23 October 2019

Industry Focus: HVAC

Indian HVAC market heats up

 

There is an exponential and proportional relationship between rapid expansion of real estate in any market in terms of built up carpet area and the demand of HVAC. As India’s urban centers expand rapidly there’s now a concomitant rise in demand for all kinds of HVAC systems ranging from split ACs to centralised air-conditioning systems. But the energy intensive footprint of HVAC products has put major riders by ISHRAE and BEE on products across the spectrum, reports Satish P Chavan.

 

For over a decade, India has been witnessing continuous growth across almost all the major industrial and commercial sectors. Besides metropolitan cities, the wave of development is also directed towards Tier 1 and tier 2 cities, which are undergoing major revamps. Expansion of commercial space, more offices and corporate hubs coming up, and introduction of organized retail outlets are driving the demand for HVAC installations across the country. Introduced for the first time in Kolkata and then in Delhi, the metro rail network is also expanding gradually in cities like Lucknow, Jaipur, Bangalore and Hyderabad, thereby creating significant demand for HVAC systems. In addition to shopping malls and retail complexes, airports are also emerging as important centers for HVAC installations in the country. HVAC systems have become one of the core building blocks for modern infrastructure, encompassing various sectors like real estate, etc. All these factors are expected to spur the market for HVAC systems in India.

 

HVAC industry trends closely reflect the fluctuations within the buildings sector, as the latter provides the primary impetus to HVAC demand. Within this sector, the commercial, residential, and infrastructure subsectors extensively use HVAC systems for maintaining comfort conditions.

 

A comprehensive examination of the current building stock, growth potential, and direction of growth, is therefore, vital to this study. HVAC systems are also one of the major consumers of energy within a building – accounting for approximately 31 percent of energy use in commercial buildings and 7 percent in residential buildings. The use of a particular HVAC technology is contingent upon the size, location, and occupancy of a building.

 

Very few studies in India have attempted to estimate the total residential and commercial space that currently exists in the country. A study initiated by PACE-D TA Program reviewed the data from external sources and its own previous estimates to determine the growth projected for 2030. Total constructed is predicted to grow five-fold to reach around 10,400 million square meters in 2030.

 

According to “India HVAC Market Forecast & Opportunities, 2019,” the HVAC market in India is forecast to reach $3.97 billion by 2019 on account of changing lifestyle, increasing per capita income, and rising expenditure by consumers on comfort solutions.

 

The Indian HVAC market is also expected to witness growth on account of rising investments by corporate in India. Major companies offering HVAC systems in the Indian market are Daikin, Blue Star, Voltas, Carrier and ETA. However, with the rising demand for energy efficient products in the country the HVAC market is expected to undergo significant brand shift over the coming years.

 

Technavio’s market research analysts expect the HVAC systems market in India to grow at a CAGR of close to 11 per cent during the forecast period, which is mainly driven by the rapid infrastructure development. The growing population combined with government initiatives to promote the “Make in India” concept has heightened manufacturing activities and infrastructure development in the country. In 2014, split AC systems dominated the market, accounting for a share of almost 82 per cent of the overall market.

 

Technavio’s market research analysts has projected the residential segment to grow significantly, posting a CAGR of nearly 12per cent during the forecast period. New employment opportunities, growing disposable income of the middle class, and population growth are the major factors contributing to the growth of the residential sector in the country.

 

A majority of the people in India live in tropical areas and experience hot summers and moderate winters. Maximum temperature in most of the areas crosses 40 degree centigrade in summers. Therefore, there is very high potential demand for air conditioning systems in this country. Residential segment will grow significantly posting a CAGR of nearly 12 per cent in 2015-2019. ISHRAE estimates that HVAC products market in India is valued around `15,000 crore, having grown from `10,000 crore in 2010. In the years 2005 and 2010, the HVAC sector has grown to over `10,000 and had reached to 15,000 in FY’14. In 2003, major market share in terms of revenue was captured by room air conditioning segment and is expected to share its dominance by 2019. According to some analysts in 2014, split AC systems dominated the market holding about 82per cent of the overall market. If we consider the regions of country, the northern region has been leading the market with high revenue contribution from Delhi-NCR. In 2003, real estate market recorded a growth of 22.5 per cent, leading to high growth in HVAC market. According to Karan Chechi, Research Director, Techsci Research, “Rapid infrastructure developmental activities have been witnessing in the cities like Gurgaon, Noida, Greater Noida, and Chandigarh which is expected to spur the HVAC market. A lot of factors are related to residential sector which are continuously promoting growth in this sector. Some are increase in population and increase in disposable income. The total market for residential Air Conditioners stood at around 3.3 million units for fiscal year 2013-14. In value terms, it stood at around `80 billion.” Both established international and local vendors have a substantial share in the HVAC systems market in India.  The international players compete on parameters such as reliability and after-sales services to increase their foothold in the market. However, the local players are gaining traction in the market as the cost-driven end-users in the country prefer low-cost products offered by these players. Main vendors in this market are: Blue Star, Carrier Corporation, Daikin Industries, ETA, Voltas. Other prominent vendors include Danfoss, Hitachi Home and Life Solutions, Johnson Controls York, Kirloskar, LG, Lloyd, Onida, Panasonic, Samsung, Thermax, Toshiba, Trane, and Zeco, etc.

 

 

GLOBAL CURRENTS

A recent report "Global Heating, Ventilation and Air Conditioning (HVAC) Market - Forecast & Analysis, 2016-2022" published by Research and Markets, the global market is expected to generate over $68.93 billion value by 2022 at an estimated CAGR of 4.34per cent from 2016 to 2022, as per the forecasts of the analysts. Rising population, revival in the housing markets, increases in income levels in emerging markets, development of reliable energy resources and growing industrial units are some of the key drivers pushing towards the growth of global HVAC market.  While robust demand is anticipated to come from the Americas over the forecasted period, Asia-Pacific continues to be the leading revenue generator in the global HVAC market. Split air conditioners are forecasted to remain on high demand for various residential end-use applications. The governments, emerging green/smart building criterions and growing consumer concerns across the world are pushing global HVAC manufacturers, developers and system integrators to build and provide energy efficient, technologically advanced HVAC units for major commercial, residential, institutional and industrial applications, among others. To present an overview and a comprehensive outlook of the global HVAC market, the study has been segmented according to different types of HVAC products including window & portable air conditioners, split air conditioners, single packaged units, chillers and fan coil unit (FCU) and air handling unit (AHU). Further, the global HVAC market is fragmented into different geographies. Major geographies covered in the report are the Americas, Europe, Asia-Pacific and Others (Middle East and Africa, MEA). Besides examining the promising side of global HVAC market, the research investigates various aspects of the market inclusive of its threats that can possibly slow down the market growth and the current growth opportunities that are going to shape the overall HVAC market expansion.

 

 

SPREADING THE CHILL

The Indian HVAC market will grow substantially across product verticals on the back of increasing affluence of the Indian middle class and a rising population of commercial real estate. Global Brands are competing alongside Indian brands and the end result is competitive products at competitive prices. Taking this forward, both Indian and global players here can look forward to
‘Make inIndia, sell Globally,’ due to its manufacturing excellence as a low cost manufacturing hub, which is already happening in other sector.

 

 

JOHNSON-HITACHI’S EXPORT HUB IN GUJARAT

Recently Johnson Controls-Hitachi Air Conditioning announced plans to develop and manufacture air-conditioners in India for sale in markets in the Middle-East and Southeast Asia, expecting operations in the country to become one of its top three, according to global head Franz Cerwinka, CEO, Johnson Controls-Hitachi Air Conditioning

The company will invest "tens of millions of dollars" in setting up the product development and manufacturing capabilities at its plant near Ahmedabad in Gujarat, he said. "We want to add engineering capabilities in India to support global business out of India. We also want to expand our manufacturing to export out of India."

Cerwinka said India is one of the most critical markets for the company and is a growth engine globally. The Hitachi brand is the third-largest by value in the room air-conditioner segment. "The Indian operations contribute around 12 per cent to our global revenue. India has the potential to become one of the top three markets for the company since there is a lot of pent-up demand which will be generated in the mid-to-long term," he said.

The company named old-timer Gurmeet Singh as managing director of the Indian operations in February, which Cerwinka said was an effort to localise operations and accelerate growth. Singh said the company launched models starting at `27,990 in the entry-level segment this year to compete with mainstream brands. He said it spent over `30 crore this year on promotions of this model.

 

 

CHOOSING THE CORRECT SYSTEM

Choosing the correct system

It is important to use the right – size HVAC cooling and heating equipment. The old rule of thumb of 200-250 gross ft2/ton cooling load may not apply to sustainable Green buildings. Recent high – performance building projects operate between 600 and 1000 GSF/ton. Set cooling equipment and system performance targets in terms of kW/ton, such as:

  • Chiller (Water Cooled) 0.51 kW/ton
  • Cooling Tower 0.011 kW/ton
  • Chilled water pump 0.026 kW/ton
  • Condenser water pump 0.021 kW/ton
  • Air Handling Unit 0.05 kW/ton

Industry Standards such as ECBC and ASHRAE (90.1) give minimum requirements for equipment

efficiencies and system design and installation. Understand that these represent the least efficient end of the spectrum of energy – conserving buildings that should be built! To be considered green, a building must exceed these standards.

 

 

 

GREEN IMPACT ON INDIAN MARKET

  • Minimal consumption of energy – due to reduction of need and more efficient utilization of non renewable natural resources, land, water, and other materials as well.
  • Minimal atmospheric emissions having negative environmental impacts, especially those related to greenhouse gases (GHG), global warming, particulates, or acid rain.
  • Minimal discharge of harmful liquid effluents and solid wastes, including those resulting from the ultimate demolition of the building itself at the end of its useful life.
  • Minimal negative impacts on site ecosystems.
  • Maximum quality of indoor environment, including air quality, thermal regime, illumination, acoustics/noise, and visual aspects.

 




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