HVAC Equipment Market

Market Overview

The global HVAC equipment market size was valued at USD 106.7 billion in 2021. It is expected to reach USD 206.4 billion by 2030, growing at a CAGR of 7.6% during the forecast period (2022–2030).

HVAC technology provides adequate indoor air quality and thermal comfort for both indoor and outdoor environments. HVAC plays a significant role in residential buildings like apartment complexes, senior living facilities, hostels, single-family homes, medium to large industrial buildings, hospitals, skyscrapers, cars, trains, submarines, and ships. Heating equipment efficiently creates the necessary heating environment. In order to satisfy the energy needs of industrial and commercial customers and comply with green technology/process requirements, the HVAC industry strives to offer affordable equipment. In addition, HVAC players are introducing environmentally friendly equipment by phase-outing chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), and other harmful refrigerant-based equipment.

Market Dynamics

Global HVAC Equipment Market Drivers

• Favorable Government Regulations

Several regulations have altered how manufacturers design commercial rooftop air conditioners, heat pumps, and warm-air systems for low-rise buildings like shops, schools, and mid-level hospitals to increase RTU efficiency and reduce energy use and waste. Several manufacturers have been working on equipment that phases out CFC (chlorofluorocarbon) and HCFC (hydrochlorofluorocarbons) to meet their customers' demands and green technology requirements. This has increased the demand for services to replace outdated models and the use of HVAC equipment. The government's increasing budgetary support for sustainable community development may factor in the industry's continued expansion in the commercial and industrial construction sectors.

• Higher Demand for Energy-Efficient Devices

The development of intelligent technologies, such as HVAC fault diagnostics and detection, which assists end-users in quickly identifying and resolving issues involving defective HVAC units throughout the enterprise, is driving the market growth. Additionally, identifying recurring and new HVAC performance issues with ranking/filtering according to duration, impact, and type of issue, automatic site meter, and HVAC submeter data importing for improved energy and HVAC operations, has been fueled by the growing demand for energy-efficient devices. Furthermore, several nations have widely adopted smart homes and innovative city initiatives. The adoption of smart cities has been encouraged by several local governments. The demand for HVAC equipment has grown as a result of the expansion of the construction industry and the rise in retrofit activity in developing nations. Business trends have also driven the demand for retrofitting.

Global HVAC Equipment Market Restraints

• Rising Competition to Control Margins

In the global HVAC equipment market, established vendors compete fiercely. One of the main concerns for international manufacturers is energy efficiency. Several players, including Daikin, Carrier, and Lennox, have already begun to release energy-efficient HVAC products, and as a result, they have taken control of the market's pricing. Due to this, relatively more minor players are forced to set their prices lower to compete with the level of technological innovation present in these products. However, due to high capital requirements and industry expertise, there is little opportunity to vertically integrate and eliminate the buyer in the HVAC equipment market. The lack of substitute inputs increases suppliers' negotiating leverage and competition. Overall, the supplier's negotiating position is rated as moderate. The HVAC equipment market will likely face significant challenges from raw material availability and price increases.

Global HVAC Equipment Market Opportunities

• Incorporation of IoT and Product Innovations

Sales of heating, ventilation and air conditioning (HVAC) systems are rapidly increasing as the global average temperature rises. Additionally, as urbanization increases in various nations, there is a rising need for adequate heating and ventilation systems, particularly among those who live in apartment buildings. The government's requirements for replacing outdated HVAC systems and developing the construction industry are two critical drivers of HVAC system sales. The increased energy demand from HVAC systems is a factor in rising electricity rates, so the HVAC industry is trying to make their products more energy efficient and give consumers the tools they need to monitor their energy use. A smart thermostat, an Internet of Things (IoT) device that gathers valid HVAC data and customizes it to a building's specific HVAC requirements, is one way to efficiently monitor electricity usage and create a more energy-efficient HVAC system.

Regional Analysis

By Region, the global HVAC equipment market is segmented into North America, Europe, Asia-Pacific, and the Rest of the World.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant global HVAC equipment market shareholder and is expected to grow at a CAGR of 7.9% during the forecast period. China is an important market for data center cooling due to the rapid growth of data centers and the government's support for energy-efficient infrastructure. Given the growth of fintech and the country's digital transformation, this expansion presents a significant opportunity for market vendors. According to data center space per user, China's Internet data centers may grow to be 22 times larger than those in the U.S. or ten times larger than Japan's. The Chinese government has given energy management serious thought due to the rise in commercial construction. In addition, China's construction sector has grown due to sustainable building regulations and a shift to a service-led economy. Energy Saving and Renewable Energy Law regulate building energy systems, HVAC, and R industries. These factors are anticipated to drive market growth during the forecast period.

North America is expected to grow at a CAGR of 8.80%, generating USD 45.86 billion during the forecast period. Due to their many benefits, particularly the power-saving features, HVAC systems are becoming increasingly popular throughout the North American continent. Canada and the United States are two of the top ten energy-consuming nations. The demand for HVAC equipment has been driven by increased industrial activity, including manufacturing facilities (particularly those in the food industry), hospitals, data centers, and other institutional and industrial facilities. The presence of established manufacturers in the area that offers unique solutions to industrial problems has fueled the market expansion.

Europe is anticipated to grow significantly during the forecast period. Over the past five years, the HVAC equipment market has undergone a transition brought on by new technology, regulations, changes in climatic conditions, and consumer trends. An increase in demand for modern, user-friendly HVAC appliances has been observed in the area. The demand for HVAC equipment is anticipated to rise in the developed European regions, particularly in the United Kingdom, Germany, and France, due to government regulations regarding energy efficiency and environmentally friendly refrigerants.

In recent years, growing health, safety, and energy efficiency regulations, updated building codes, and environmental legislation have benefited the U.K.'s ventilation and air conditioning market. However, the market uncertainty following Brexit hindered the adoption of significant projects in the U.K., particularly in London. Additionally, the U.K. government has been actively working to mitigate the effects of climate change. The adoption of HVAC technology is anticipated to be impacted by this. The market is expanding as a result of developments. For instance, the UK-based HVAC manufacturer Swegon acquired the expert in air terminals, Waterloo Air Products, in March 2020. With this most recent acquisition, Swegon advances its "indoor environmental quality" strategy. The acquisition deal may increase the company's air terminal range and custom-building expertise.

Other regions, such as Latin America and the Middle East and Africa, have a high potential for gaining a significant share of the HVAC equipment market. Several important Latin American nations, including Brazil, Argentina, and Mexico, account for a sizeable portion of the market under study. The use of low energy-consumption tools and equipment is required in Brazil by laws like the Action Plan for Energy Efficiency in Buildings and the Regulation of Energy Efficiency Labeling for Commercial, Services, and Public Buildings. Many households in the nation are installing new air conditioning equipment to comply with the rules and reduce energy use, boosting the market growth. Aside from that, in nations like Argentina, building energy efficiency standards, such as Law 13059/03-Thermal Conditioning Condition and Energy performance - IRAM 11900, require the use and supervision of energy-efficient electronic systems and serve as significant market drivers for HVAC equipment in the nation.

Segmental Analysis

The global HVAC equipment market is segmented by type and equipment type.

Based on Type

The global market is bifurcated into heating, air conditioning, and ventilation.

The air conditioning segment is the highest contributor to the market and is expected to grow at a CAGR of 7.8% during the forecast period. Due to the trend of an increase in residential and commercial users along with government regulations for energy efficiency and eco-friendly equipment, air conditioning equipment is predicted to hold a significant share of the HVAC equipment market. Space cooling is now the end-use equipment in buildings with the fastest-growing energy demand since 1990. Additionally, the Federal Energy Management Program (FEMP) has established guidelines for the minimum energy efficiency standards through Energy Star. Additionally, there are minimum energy performance standards (MEPS) for air conditioners in nearly 60 countries. However, these requirements differ significantly between nations and are typically weaker or nonexistent in hot and humid regions, where the demand for air conditioners is anticipated to increase quickly.

It is anticipated that new government regulations, like those in the US, will increase the energy efficiency of HVAC equipment. This has made it possible for buildings' most cutting-edge heating systems to use innovative HVAC control systems. Some products that serve the segmented market are packaged re-heat air conditioners, packaged re-heat gas/electric models, and packaged heat pump models. AHUs are typically connected to central plants like chillers and boilers to provide heating and cooling. The demand for HVAC equipment in the automotive and related industries has increased due to factors like the adoption of geothermal heat pumps, which have increased the overall demand for automotive HVAC equipment. Due to the growing demand for energy efficiency in buildings to reduce CO2 emissions and energy and utility costs, the design type incorporating a heat wheel built into the HVAC unit has gained popularity over the past few years.

Based on Equipment Type

the global market is bifurcated into unitary equipment (site-assembled), applied equipment (semi-custom), chillers, heat pumps, and ductless systems.

The unitary equipment (site-assembled) segment owns the highest market share and is expected to grow at a CAGR of 6.4% during the forecast period. The unitary equipment (site-assembled) is subdivided into sub-type and end-user industries. Rooftop units (also known as RTUs) are small air conditioning units that, as their name implies, are installed on the roofs of shops and other small commercial structures to distribute conditioned air along a predetermined path to specific areas. They are packaged air conditioning units and are very well-liked since they are simple, compact, self-contained, and all-in-one HVAC devices. Another kind of air handler is an RTU. AHUs and RTU units are very similar, except that RTU units are permanently installed on the roof and are typically more compact. Therefore, they must be more durable and weatherproof to withstand environmental factors like wind, rain, snow, and sun.

The applied equipment (semi-custom) is subdivided into sub-type and end-user industries. Compared to standard units, custom air handling units (AHUs) are constructed to last longer and have better fit and finish. Custom units are preferred in applications that may involve multiple filters and higher-pressure requirements because they are made to handle higher pressures. Larger cross-sections are typically found in custom AHUs, allowing for more effective, more enormous fan and component sizes. The best life cycle cost and energy-efficient designs are provided by optimal equipment sizing. A unit that is specially made may contain equipment that is standardized throughout a business or structure. Typically, these options are not offered with packaged standard units. Custom air handling units come with service access panels that enable the removal of fans and coils, facilitating quick and simple maintenance throughout the unit's lifespan. More excellent section space is built into them to allow for maintenance access. The use of custom-built AHUs is expected to increase due to these benefits.

Recent Developments

• September 2022- DAIKIN joined the just formed "GX business working group" as a leader to create a framework and promote the evaluation and disclosure of climate-related opportunities by the GX league.