Energy efficiency, regulations to drive HVAC demand

Demand in the U.S. for heating, ventilation and air conditioning (HVAC) equipment is projected to increase 5.1 percent annually to $16.8 billion in 2015, according to a study just released by The Freedonia Group, a Cleveland-based market research firm.

Rising interest in more energy-efficient HVAC systems, in part spurred by regulatory changes, will also support increased demand. Systems using less environmentally harmful refrigerants will be popular, despite their premium price. Public and private incentives will encourage owners to upgrade to models with efficiency ratings that are at or above Energy Star levels. 

Environmental concerns will provide a special boost to cooling equipment, especially central and room air conditioners. Demand for these will increase at an above-average pace, benefiting from the continuing development of higher-efficiency models and from gains in the share of homes with central air conditioning.  The cooling equipment industry is affected by a variety of regulations, including those involving ozone-depleting hydrochlorofluorocarbon refrigerants. For example, in 2010 the production and import of HCFC-142b and R-22 were banned, although the government permitted a declining allocation of R-22 to service existing equipment until production is completely banned in 2020.

Heat pumps accounted for the largest share of heating equipment value demand in 2010 and have been gaining share at the expense of less efficient equipment and those that provide heating only.  Through 2015, demand for heat pumps is expected to post the strongest gains of any heating equipment, supported by their ability to provide efficient heating and cooling in moderate climates, and by rising interest in geothermal versions.  Demand for boilers will also post above-average gains benefiting from the rebound in nonresidential and residential multiunit construction, and interest in radiant heating systems.