HVAC market drivers and challenges - Today and beyond 2020

By Saziye Dickson of BSRIA

AC – comfort or a necessity?

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Presentation Title

• Global AC markets & Main Trends

• Special Focus on Middle East & Africa

• Technology

• Refrigerant diversity – where is the market heading?

• Solutions transition – the shift from product to solution

• Connected appliances – Global SMART Connected HVAC-R

Agenda

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Intro to BSRIA

BSRIA VALUES

Building Services Research & Information Association

BSRIA WMI• Consultancy, Test, Compliance and Research

• Promotes best practices in building

• Est. 1955, 800+ members

• Non-profit association

• Over 30 years of Market Intelligence

• Independent, authoritative studies

• Unrivalled technical expertise

• Research in 90+ countries

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Airtightness

Sound insulation testing

Thermal Imaging of Building Fabric

Ventilation Testing

Construction Compliance

Information & Membership

Technical publications

Training

Membership

Test

Standard testing

Bespoke testing

Witness and on-site testing

Product development, research and

troubleshooting

Instrumentation

Hire, Sales and Calibration of test and measurement

instruments

World Market Intelligence

Market Briefings

Market Reports

Private ClientResearch

Market Consultancy

Intro to BSRIA

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Presentation Title

Global AC Markets & Main Trends

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World AC Market

World Air Conditioning Market, 2017 to 2022 (F)

Total Units in 2018e: 145 millionCAGR 3.9%

Total Value in 2018e:USD 109 billion

CAGR 5.0%

Economic

Political

instability

Channel

changes

Refrigerants

Energy

efficiency

Mergers,

acquisitions

& alliances

Smart revolution

& Hybrid solutions

USD billionMillion units

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Source: BSRIA

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Single splits Market

World Market Single ductless splits, from 2017 to 2022 (F)

Million units

Source: BSRIA

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• 6% growth in 2018

• Most are heat pump units

• Europe all inverter followed by China

• Rapid rise in R32 refrigerants

• Unpredictable sales

• MEA and Europe growing fastest

USD 57 billion in 2018(e)Market Value

CAGR (2017-2022)3.8% Vol

104 million in 2018(e)Market volume

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AC VRF Market

World Market for VRF, outdoor units from 2017 to 2022 (F)

Million units

Source: BSRIA

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• 13% growth in 2018(e)

• Europe mature market

• Rapid development in the Americas

• Early days in the MEA

• Rapid success of mini-VRF for residential applications

• Competes with Unitary, Chillers and BACs

USD 12.8 billion in 2018(e)Market Value

CAGR (2017-2022)14.1% volume

2.3 million in 2018(e)Market volume

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AC Chiller Market

World Market for Chillers, USD million from 2017 to 2022 (F)

USD billion

Source: BSRIA

Source: BSRIA

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USD 8 billion in 2018(e)Market Value

CAGR (2017-2022)4.2 Value

0.4 million in 2018(e)Market volume

• 3% growth in 2018(e)

• Growth Inverter & reversible chillers

• Increase in capacities of compressors

• Rising demand centrifugal chillers

• Rise in modular chillers

• IP enabled chillers becoming the norm

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World fastest growing AC markets, CAGR 2016-22

Canada

USA

Mexico

Brazil

Argentina

SpainPortugal

UK

France

Belgium

GermanyItaly

Poland

Turkey

Saudi Arabia

Iran

UAE

India

China

Russia

Australia

Japan

S. Korea

VietnamThailand Philippines

Indonesia

Hot spots >5% growthWarm spots 1-5% growthCold spots <1% growth

Source: BSRIA

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EgyptTunisia

Morocco

EthiopiaKenya

Tanzania

South Africa

NigeriaGhana

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Middle East & Africa

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- Protectionism- Trade wars- Diversification of economies- Increase custom duty/taxes- Free Trade Zones

Globalisation to Localisation

Qatar 4 Arab nations

XIran Nuclear dealUS vs China

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Single splits in the MEA Region

Source: BSRIA

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• 5% growth in 2018(e)

• Tighter EER Rating in established countries others follow- rising energy prices

• Growth in penetration of inverters – lowest Western Africa, strong in the Eastern and highest S. Africa

• Highest CAGR (2017-2022) with around 8%, by volume

• Production in Egypt, Nigeria and S. Africa

• Localisation is on the rise

**

**

*Estimate, ** Not updated this year

* DRAFT

VRF market in the MEA Region

Top 10 VRF markets in the MEA in 2018e by units

Source: BSRIA

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• 13% growth in 2018(e), and 11% CAGR (2017-2022)

• Relatively new market with rapid development

• New players coming in to the market

• Average prices down

• Lack of awareness and qualified installers limiting growth

• 100% Imported

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*Estimate, ** Not updated this year

DRAFT

AC Chiller Market

Top 10 chiller markets in the MEA in 2018e, USD million

Source: BSRIA

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• 2% growth in 2018 (e), USD millions

• Tightening Energy Efficiency standards pushing prices up

• Lack of public projects/capital

• Dominated by screw chillers

• District cooling projects pushing demand for centrifugal/absorption

• Rising electricity prices benefitting inverter chillers – ROI is key

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*Estimate, ** Not updated this year

DRAFT

Penetration of Inverters

Penetration in single and multi splits in key countries by volume %, 2017 and 2022 (F)

Penetration in chillers in key countries by volume %, 2017 and 2022 (F)

* Key 5 Europe = UK, France, Germany, Italy, Spain

Source: BSRIASource: BSRIA

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Presentation Title

Refrigerant diversity – where is the market heading?

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Refrigerants in the UAE in AC

PAC by refrigerant 2017(e)

PAC by refrigerant 2022(e)

CPAC by refrigerant 2017(e)

CPAC by refrigerant 2022(e)

HCFC still main refrigerant in splits >60%

Competition is moving towards R410A and R32

Support needed for phase out incentives/taxes

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Refrigerants in Saudi Arabia in AC

PAC by refrigerant 2017(e)

PAC by refrigerant 2022(e)

CPAC by refrigerant 2017(e)

CPAC by refrigerant 2022(e)

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Ban on R22 in 2018 but imports allowed until further notice

R410 is the main refrigerant

Fastest transition in centrifugal chillers

What is the plan on Refrigerants?

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Splits

Shift from R410A to R32 By 2022 significant shift towards R1234ze

Screw

VRF

Shift from R410A to possibly to R32

Scroll

Uncertainty on R410A – Possibly R32 and propane

Major shift is towards R1234ze or R1233zd

Centrifugal

Outline of Actions on use of HCFs

Source: ww.env.go.jp

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• Complete lifecycle of gases and appliances must be considered• Training and educating the industry on these issues are paramount• Collective approach from manufacturers to local authorities/governments to FMs

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Presentation Title

Solutions transition – the shift from product to solution

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Products to Solutions

Heating & Renewables

Ventilation

Air Conditioning

Refrigeration

Building Controls

Smart b

uild

ings

Facilities Man

agemen

t

Energy M

anagem

ent

Co

nn

ectivity

• Multiple use and integration of technologies

• More JVs offer AC to HVAC solution

• New players and technologies cut-across current HVAC sectors

• Developing & educating workforce to stay competitive

• Increase focus on controls & software solutions

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Service and Maintenance

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r

Smart Appliances

Smart Devices

Smart Grid Management

Smart Metering

Smart Cities -Smart Government

Smart Distr. Energy

Smart Education

Smart Government

Smart Health

Smart Public Security

Smart Telecoms

Demand ResponseEnergy Storage &

Renewables

Smart Devices

Smart Grid

BACSBuilding Energy

Management

Smart Homes

r

Smart Fire & Security

Smart HVAC

Smart Buildings

Communicating Room Controllers Smart

Transport

The Smart World

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After Sales & Remote Monitoring Market in AC

• Significant chillers in the market due for upgrade or replacement

• Overall equipment capacity is falling due to increases in energy efficiency, therefore requiring smaller HX

• Replacement products for VRFs are starting to come through

• Corrective work also represents nearly third of the market value

• Trend to remote monitoring for high spec projects - but concerns over security

Scope: Germany, UK, Italy, Spain, France Source: BSRIA

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Presentation Title

Connected appliances – Global SMART Connected HVAC-R

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Where the Growth is Happening…

BACS, 21,899

BEMS, 5,014

Smart HVAC, 1,755

Smart Home, 15,808

Source: BSRIASource: BSRIA

Total Smart Buildings Market, 2017, USD million (Including Services)

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Smart HVAC accounts 4% of Total Smart Buildings

Key Global Trends in BACS

BACS is increasingly Software Based

Analytics Increasingly Important

+ 9.7%

+ 1.3%

+ 3.3%

+ 3.7%

+ 3.9%

Software

Hardware

Controllers

Field devices

Total Market

Source: BSRIA World BACS Study 2018

3.7%

4.3% 4.6% 4.6% 4.5%

1.5%2.2% 2.1% 2.1% 2.2%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

0

200

400

600

800

1,000

1,200

1,400

1,600

2017 2018 (F) 2019(F) 2020(F) 2021(F) 2022(F)

Non-IP IP Growth IP Growth non IP

Source: BSRIA World BACS Study 2018

BACS Controllers and Devices increasingly IP CapableGlobal BACS - Forecast Annual Growth 2017 - 2022

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Opportunities inMiddle East & Africa

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Growth in the MEA Region in 2018 (e)

USD 6.1 billionPAC Market Value

CAGR5.8% Vol + 6.1% Val

8.6 millionPAC Market volume

Growth rates of air conditioning in MEA countries, 2018(e) (units)

Source: BSRIA Source: BSRIA

USD 1.8 billionCPAC Market value

CAGR4.7% Vol + 5.0% Val

0.9 millionCPAC Market volume

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DRAFT

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• Growing demand on AC & increasing disposable income

• Energy efficiency driving newer technologies/refrigerants

• An increasing number of devices are intelligent and IP connected

• Opportunities in after sales market

• Forecast growth for the MEA region is amongst highest

• Urbanisation in Africa, faster than any other continent

Summary

Thank you!

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THANK YOU

FOR ATTENDING

THE PRESENTATION Please don't forget to collect your CPD

certificate during the event from the CPD

collection area.

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