February 2021 HVAC&R trends and the impact of COVID

[edit] Introduction

In February 2021, the BSRIA Worldwide Market Intelligence (WMI) team presented preliminary data on the HVAC and BACS markets. The findings explored the impact of the 2020-2021 global economic downturn resulting from the pandemic, along with expected regional GDP recovery rates in 2021-22 – noting that the emerging and developing markets would see the most significant recovery. It also documented US GDP growth expectations that have been boosted due to changes in the administration, savings made during the pandemic and good progress on vaccination programmes.

[edit] Global impact of COVID-19

Globally, the heating markets in 2020 were negatively affected by the pandemic. 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 - may result in a threat to traditional heating and a greater need for cooling and ventilation. On the commercial side, projects were put on hold or delayed during the pandemic, and this resulted in a threat from chillers.

Despite this, there continues to be significant demand for replacement boilers which will sustain the market in the longer term.

[edit] Regional markets

In China, 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 three 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 is estimated to account for some 30% of the market volume, and globally we expect to see a CAGR growth rate of heat pumps from 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 five-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.

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 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.

[edit] Varying influences

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 airports in particular, suffered during 2020 as did the hospitality sector, stores and shopping malls due to enforced lockdowns and social distancing rules.

[edit] Emphasis on wellness

There is no doubt some of the changes brought about by the pandemic are here to stay, including redevelopment of malls and outlets (combining online offerings with physical stores) as well as the focus on health and 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 and safety will be high on the agenda, which is likely to increase the 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.

[edit] Conclusions

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.

The light commercial markets were hit the hardest, and double-digit growth for VRF seen in the US prior to the pandemic was hit hard, with the market remaining fairly flat in 2020. The chiller /airside market in the region was also down.

This article originally appeared on the BSRIA website under the headline, 'BSRIA presents latest HVAC&R trends and impact of COVID'. It was published in February 2021.

--BSRIA

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