US HVAC Market to 2030 and beyond

The heating, ventilation, and air conditioning (HVAC) industry is reeling with a year like no other.

In the US, amid a clear market rebound, supply shortages and price increases have become part of the landscape on top of the familiar dearth of skilled labour. Supply chain disruptions, high energy and commodity prices, not to mention the pandemic, are a global phenomenon and are here to stay at least for the coming months.

Even the ripple effect of sky-rocketing natural gas prices overseas will be felt directly by the US consumer: EIA anticipates that US households will pay on average 30% more for natural gas heating (6% more for electrical heating) in the upcoming winter compared to last year, partly due to colder weather in the North. Having said that, US energy prices are still significant below those in Europe.

US HVAC Market in the long-term

Beyond today’s tensions, it is a good time to take a longer view of what will affect our industry. Key elements of US federal legislation and national commitments for the climate during the COP26 conference are about to unfold in the next few weeks. Those will not translate immediately into headline-grabbing impacts for the US HVAC sector, but the transformations in the decade to come could run deep, whether they end up being:

• Federally legislated, with follow-ups to the 2020 Hope-for-Homes program (rebates for EE improvements & contractor training) or with a version of the CEAA (tax credits, in particular for energy-efficient buildings),
• Elaborated at state / county /municipal level, where building codes evolve towards stricter energy efficiency standards (e.g., Title 24’s 2022 BEES as adopted recently by California’s CEC, pushing for heat pumps and electric-ready homes) and where benchmarking and BEPS are now seen in various jurisdictions,
• Standardized with stricter Minimum Efficiency Performance Standards (e.g., DOE’s planned 2023 MEPS update for central AC and heat pumps),
• Driven by the industry’s direct engagement, with the phase-down of HFCs, the 2020 passage of the AIM Act and its recent rule finalization by EPA, or with the heralding of ESG goals, 
• The result of market mega-trends where digitalization, IAQ, efficiency and decarbonization combine into a new wave of innovation.   

We have seen some of the changes already affect energy producers and utilities, given their long investment cycles, already looking past 2030. It will be interesting in particular to look at the gas and electric utilities, whether IOUs or PUC-regulated, their IRP long-term planning, rate structures, energy-efficiency program, and their relation to end-users, whether residential, commercial, or industrial. The interplay with the HVAC industry to become also a Distributed Energy Resource and, increasingly, with Big Tech and Controls pure-plays (think Google’s Nest, IoT devices) is already clear. 

BSRIA HVAC 2030

At BSRIA, we set out a new effort to look at the decade to come for the HVAC sector, starting with a long-term view of the winning and losing products and solutions in residential/light commercial heating, based on two key scenarios. We are hosting a seminar on November 3rd  to set the stage with an interactive discussion and to introduce our “HVAC 2030” Publications covering the US, China, and Europe. 

It is certain that the HVAC sector has a role to play in the energy & buildings transformations ahead. ASHRAE’s Public Policy Priorities for 2021-2022 or AHRI’s Position Statement on Decarbonization similarly recognize this.