments in the forecast period, installation services are projected to have the highest market share globally for HVAC systems. This is due to an increase in demand for professional installation services as more buildings call for efficient heating and cooling solutions. Moreover, intricate regulations along with specialized skills that go beyond regular ductwork imply that this segment is poised for significant growth.
o Heat Pumps
o Furnaces
o Unitary Heaters
o Boilers
Based on heating equipment, Heat pumps to hold the highest market share during the forecast period.
Heat pumps accounted for the largest share of the HVAC system market in 2023. According to the most recent analysis by IEA (International Energy Agency) in 2023, heat pump sales all over the globe increased by 11% in 2022 marking a second year of such increase in the central technology of transition to guaranteed and sustainable heating and under present rates of growth heat pumps are projected to double their share for heating buildings by almost 2030.
The installation of heat pumps instead of fossil fuel-based boilers leads to a large decrease in greenhouse gases emissions in all leading markets like North America and Europe. In addition, governments around the world are pursuing policies that encourage the use of heat pumps, which will have an obvious consequence on how much gas, oil and coal are used for heating (International Energy Agency - IEA). In 2030, using these devices may help reduce global carbon dioxide emissions by no less than 500 million tons.
o Air-handling Units
o Air Filters
o Dehumidifiers
o Ventilation Fans
o Humidifiers
o Air Purifiers
Based on Ventilation equipment, the air-handling unit to hold the highest market share during the forecast period
Air-handling units held the largest size of the HVAC system market for ventilation equipment in 2023. AHU's design is based on myriad factors: building size, occupancy, air quality requirements, climatic conditions, efficiency levels of energy, level of noise, and maintenance costs.
Most companies have AHUs in place to enhance their indoor air quality as well as lower energy expenses or at least comply with the building regulations. An example is Google which has heavily invested in energy efficient AHUs for its data centers.
For instance, they have developed a separate air handling system known as EcoFlair that uses water-based cooling and high-efficiency fans to reduce its electricity consumption. Additionally, Gigafactory in Nevada employs sophisticated AHUs that filter and circulate the air within the structure. The AHUs contain MERV-13 filters responsible for filtering up to 90 percent of the particles found in the atmosphere. Also included in these designs are heat recovery systems capturing waste heat emitted by AHUs from where it can be used to warm up incoming air before being circulated through rooms.
o Unitary Air Conditioners
o VRF Systems
o Chillers
o Room Air Conditioners
o Coolers
o Cooling Towers
Based on the cooling equipment type, VRF system to hold the highest market growth during the forecast period
Many commercial and residential applications, such as office buildings, hotels, schools, retail stores, and data centers utilize VRF systems. Samsung has introduced a new DVM S2 VRF outdoor AC unit that works with indoor AC units in April 2022. It offers wind-free cooling which gently cools down the ambient temperature of a room more powerfully than any other method mainly in residential complexes and commercial spaces.
Smart building technologies can be integrated into VRF systems to increase control and efficiency. As a result of this technology, companies are investing in VRF systems as a means to drive their overall building performance improvements. For instance, ABB (Switzerland) and Samsung Electronics (South Korea) collaborated in April 2022 to advance smart building technology solutions thus providing combined technology development for energy savings and management in residential and commercial buildings.
Smart homes connect devices and appliances through a central system so as to save on costs, time, and energy. For instance, by linking the Samsung SmartThings app with ABB home automation solution, residents are able to use their personal digital gadgets to monitor and operate any type of kitchen appliance including white goods or refrigerators, gas or smoke detector, heating device, security alerts such as alarms, air conditioning units that help regulate temperature inside living places comfortably.