US air conditioning market grew to exceed US$23bn in 2018

1 The US packaged air-conditioning market leapt to over USD 20 billion in 2018.
2 The US central plant air-conditioning market shows four consecutive years of growth.
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[edit] The US packaged air-conditioning market leapt to over USD 20 billion in 2018.

US air conditioning market value 2018-2023

BSRIA research indicates that the value of the US market for packaged air conditioning solutions rose by more than 14% in 2018 to reach US$20.4 bn. This is confirmed by BSRIA’s newly-published market study ‘Room, packaged, unitary and furnaces air conditioning study’.

The figure includes the combined sales for windows/through the wall units, PTAC, movables, minisplits, VRF, roof tops, indoor packaged, US-style ducted splits, evaporative coils (including those with blower), furnaces and close control units.

The market’s growth saw an increase of more than 6% in volumes, although prices increased above this level, driven by warm weather and a relatively healthy US economy, and the residential sector benefitted from continued consumer confidence.

BSRIA estimates that 2019 will see further growth of just under 4% in terms of volume but over 8% in terms of value, to exceed US$22bn this year. VRF will continue to see strong growth and although small compared to the overall AC sales, it continues to be the fourth largest VRF market in the world, albeit still from a low base, while mini splits will again grow in double digits. In contrast PTAC are forecast to decline in volume, but are still set to reach USD 379 million by 2023.

US style ducted splits still dominate, but growth is modest at around 3%, while the minisplits market remains small at less than 10% of the US ducted splits market in terms of volume, but still expected to see double digit growth.

The rooftop market is relatively mature and is expected to see modest volume growth with a CAGR to 2023 of less than 3%. Nevertheless, the US still accounts for 90% of rooftops sold in the world.

The ongoing trade disputes, notably with China are raising the spectre of higher tariffs which could increase prices of imported units. However, demand for more sophisticated products, including smart controls and IoT functionality could also increase purchase prices.

The impending replacement of R4210a refrigerants is also raising questions about the most appropriate replacement. Currently, there is no clarity regarding the regulatory policies regarding the replacements.

With political opinion becoming increasingly polarised in the US, attitudes to climate change and how to respond to it are one of the key points of contention between Republicans and Democrats. The outcome of the 2020 presidential election could therefore have a big impact on the regulatory environment for air conditioning as an energy-hungry sector. At the same time, regulatory policies pursued at state level will continue to have an important impact, and these vary considerably depending on the party in control and their priorities.

Despite the progressive convergence of the market for ductless, ducted and packaged systems towards smarter and integrated solutions, the vast room AC market will remain resilient in the US. Window units, almost phased out in other parts of the world, are still mainstream in the US, due to construction and specification practices.

Efficiency, greener products, smart revolution and convergence of technologies have been the main drivers in the air conditioning market in the USA in the past five years.

With US average electricity prices less than half the European average, saving money on energy bills has not been a high priority for US consumers except in selected states such as California and the North East. The relatively long payback period for more energy efficient AC systems is a disincentive for consumers, for whom “smarter” features such as connected access and voice control can be more appealing. However, the commercial AC market appears to be more responsive to energy savings.

Connected features including remote control and monitoring are increasingly valued. For commercial AC solutions, these can provide improved resilience and a reduction in service and maintenance costs. However, this tends to apply most to more expensive and business-critical AC systems.

Future growth will depend very much on the health of the US economy and also on the political agenda regarding energy policy and also trade and tariffs, which emerge from the 2020 elections.

[edit] The US central plant air-conditioning market shows four consecutive years of growth.

US air conditioning market volume 2018-2023

BSRIA research indicates that the value of the US market for central plant air conditioning rose by around 6% in 2018 to reach US$3.2bn. This is confirmed by BSRIA’s newly-published market study ‘Central Plant Air Conditioning Study’.

The central plant figures include the combined sales for chillers and airside products (AHUs, fan coils, VAVs and Other Terminal Units).

Driven by the longest expansionary economic cycle in the country’s history, robust construction growth and an acceleration in product replacement, the air conditioning market experienced growth in all its segments and applications (residential, commercial and industrial).

Over the past five years, product replacement is being fuelled by higher efficiency, green products and technology convergence. However, currently the majority of the demand is coming from replacement rather than new build projects.

In 2018, the central plant market was no exception to this, expanding on the back of economic growth and increased investments in renovation and construction.

As expected for a mature market, growth generally did not exceed 5% in any of the product categories, but prices were under inflationary pressure resulting from the effects of the trade war between USA and China. Consequently, AC prices are expected to continue to rise over the next few years, also driven by a shift towards more energy efficient and sophisticated systems and the use of new refrigerants.

The smart revolution has made an impact on the commercial market, where the connectivity and data analytics are primarily used to reduce service and maintenance costs. Embedded monitoring devices is becoming a mainstream feature in commercial equipment.

The chiller market expanded very modestly in 2018. Sales were propelled by higher efficiency systems, the use of new refrigerants and add-ons from suppliers, such as remote monitoring based on subscriptions, as a tool to retain customers and to store useful data on patterns of equipment use. Often, the efficiency of old systems is improved by retrofitting a variable-speed drive rather than purchasing a new unit. In terms of volume, sales are expected to remain fairly flat. Under a scenario of sluggish equipment sales, service represents a good opportunity to increase profitability and to retain customers until the next sales cycle.

Air handling units (AHUs) will follow suit, moving towards increasing fan motor efficiency, more controls and features to improve indoor air quality.

With regard to the fan-coil market, this will remain highly commoditised, although BSRIA expects to see some innovation in fan-motor efficiency. This market was less affected by inflationary pressures due to the large base of local manufacturers. Energy efficiency through the use of EC fan motors and noise reduction are the main trends, together with improvements in design to allow for easier installations.

The BSRIA report on air conditioning analyses the main trends underlying the US market with a deep dive into the demand evolution by product, segment, capacity, application and key components. Special focus is on the emergence of ductless in residential and light commercial, energy efficiency regulation and market forces, refrigerants, a fast-changing competitive landscape and outlook for the market within the next five years. With a combination of detailed market data and insightful analysis, the US AC BSRIA report is a unique tool for strategy planning available to all the businesses operating or planning to operate in this exiting market.