Market Trends of North America Commercial HVAC Industry
Increasing Demand for Heating Equipment in Commercial Buildings Will Drive Market Growth
- The use of heat pumps as the primary energy source for commercial buildings is growing as they are used to provide hot water, space heating, and cooling in various commercial buildings, including office buildings, hotels, hospitals, and schools.
- The growing demand for space heating on business premises is an important factor driving market growth. Moreover, increasing demand for commercial boilers is being driven by the acceptance of energy efficiency solutions and significant investments to build environmentally conscious buildings that reduce CO2 emissions.
- Cleantechnica reports that, currently, 4.7 million heat pumps are installed in the United States. To meet the increasing demand and fulfill the targets set by the state alliance, numerous companies are continuously investing in the region to enhance the production of heat pumps. For instance, in November 2023, Johnson Controls received a grant of USD 33 million from the US Department of Energy's Office of Manufacturing and Energy Supply Chains. This grant aims to support the expansion of three manufacturing sites in the United States to boost domestic production of electric heat pumps.
- With these facilities working together, they will have the capacity to manufacture around 200,000 electric heat pumps annually, resulting in a significant production increase of nearly 200%. This grant is a part of the Biden Administration's utilization of the Defense Production Act to enhance domestic production of five crucial clean energy technologies, including heat pumps.
- Several companies are constantly investing in introducing various products catering to the demand for these heating systems in the commercial segment. For instance, in March 2024, LG Electronics Canada announced the introduction of its latest heat-pump-enabled HVAC solution, the LG R32 Air-to-Water Heat Pump Monobloc system. It offers seamless installation in which hydronic components and water pipes are incorporated to eliminate the need for refrigeration piping.
- Furthermore, according to NREL (National Renewable Energy Laboratory), between 2023 and 2050, heat pumps are expected to generate significantly fewer CO2 emissions in the Upper Midwest of the United States than other heating options. Nevertheless, geothermal heat pumps were slightly more climate-friendly than the air-source type. While geothermal heat pumps were expected to generate, on average, 0.57 metric tons of CO2 every year, a propane furnace would generate 5.19 metric tons of CO2 annually.
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The United States is Expected to Hold Significant Market Share
- The demand for commercial HVAC in the United States is increasing due to climate variations, extreme weather, energy efficiency initiatives, and government regulations to reduce carbon emissions. For instance, in April 2024, the US Department of Energy launched a program to turbocharge the manufacture and deployment of next-generation heat pumps for commercial buildings. The accelerator is a public-private partnership that brings together manufacturers, owners of commercial buildings, and the DOE national labs. Its goal is to accelerate the development of more affordable and efficient packaged rooftop units, or cold-climate heat pumps, that are installed on flat commercial roofs.
- Similarly, in September 2023, a significant initiative was launched by a group of 25 state governors with the goal of deploying 20 million heat pumps by 2030. This represented a quadrupling of the number of heat pumps installed in 2020. Bipartisan governors who together represent 60% of the US economy and 55% of the country's population have committed to installing 20 million heat pumps by 2030 and collectively call themselves the US Climate Alliance.
- Moreover, the use of energy-efficient air conditioning equipment in commercial buildings is influenced by energy standards and regulations, such as those established by Energy Star and the US Department of Energy (DoE). To lower operating costs and their environmental impact, building owners and operators prioritize equipment with high seasonal energy efficiency ratios (SEER) and energy-saving features.
- Furthermore, the expansion of office buildings in the country will support the market growth. According to CBRE Group, between 2018 and 2023, the number of office conversion projects in the United States grew steadily. The year 2023 witnessed the most significant increase, with the number of office conversion projects nearly doubling from the previous year.
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