VRF technology has been around for nearly 40 years, invented in 1982 in Japan. Today, the US is the 4th biggest VRF market in the world after China, Japan, and South Korea.
Globally the VRF market reached USD 12billion in 2020 with a contraction of 4% compared to 2019 level due to the impact of COVID-19.
VRFs traditionally have been installed in light commercial and medium size projects up to 300kW capacity range, however in the last decade the increase of mini-VRF sales (<20kW) enabled its rapid penetration in the residential market. As of 2020, 55% of global VRF sales comprised mini-VRF, by volume. We are also seeing this trend in the US, where today around 24% of VRF sales are for residential applications.
The VRF market is a relatively mature market in Asia and Europe, while it is still relatively new in Americas and Middle East, India, and Africa.
In the Middle East, VRF units have been taking market share from rooftop units where they are traditionally installed in residential villas.
In Asia and Europe, the VRFs have been taking the market share from multi-splits, rooftops, ducted single splits and scroll compressor chillers.
The US market reached USD 657m in 2020 and has seen significant growth in the last 10 years, seeing a 19% growth in value terms (CAGR) between 2009 – 2019. In the US, VRFs are taking share away from traditional US ducted units, PTAC (Packaged Terminal Air Conditioner) and residential and light commercial rooftops units, but less so replacing scroll chillers, due to less significance of this market in the US. In the US, the VRF market is led by Mitsubishi Electric, followed by Daikin, LG and Fujitsu.
The global success of VRF products can be attributed to several factors such as its energy efficiency – especially at part-load compared to conventional HVAC systems – its flexibility in zonal control, delivery of simultaneous heating and cooling, heat recovery, and ease of installation with no duct work required. However, initial capital cost could be a deterring factor when it comes to decision making, therefore Life Cycle Costing (LCC) should be carried out for a better comparison.
The range of applications vary hugely, from a single-family home to offices, data centres, hospitality, hospitals etc. However, for maxi VRF (>20kW units) offices are a significant application. Outside the US, retail and hotels are also key applications for VRF, but this is less significant in the US, due to continued success of PTAC units, which is unique to the North American market. In recent years, we have seen an increasing adoption of VRFs in residential application and in the US, particularly in townhouses.
The monitoring of single dwelling energy usage through sub-metering allows landlords to charge each tenant for their energy usage. In China, where up-market properties are sought after with a pre-installed air conditioning unit, this has encouraged the use of mini VRFs. This trend has also been seen in other cities, for example in London. As the effects of climate change drives change for shorter and milder winters, the VRFs ability to heat and cool efficiently meets this demand between seasons.
VRF is not the only Asian technology seeing growth in the US, we are also seeing an increase in ductless split systems replacing traditional ducted splits technology; however, this is still from a low base.