VRF market presents dilemma for engineers

Market report shows that the market for VRF systems in the U.S. has grown only marginally.
By Omar Talpur, market analyst, IHS Building Technologies, Austin, Texas May 7, 2015

Figure 1: The number of air conditioning units far outweighed the number of variable refrigerant flow (VRF) systems in 2014. Courtesy: IHS

As variable refrigerant flow (VRF) technology has grown in popularity in Asia and Western Europe, manufacturers have begun to look to the United States for additional revenue streams. Touting VRF’s energy efficiency, manufacturers believed that the product could cause a sizable shift in the current market dynamics; however, IHS found that this takeover will not be as sudden or as pronounced as many had hoped.

In 2014, IHS found that the total nonresidential market for traditional ducted air conditioners the in the U.S. was almost 695,000 units. This is expected to grow at a 4.7% compound annual growth rate (CAGR) to almost 872,000 units in 2019. In comparison, while VRF systems are expected to experience higher growth with a CAGR of 8.9%, the product will only see unit sales increase from 31,000 to 47,000 units a year. VRF has been unable to gain the traction in the U.S. that it has in Western Europe.

One of the major factors is that buildings in Western Europe were built after World War II when the concept of central air conditioning had not yet penetrated the market. Due to the conservationist attitude of the region, many of these buildings are still in use and European engineers have leaned heavily on VRF to modernize them as the system can provide air conditioning capability without the need for costly ductwork. Since the U.S. has far fewer buildings of this type, engineers have one less reason to adopt VRF systems.

Table 1: VRF systems are expected to experience higher growth with a compound annual growth rate (CAGR) of 8.9%; the product will only see unit sales increase from 31,000 to 47,000 units a year. Courtesy: IHSThis marginal increase in market size for VRF should give engineers pause when they consider investing resources in VRF systems. If VRF growth continues at its current trajectory, return on investment may be too low for most engineers; as a result, resources could be better invested elsewhere in the business.

For more information on this report, visit https://technology.ihs.com/518466.