Assessing the UK air-conditioning market

BSRIA, Turbocor, air conditioning
Waiting for the upturn — David Garwood.

In a market that is being held up by legislative drivers, David Garwood of BSRIA nevertheless finds areas of growth.

The UK air-conditioning market is directly linked to trends in commercial construction. The most pessimistic outlook for construction paints a picture of a depressed industry until 2015 at the earliest. It is only then, under the current assumptions, that significant growth will be witnessed in the air-conditioning market — though due to lead times on projects, a recovery in certain air conditioning markets may take longer

The air-conditioning industry is being held up by legislative drivers, without which market conditions would be extremely dire.

The old chestnut of R22 replacement programmes is continuing to bump up the size of the split-air-conditioning market. There are still a number of units out in the market that have yet to be replaced. The end user is waiting until the equipment can no longer be repaired.

The standard split market is dominated by high-wall and cassette single-split systems. High-wall units slightly recovered further in 2012, linked to demand for R22 replacement. Sales of cassette single splits started to decline in 2012, following trends in the UK retail sector.

EU Legislation for air-to-air heat pumps with a rated capacity below 12 kW was adopted in spring 2011 and entered into force in January 2013. The legislation includes both energy-efficiency requirements and energy labelling and covers requirements for heating and as well as cooling.

Market outlook for packaged air-conditioning products from 2011 to 2016 by volume. Note how VRF is slowly regaining market share, though sales are likely to dip slightly in 2013.

The energy labelling of products is based on their SCOP (seasonal coefficient of performance) and SEER (seasonal energy-efficiency ratio), which need to meet minimum requirements in order to be sold within the EU.

The directive means that units having fixed-speed compressors and cooling capacities of less than12 kW will be ruled out of the market. Some inverter products may well not meet the new SCOP and SEER requirements.

The VRF market is very slowly regaining its lost share, though sales are most likely to dip slightly down again in 2013. Last year the market was boosted by sales for the hospitality sector in the run up to the Olympic Games. It is likely that, if the current market trends remain the same, the year 2013 may see a dip in sales volumes, returning to the level seen in 2011. There is no other driver to continue the recovery. On the plus side the suitability of VRF products for refurbishment projects will continue to hold them in good stead, and sales are likely to rebound in 2014.

One notable trend in the last few years has been the increase in sales of heat-recovery ventilators installed with VRF systems to allow fresh-air ventilation in new build and major refurbishment project to comply with Building Regulations.

The effect of the dire economic conditions has also been felt by the trend towards multiple scroll chillers away from screw on projects where price is the leading driver. The reciprocating market has now disappeared from the UK market, and in recent years the Turbocor centrifugal market has grown from strength to strength, competing against multiple scroll and screw. This market too has felt the effects of the end user tightening their belts, as growth in this sector has markedly slowed down. Multiple scroll is still the winning product.

Market outlook for central plant products from 2011 to 2016 by value. The bar for centrifugal chillers includes units with Turbocor compressors going from strength to strength. The growth in air-handling units is driven by legislation.

The UK Turbocor market remains the largest in Europe, with Germany in second place. The suppliers of this product promote sales on the basis of claimed energy efficiencies over other competing substitute products. The downside of this product is that it comes at twice the price of a screw chiller with similar capacity. This is why the market growth is stalling. Price is the leading driver for many projects, so multiple scroll wins in some cases, especially for lower capacities. Suppliers are confident about the future prospects for the Turbocor market and are investing in developments, including the use of new refrigerants.

The market for air-handling units is bucking the trend in other air-conditioning sectors and is driven by legislation. Building Regulations Part F stipulate the need for fresh-air ventilation in newly refurbished or new-build buildings which are now more airtight, for greater energy efficiency. Most of the growth is at the lower end by airflow, with demand for small, compact heat-recovery ventilators.

Increased opportunities in this market have led to a number of companies from different backgrounds moving into the market for commercial air-handling units, including those active in domestic whole-house heat recovery and others in ventilation.

Both bespoke and standard markets have benefited from the rise in demand for ventilation. The bespoke market is holding up well, though this market will not increase significantly until the return to a healthy construction market.

The fan-coil market has held up better than chilled beams, which continues to decrease. Fan-coil innovation has led to this product being able to compete well against chilled beams; efficient EC motors and VAV strategies are giving the fan-coil market a new lease of life.

The UK market for fan coils is a highly engineered product, especially those manufactured by specialist fan-coil providers. The trend is towards units with fans driven by EC motors; leading suppliers report this is now getting close to 100%.

To summarise, the general outlook for air conditioning is one of a relatively stable market, at best, until 2015/16, though further declines cannot be ruled out. The further tightening of legislation will give manufacturers a chance to up their game and improve the efficiency of their products.

David Garwood is market research consultant with BSRIA and author of the association’s UK air-conditioning reports for the last five years.

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