BSRIA presents latest HVAC&R trends and impact of COVIDFebruary 2021

The AHR show – normally a key opportunity to meet with BSRIA’s market intelligence experts – was cancelled this year due to the global pandemic. So instead, the BSRIA Worldwide Market Intelligence (WMI) team hosted a webinar on February 24th, 2021, to present preliminary data from its forthcoming world studies in the HVAC & BACS markets.

Socrates Christidis, WMI’s Manager of Heating and Renewables set the scene by discussing the global economic downturn resulting from the pandemic, along with expected regional GDP recovery rates in 2021-22 – noting that the emerging and developing market would see the most significant recovery.

However, US GDP growth expectations have recently been boosted due to the change in administration, savings made during the pandemic, and good progress on the vaccination programme.

Globally, the heating markets were negatively affected in 2020 by the pandemic and we expect to see a drop in the market. However, overall residential markets were impacted less than commercial, and the market for heat pumps was the only market across all the HVAC product groups to see growth. This market was driven by legislation, incentives, and building regulations.

Traditional heating markets were already facing challenges ahead of the impact of COVID-19. A drive towards decarbonisation and energy efficiency, combined with climate change generally means a threat to traditional heating and a greater need for cooling and ventilation. On the commercial side, projects have been put on hold or delayed and there is a threat from chillers.

Despite this, there continues to be significant demand for replacement boilers which will sustain the market longer term. In the world’s biggest market; the recovery has begun earlier than elsewhere; not only did they get the pandemic under control earlier, but the non-condensing boiler market outside Beijing has been supported by the coal-to-gas policy. In the US the traditional residential market is relatively small as there is a strong market for furnaces; sold in combination with ducted splits.

The global market for heat pumps (non a-a) reached some 3 million units in 2020. Whilst the Chinese market saw a drop, the US market was flat, and the European market continued to see significant growth during the pandemic. However, the US now is estimated to account for some 30% of the market volume and globally we expect to see a CAGR growth rate of heat pumps form 2020-2025.

The 2025 outlook for the residential boiler market in Europe is likely to see a small decrease, with heat pumps favoured in new builds.

The Chinese market is expected to decline – unless we see some policy push in the new 5-year plan, whilst in North America we will see modest but stable growth driven by the replacement segment for boilers in old houses equipped with hydronic heating systems.

Lone Hansen, WMI’s manager of BACS & Smart technologies gave insight into the impact of COVID in 2020 from our Global BACS study which is just being published. This is a market covering software, hardware, controllers and field devices and is estimated at 5.8 Bill in 2020 globally. Due to the shutdown having a heavy impact on commercial businesses and delays in construction projects; the BACS markets have been hit relatively hard with a global downturn in 2020, with India and Latin American countries hit the hardest. China and Germany were least impacted and are already seeing a recovery. Latin America, Australia and the UAE are not expected to recover until at least 2025; whilst the North American market is expected to recover by 2022-23.

Different sectors have been impacted in different ways. Businesses went online. Mass homeworking impacted the office sector, as well as shopping, entertainment, news, and banking. This benefitted online platforms, software suppliers and data centres.

The pandemic put intense focus on the healthcare sector, particularly hospitals which benefitted from additional investment.

However, transport, and in particularly airports, have suffered during the last year as has the hospitality sector, stores, and shopping malls due to enforced lockdowns and social distancing rules.

The longer-term impact remains to be seen, but there is no doubt some of the changes are here to stay, including redevelopment of malls and outlets, combining online offerings with physical stores, and the focus on health & wellness. On the office side, we expect there to be more focus on refits and refurbishment when owners and tenants review their need for office space and potential repurposing of available areas.

The focus on wellness and health & safety will be high on the agenda, which is likely to increase focus on digital/non touch technology to get people back into commercial buildings. We expect to see an increase in several areas which can all be linked and co-ordinated by a smart building management system:

• Improving the flow of air and the quality of air.

• Integrating booking systems so that ventilation can be improved and cleaned periodically.
• Software and sensors to measure space utilisation and potentially alert when people are not socially distancing.
• Checking people’s temperature as they enter certain areas – as a possible warning of any illness.

Lone also provided insight into the latest protocols, uptake of wireless technologies and key wellness standards from IWBI and Fitwel to encourage more emphasis on wellness in buildings and SPIRE aimed at SMART buildings.

Saziye Dickson, Research manager of VAC&R, completed the presentation with insight into the global air conditioning market. Saziye also gave insight into our latest studies on US commercial and industrial refrigeration, and our global compressor study.

Cooling and ventilation is high on the agenda following the pandemic and impact of global warming.

Like other HVAC segments, different products and regions have been impacted differently. The biggest global market, Asia Pacific, was hit early by the pandemic, but China is already on route to recovery. The pandemic has pushed more emphasis on smart units and increase in sales and ventilation and focus on high spec filters across the key Asian markets, including Japan. However, the region’s commercial segment has suffered due to loss of tourism. Recovery is happening, but at a slow pace.

The Americas is the second biggest region for AC and of course particularly driven by the US market. Like other markets, the Latin American markets have been hit hard by the pandemic, but the residential market in the US did well as many households have been increasing their savings and focusing on investment in refurbishment of their homes. This meant the splits market across the region was up in 2020. However, the light commercial markets were hit the hardest and the steady double-digit growth for VRF we have seen in the US was hit hard, with the market remaining fairly flat in 2020. The chiller /airside market in the region was also down.

Due to the ongoing restrictions; the key European HVAC exhibitions are also going digital, including ISH in March. BSRIA would normally provide insight into the European HVAC & Smart trends at this show, but instead will be arranging a webinar in April. Bookings will be available through our website in March on www.bsria.com/uk/