The global Heating, Ventilation, and Air Conditioning (HVAC) system market size is expected to reach USD 219.49 Billion in 2030 and register a revenue CAGR of 5.5% during the forecast period. Rising demand for cooling systems among end-users is a major factor driving HVAC system market revenue growth. Cooling systems comprise air condition units such as cooling towers, split & packaged air conditioners, and others. Technological advancements such as integration of sensors into this equipment have significantly impacted the demand and acceptance of these systems. Internet of Things (IoT)-integrated cooling systems enable users to control them from distant locations. Moreover, market participants are increasingly investing in developing compact cooling units that are cost and energy-efficient and provide users with comfort. These initiatives by companies have boosted demand for cooling systems thereby driving HVAC system market growth.
In addition, industrial professionals prefer heating systems such as boilers, heat pumps, and others due to their applications in space heating, steam generation, vaporization, and other areas. Therefore, in areas where climate is extremely cold, these equipment are ideal and greatly assist industries in keeping their operations running smoothly. Ventilation units and air purifiers are also gaining popularity among end-users as people become more aware regarding importance of maintaining a healthy and safe environment.
Rising consumer preference for a comfortable lifestyle has paved the way for HVAC system market growth. Market players are increasingly investing to develop products and address need of customers by providing them with several lucrative benefits and offers. For example, Internet of Things (IoT)-enabled heating and cooling systems enable users with real-time monitoring of system functionality and condition. These modern HVAC systems also alert customers regarding system failure and thereby reduce unnecessary expenses on repairs. Due to aforementioned factors, demand for HVAC systems is increasing and it is going to continue over the forecast period.
Alteration in climatic conditions is another major factor influencing rapid adoption of HVAC systems among end-users. Customers are constantly seeking cost-effective heating and cooling systems due to harsh and unpredictable climate changes. In addition, innovative designs and features of modern air conditioning and heating systems also add to aesthetic side of commercial and residential spaces. Therefore, companies are also bringing and adding new products to their portfolio frequently so that customers can choose from a wide range of products depending on their preferences. Development of improved designs and changing consumer preferences are expected to boost demand for HVAC systems over the forecast period.
However, high installation charges, frequent maintenance, high energy consumption, and other difficulties in operation act as a major restraint to the market expansion of HVAC systems. Moreover, in regions and countries with high humidity, longevity of these systems is significantly reduced due to corrosion. However, despite these disadvantages increasing acceptance of HVAC systems due to their large number of benefits is going to drive market growth throughout the forecast period.
Market Dynamics:
Driver: Rising demand for water-cooled chillers from end-use industries
Water-cooled chillers aid in absorbing heat from processed water and effectively transfers it to a separate water source such as a river, pond, and others. This equipment is primarily used in industries where a large volume of products and goods are stored and used frequently. In addition, they are also preferred in industries where a cooling tower is under maintenance or needs replacement. Water-cooled chillers enable industry professionals to effectively remove mineral deposits by utilizing treated condenser water. This significantly reduces equipment downtime and maintenance costs. The deposited mineral however can significantly affect performance of equipment by creating poor heat transfer situations.
Rising demand for water-cooled chillers is mainly due to wide variety of advantages they offer. For instance, water-cooled chillers operate silently. The inflow of water through system does not result in same noisy expansion and contraction that is being heard in air-cooled chillers. Quiet operation is particularly important in environments such as hospitals and schools, where noise can cause disturbance to occupants. In addition, water-cooled are comparatively more energy efficient than air-cooled chillers. The film coefficient is 10 to 100 times better and these aids water-cooled chillers to transfer heat more efficiently thereby saving energy expenses for companies. Moreover, in food & beverages industries, water-cooled chillers are ideal as they do not require open spaces to operate. Water-cooled chillers are also preferred as they utilize water as a refrigerant instead of toxic chemicals. This ensures safe operation for users as well as maintenance engineers who come in contact with them significantly.
Restraint: Lack of awareness regarding benefits of installing HVAC systems in emerging economies
With rapid technological advancements, it is essential to make consumers aware regarding benefits of utilizing new devices and equipment for their day-to-day operations. In HVAC systems, they are primarily perceived to be a non-energy efficient technology. Additionally, consumers in developing countries assume them to be expensive and non-beneficial. Therefore, adoption rate in these countries is very much limited. However, there are plenty of options consumers can choose from under HVAC systems that are comparatively more beneficial than that of their competitors. For instance, installing an open loop geothermal HVAC system offers significant benefits. These systems are most energy-efficient HVAC system as they utilize Earth's surface to heat or cool spaces rather than fuels such as propane, and others. Moreover, they are also cost-effective and provide easy maintenance for industrialists and homeowners.
Development of low Global Warming Potential (GWP) refrigerant is another factor for which consumers should be able to adopt HVAC systems. However, lack of awareness has restrained adoption rate and limited market growth for these effective refrigerants. In addition, HVAC system contractors have very limited knowledge regarding HVAC system standards, which ultimately hinders their business growth.
Type Insights:
Based on type, the global HVAC system market is segmented into heat pumps, furnaces, boilers, and unitary heaters.
Boilers segment accounted for largest revenue share in 2021. Rising demand for high-efficiency boiler systems from power plants is a major driver of this segment's growth. Boilers are critical equipment for power plants as they aid in efficient production of steam. The steam produced is then used to generate electricity. As the world's population is increasing, demand for dependable power delivery is increasing as well. As a result, it is critical to replace old boiler systems in power plants with newer systems that can generate a large volume of steam, thereby increasing power plant thermal efficiency. Leading market players are also focusing on providing advanced boiler systems that offer multiple fuel flexibility while also reducing harmful Carbon Dioxide (CO2) emissions. Several power plants worldwide are still operating on older boiler systems. As a result, significant investments are being made by various governments and private companies in establishment of reliable power generation units capable of providing a massive power supply. Moreover, governments in various countries are rapidly investing in development and refurbishment of new plants and existing plants. This provides a lucrative opportunity for the segment to grow over the forecast period.
Ventilation Devices Insights:
Based on ventilation devices, the global HVAC system market is segmented into humidifiers, dehumidifiers, air purifiers, air filters, ventilation fans, and air handling units.
Air purifiers segment accounted for largest revenue share in 2021. Increasing global pollution level is a prominent factor driving growth of this segment. Rapid industrialization and rising population worldwide have paved the way for emission of toxic gases, volatile chemicals, fine particulate, and biological components thereby resulting in adverse health impacts. Furthermore, countries such as China, India, Brazil, and Mexico face acute health risks due to a lack of stringent regulations and guidelines on pollution control and monitoring. Moreover, in these countries, a significant shift in population from rural to urban areas has increased pollution levels. According to international authorities such as the United Nations Fund for Population Activities (UNFPA), Asia Pacific region accounts for 40% of all international migrants worldwide, with two out of every five people living in cities. This ratio will skyrocket over next two decades as more people migrate from countryside to towns and cities in search of work and better opportunities.
Additionally, number of vehicle fleets emitting significant amounts of pollutant gases has also doubled as a result of urbanization. Furthermore, household appliances such as refrigerators are significant sources of Chlorofluorocarbons (CFCs). As a result, rising consumer awareness regarding negative health effects of air pollution has created a significant market for air purifiers, particularly for indoor air quality management.
Cooling Equipment Insights:
Based on cooling equipment, the global HVAC system market is segmented into room air conditioners, unitary air conditioners, chillers, coolers, cooling towers, and Variable Refrigerant Flow (VRF) systems.
Chiller segment accounted for a significant revenue share in 2021. Rising demand for chillers is mainly attributed to increasing application in process cooling of end-use industries. In food & beverage industry, for instance, process cooling is extensively used for pasteurization and food baking processes. This results in generation of an enormous amount of heat. Therefore, chillers are used in these processes to maintain temperature of equipment and protect it from overheating. Chillers are also extensively used in medical & pharmaceutical industry for cooling down temperature of X-Ray machines, and other equipment involved in laser treatment processes.
Additionally, rising demand for this equipment is due to rising per capita income that has resulted in rapid adoption of products that provide comfort. Chillers and other similar cooling equipment are preferred as they enable users to keep their foods, and juices fresh for a longer period of time.
Application Insights:
Based on application, the global HVAC system market is segmented into residential, commercial, and industrial.
Commercial segment accounted for a significant revenue share in 2021. Primary goal of a commercial HVAC system is to provide comfort and make occupants feel cozy by providing high-quality air in an environment with humidity ranging from 40% to 60%. Heating is primarily accomplished through combustion of fuel, primarily oil, gas, or electricity. The heating system extracts hot air and cools it using refrigerant or water-cooled systems, removing excess humidity at same time. Ventilation system uses fans to draw outside air, filter it through both outdoor and re-used indoor air, and expel contaminated air from the building. This keeps CO2 (Carbon Dioxide) levels below 1000 molecules per million.
Rising demand for packaged HVAC systems due to their all-in-one feature is driving the segment's growth. Packaged HVAC systems come with all equipment and devices required in a conventional HVAC system including a compressor, condenser, evaporator, fan coil, and others. Thermostat, which is a critical component of every HVAC system comes in an integrated form in this packaged HVAC system. This system is compact and therefore is ideal for buildings that have less space to accommodate. Packaged terminal air conditioner is a popular type of packaged HVAC system that is widely used in hotels, hospitals, and condominiums. They are typically mounted on windows for optimum efficiency. The system also enables its users to easily adjust room temperature and air quality as per their needs. Packaged terminal heat pumps are another type of packaged HVAC system that efficiently aid in providing heating and cooling.
Regional Insights:
Based on regional analysis, HVAC system market in North America accounted for largest revenue share in 2021. Rising demand for air purifiers and humidifiers due to rise in chronic diseases is a crucial factor that is driving market growth in this region. Air purifiers and humidifiers are mostly used in healthcare facilities and individual homes to keep indoor air safe and free from contaminants. As geriatric population of countries such as the U.S. and Mexico is rising, therefore utilization of these equipment has become necessary thereby driving HVAC system market growth in this region. In addition, rapid adoption of advanced technologies has shifted preference of industry professionals towards smart manufacturing methodologies thereby necessitating installation of energy-efficient HVAC systems into their manufacturing plants in this region. Moreover, increase in disposable income of consumers across this region has enabled them to live more luxuriously thereby driving demand for innovative HVAC systems.
Market in Asia Pacific accounted for second-largest revenue share in 2021. Increasing urban population accompanied by stringent government regulations in making heating and cooling products more energy-efficient are some prominent factors that are driving market growth in this region. Environmental regulations, for instance, China’s Green Building Evaluation Label (GBAL), and India’s Bureau of Energy Efficiency (BEE) Standards and Labelling Program among others, have significantly shifted consumer preference towards more environment-friendly refrigerants with a low rate of GWP and energy-efficient technologies. Additionally, construction activities in countries such as India, and China are expected to bolster due to rising demand for housing units, thereby necessitating the demand for HVAC system.
Market in Europe accounted for third-largest revenue share in 2021. Rising demand from sectors such as residential, industrial, and commercial is primarily responsible for driving market growth in this region. HVAC system aids in providing fresh air by effectively removing harmful air contaminants and odors that are emitted from floor cleaners. Moreover, rising demand can be attributed to increasing government investments in construction of sustainable buildings in countries of this region. High demand for energy-efficient HVAC systems from automotive industry is also contributing to growth of the market. HVAC system is used in vehicles as it helps in regulating internal temperature of cabin. In addition, it checks moisture content, removes excess humidity, and provides thermal comfort to passengers as well as drivers.