VRF Market Expected to Hit $24B by 2022

Double-digit growth is expected again this year

**ROOM TO GROW:** In North America, variable refrigerant flow (VRF) systems still make up a small percentage of the HVAC market, but their popularity is increasing every year. Photo Courtesy of Daikin

**BIG GROWTH:** The VRF market is outpacing the growth of the overall commercial HVAC market, and Daikin expects to see double-digit growth continue over the next five to 10 years. Photo courtesy of Daikin

**KNOWN ENTITY:** While VRF can feel like a new technology in the U.S. market, it has been used throughout the world since the 1980s. Photo Courtesy of Mitsubishi Electric

**STRONG SALES:** Sales of Samsung’s VRF systems have grown around 17 percent each year for the last three years, and the company expects to see 20-25 percent growth per year for the near future. Photo courtesy of Samsung

A recent report from MarketsandMarkets noted that the global VRF market was valued at $11.08 billion in 2015 and is expected to reach $24.09 billion by 2022, which is a compound annual growth rate (CAGR) of 11.4 percent. The report stated that the reasons for this double-digit growth include the technology’s energy efficiency and easy installation and maintenance, and, as such, sales of VRF systems are expected to continue growing for years to come.

Manufacturers agree with this assessment, noting that sales of VRF systems continue to rise unabated, leading many to predict their shipments will increase by double digits annually for the foreseeable future.

NO OBSTACLES

For example, sales of Samsung’s VRF systems have grown around 17 percent annually for the last three years. National director of sales, Vic Perez, expects that growth to escalate to 20-25 percent annually in the very near future. “Growth has been driven by several factors, such as higher efficiencies, advanced controls integration, smaller equipment footprints, system flexibility, easier design selections, quieter operation of equipment, and better life-cycle costs.”

Tech-savvy building owners appreciate and seek out these features as well as VRF’s sophisticated and reliable controls technologies, said Kevin Miskewicz, director of commercial marketing, Mitsubishi Electric US Inc. Cooling & Heating Division. “VRF’s advanced controls are a big draw; from simple remote controls to whole building solutions that tie in multiple automated systems, VRF technology integrates with management platforms that are user-friendly and highly effective. This technology also has industry-leading efficiencies and can contribute to green ratings and certifications, like LEED.”

While VRF can feel like a new technology in the U.S. market, it has been used throughout the world since the 1980s. “In many countries, it is the most utilized HVAC technology,” said Miskewicz. “For example, in Japan, VRF represents approximately 90 percent of installed systems within commercial buildings, and Europe and China come in at 81 and 86 percent, respectively.”

In North America, VRF systems still comprise only a small percentage of the HVAC market, but data show that this market is also heading in the same direction as other major global markets, said Chris Bellshaw, director of VRV product marketing, Daikin North America LLC. “The VRV/VRF market continues to outpace the growth of the overall commercial HVAC market, and we expect to see double-digit growth continue over the next five to 10 years.”

Jamie Noakes, VRF sales director – North America, York, agrees, noting that in 2016, VRF systems had the highest annual growth rate in North America, and VRF will continue to see strong growth in sales. “We believe that energy efficiency and greater acceptance by the engineering community are accelerating the growth. While we expect to see the growth rate steady in the coming years, our expectation is that growth will still be robust.”

GROWING ACCEPTANCE

Areas of the country in which sales of VRF equipment are particularly strong include the Northeast U.S., where many systems are being installed in retrofit applications. “VRF is also growing quickly in medical offices, the K-12 market, retail, and lodging,” said Mel Harris, VRF sales director – North America, Hitachi. “We are noticing that VRF is more widely accepted around the perimeter of the country, but it is gaining traction in the middle of the country, as well.”

Perez agrees, noting that in addition to the Northeast, sales of VRF equipment are robust in the Mid-Atlantic, Southwest, and West Coast. “We’re seeing the greatest interest in applications where comfort is paramount, such as classrooms and dormitories, health care facilities, hotels, office buildings, multi-tenant residential buildings, and landmark/historic structures. There really is no application that limits the use of a VRF system.”

That said, there are some applications that may not be the best fit for VRF technology, such as those in which extreme temperature and humidity control is critical, said Perez. “These include hospital operating rooms or certain product manufacturing processes, such as pharmaceutical production and food processing.”

And those who think VRF may not be the best solution in cold climates may want to think again, said Bellshaw. “When the technology was initially introduced, the growth was strong in larger metro areas, mild climates, and retrofit projects in which VRV/VRF was providing a solution where other HVAC system types would not work. Over the last five to eight years, this has expanded into both new construction and retrofit, as VRV/VRF is being viewed as a system that provides a better solution than the other types being considered. In addition, there has also been significant growth in cold climates, as systems now have the capability to heat effectively as low as minus 22°F, and the market has become more confident with heat pump technology being used as the primary or sole source of heating.”

However, as with any HVAC system, VRF is not a one-size-fits-all solution, said Noakes.

“While VRF is advantaged in zoned applications, multiple HVAC system projects are becoming more common, where perhaps a chilled water system and a VRF system are both applied in a building. Universities and hospitals are examples of this, as we are seeing designs where VRF is used in classrooms and administrative spaces, and chillers or rooftop units are being used for large spaces, such as gymnasiums, auditoriums, and operating rooms/critical-care spaces.”

That is why even though VRF is an attractive option for many applications, markets for rooftop units and chilled water systems will continue to exist, although it may be shrinking. “VRF systems are often replacing rooftop systems and are faring very well against chilled water systems in the marketplace due to their part-load efficiencies and simplified equipment requirements, such as the elimination of cooling towers, pumps, boilers, etc.,” said Perez. “Keep in mind that more than 63 percent of consulting engineers in the U.S. have not utilized a VRF system. That truly is a great opportunity for the VRF industry.”

Publication date: 2/13/2017

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Joanna Turpin is a Senior Editor at The ACHR NEWS. She can be contacted at 248-786-1707 or joannaturpin@achrnews.com. Joanna has been with BNP Media since 1991, first heading up the company’s technical book division before moving over to The ACHR NEWS, where she frequently writes about refrigerants and commercial refrigeration. She obtained her bachelor’s degree in English from the University of Washington and worked on her master’s degree in technical communication at Eastern Michigan University.