Freedonia Group: 4.5% Increase in HVAC Demand Expected

Public and private rebates, credits, and other incentives will encourage owners to upgrade systems.

An HVAC industry survey conducted by The Freedonia Group, Cleveland, OH finds HVAC demand will increase by 4.5% each year, to $17 billion by 2013. The research finds advances will be driven by a projected recovery in residential construction from a low 2008 base.

Demand will also benefit from interest in more energy efficient HVAC systems driven by volatile energy prices. Public and private rebates, credits and other incentives will encourage owners to upgrade to models with efficiency ratings that are at or above ENERGY STAR levels.

Ongoing changes in federal regulations regarding minimum efficiency requirements for many of these systems and the phase-out of ozone-depleting refrigerants with chlorine will also favorably affect sales of HVAC equipment.

HVAC shipments are forecast to advance somewhat slower than demand at 4% per year, to $15.2 billion in 2013, as producers outsource manufacturing to lower cost facilities, primarily in China and Mexico.

The new study available from The Freedonia Group finds that in 2008, heat pumps accounted for the largest share of heating equipment value demand and will achieve a 52% share in 2013. Additionally, heat pumps are expected to post the strongest gains through 2013. Heat pump demand benefits from their ability to provide efficient heating and cooling in moderate climates, as well as the increasing availability of low temperature and geothermal versions.

While warm air furnaces will continue to account for the second largest share of heating equipment sales, this segment is expected to lose market share because of lower efficiency compared to heat pumps. Still, sales will be supported by their relatively low initial cost and amenability to installation with other central home comfort systems.

Unitary air conditioners will remain the largest segment in the cooling equipment market, accounting for over 70 percent of total value demand in 2013. Gains are expected to be slightly above average over this period. Room air conditioners are expected to post the strongest gains through 2013 as quieter and more efficient units become available and residential construction recovers from depressed 2008 levels. Most other types of cooling equipment will be hampered by their widespread use in nonresidential applications, a market which is due to slow from a high 2008 base.

HVAC Equipment (published 10/2009, 309 pages) is available for purchase from The Freedonia Group, Inc., Cleveland, OH 44143-2326. Contact Corinne Gangloff at 440/684.9600, or e-mail [email protected] Information may also be obtained through

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