An interesting trend has been developing in the unitary HVAC market. Heat pump growth is outpacing that of central air conditioners and is expected to continue to do so, according to reports from the Air-Conditioning and Refrigeration Institute (ARI). Where are they going?
Look to the North, say industry insiders. Dual-fuel systems - high-efficiency heat pumps coupled with gas or oil furnaces - have also been affecting the market penetration.
Mark King is Rheem’s residential outdoor product manager. “We are seeing a moderate migration to heat pumps in northern climates that have been more traditionally gas and oil markets. Home-owners are becoming more accepting of alternative product and fuel solutions in their quest to lower operating cost.
“Where electricity is seeing an average increase this year in the area of 8 to 10 percent, natural gas, heating oil, propane, and kerosene have seen price increases in the range of 25 to 30 percent,” King said. “As homeowners seek cost relief through more economical alternatives, a heat pump is the logical next step to realizing the energy savings.”
Ray Peters, an HVACR instructor with Linn State Technical College, Linn, Mo., pointed out that dual-fuel systems cost more, but “Sometimes a special deal will be available from the utility for the installation of a dual-fuel system.” These deals may include rebates to offset the cost of the installation, and better electric rates for homes with dual-fuel systems.
A dual-fuel heat pump is “an electric heat pump and a gas furnace all in one,” explained Bill McCullough, director of Cooling Product Management, Lennox International. “In northern climates, when the temperature drops below freezing, a gas furnace might heat more economically depending on current fuel prices. By combining the two, you can have the benefits of both systems. The homeowner also has the flexibility to adjust to changes in energy prices to maximize lower-cost heating.”
Dual-fuel driversOf course, heat pumps are not completely new in the North. Their recent growth is building upon an established, though smaller, customer base. “Heat pumps are suitable for northern climates in the United States,” pointed out Al Knight, product manager, split-systems, Goodman Manufacturing. “One of our strongest markets per capita is the Canadian province of Quebec. There is heat in the atmosphere down to absolute zero.
“Our new line of heat pumps, introduced in 2006, offers increased drainage area under the coil, and we have recircuited the outdoor coil to optimize the heat pumps operation in below-freezing weather,” he added.
“Over the past few years, our market for heat pumps in Northern climates has been growing because of the uneven fluctuations in utility costs,” said Johnny Johnson, brand manager, Carrier. Dual-fuel products, like the manufacturer’s HybridHeat system, use a heat pump along with a gas or oil furnace.
“The consumer response has been terrific,” Johnson said. “Consumers are able to take advantage of the efficiency of the heat pump during the milder portions of the winter to drive down utility costs. The real value of HybridHeat is in the control this system gives to the dealer and consumer to manage the best mix of electricity and furnace fuel into the future, depending upon the uncertainty of utility costs.”
“Natural gas price is one of the key factors that correlate to heat pump growth over the past 30 years,” agreed McCullough. “A recent study of consumer macro trends revealed that homeowners value product choices and the ability to customize their environment to fit their lifestyle. Dual-fuel systems in particular are a variation on heat pumps that give homeowners even more control over their home comfort and utility bills.”
“We have seen this kind of demand before when the price of fossil fuels goes up or shows volatility,” said Randy Scott, vice president, product systems management, Trane.
In the big picture, “The key driver is a simple return on investment analysis, which quality dealers will provide for homeowners,” said Tim Lashar, outdoor products manager and Luxaire brand manager for the Unitary Products Group of Johnson Controls. “By factoring in the cost of fuel and unit performance, it will sometimes make sense for homeowners to invest in a heat pump system.
“If a homeowner can see a payback on his/her initial investment over the first few years of the system’s life, a heat pump is an excellent option.”
Let’s not forget the impact of marketing. “Rheem and [other manufacturers] have been doing a much better job of educating and informing homeowners in all markets of the myriad of choices available to tailor their home comfort system to their particular need and budget,” said King.
Installation BenefitsAdvantages of installing a system for new construction/add ons are also playing to the heat pump’s benefit.
According to McCullough, “Heat pumps offer more flexibility when designing a new home or additions to existing homes.
“Vent or flue pipes that waste valuable closet and storage space are not required because heat pumps do not create fumes or flue products,” he said.
“Therefore, the designer will have more options to locate the heat pump and indoor air handler. Heat pumps can easily retrofit an existing air conditioning unit, typically with no wiring or electrical service upgrades required.”
“While this trend to growing cost consciousness applies equally to replacement, retrofit, and new construction market segments,” commented King, “rising new construction cost is influencing heat pump installation in new homes because no special venting is required and developers and homebuilders can avoid the additional infrastructure cost of laying expensive gas lines.”
Contractor TrainingIn order for the product to reach its market potential, and not be subject to untimely breakdowns and consumer dissatisfaction, contractors who have not traditionally installed heat pumps may need a little extra training. Peters said the Missouri market has seen its share of consumer complaints (such as cold blow); these can stem from duct sizing and register location issues.
“It won’t matter if your a/c is blowing cold,” he said. When a homeowner expects heat, though, and the air coming out of the register feels cooler than his or her body temperature, the contractor will get a phone call.
“You need the correct number of registers so that the air isn’t blowing too hard.”
Linn State Technical College has very well-equipped heat pump labs, including air-to-air and geothermal systems. The HVACR department currently is installing a dual-fuel lab with contributions from Trane.
“Contractors should start with a thorough heating and cooling load analysis of the home,” said McCullough.
“If it’s an existing home, understand the homeowner’s likes and dislikes about their current comfort system. It’s very important that an entire system be installed,” he continued, “not just the outdoor unit or indoor unit. Because the refrigerant is used to both heat and cool the home, proper coil volume ratios are extremely important to ensure a reliable, long-lasting system.”
“Contractors need to know how to size heat pumps, as well as the specifics on how to install and charge them properly,” agreed Jamie Byrne, vice president of sales, American Standard. “Many of our distributors offer classes in heat pump applications and we encourage dealers to register their technicians.”
“Both Trane and American Standard provide course books, CD-ROMs, and video training materials on the proper application, installation, and diagnostics of heat pumps,” said Trane’s Scott. “Many distributors offer heat pump application classes, and we just introduced 12 new technical E-Learning courses covering topics such as superheat, subcooling, air volume measurement, and psychrometrics.”
“Contractors need to become more comfortable with the control wiring of the heat pump compared to the control wiring of an air conditioner,” said Knight. “They need to learn how to troubleshoot a heat pump in the heating mode.”
Market PredictionsAccording to the Freedonia Group, an international industrial research company, “Heat pumps are expected to post the best gains [in the residential HVAC market] through 2009.”
“Since 2002, there has been a steady increase in the percentage of heat pump sales to total 5-ton-and-under split system sales,” said Knight. “If this trend continues, heat pumps could account for 35 percent of all five-ton-and-under split system sales five years from now.”
“Although the heat pump market is still much smaller than the air conditioner market, the compound annual growth rate for heat pumps is almost eight times higher than air conditioners,” said McCullough.
“We expect this trend to continue because of the flexibility heat pumps offer, and we expect utility companies will continue to offer attractive incentives for homeowners to install heat pumps. In some residential new construction communities, a natural gas infrastructure is not being installed, thus leaving homeowners the choice of electric resistance-type heating or energy-efficient heat pumps.”
“Fuel costs and utility rebates will continue to have an impact on where heat pump sales go in the future,” said Lashar. “Heat pump sales in northern climates may be prone to somewhat of a cyclical cycle, as the aforementioned factors come in and out of the market place.”
“We expect to see more interest in hybrid comfort systems across the northern and mid-sections of the country,” said Scott. “It makes a lot of sense, using the heat pump on milder days and reserving the gas furnace for more extreme cold.
“The dealer customizes the settings for the climate they are in, as well as the comfort needs of the home or business,” he said. “The consumer wins because they enjoy superior comfort while saving money on their utility costs.”