Variable refrigerant flow (VRF) technology continues to gain momentum around the world, including in the U.S. According to a report from BSRIA Ltd., the VRF market reached 1.3 million units, a value of $9.7 billion, in 2014.
While the U.S. ranked fourth in the top 10 markets, it’s on the upswing. VRF continued to gain market share from small- to medium- size chillers in 2014, according to the report, and BSRIA expects market growth to continue at an 11 percent compound annual growth rate (CAGR) between 2013 and 2018.
“VRF is very popular overseas, particularly in Asia, Europe, and South America,” said Yi Hu, senior product manager, Haier America Inc. “In the recent years, we’ve seen VRF growing significantly in the North American market, and now it is a viable business.”
Haier, which actively markets VRF around the world, plans to launch its VRF products in the U.S. market in the near future, said Hu.
“VRF is growing more in the light commercial and commercial area, but there is a market need for high-end residential homes now,” Hu said. “The U.S. economy has strongly recovered and is expected to grow faster than it has over the past few years. GDP [gross domestic product] growth subsequently will drive the increase in construction output. Net-zero energy houses, smart controls, utility rebates, and more will drive the HVAC industry, and VRF is one of the few HVAC solutions that allows consumers to achieve all those goals.”
Many other manufacturers are also introducing VRF product lines in the U.S. market. Johnson Controls Inc. (JCI) recently announced a partnership with Hitachi Appliances Inc. that will add VRF technology to its portfolio of HVAC solutions.
“JCI has been considering VRF for about seven years,” said Justin Patrick, vice president and general manager of VRF solutions, Johnson Controls. “The company’s been watching the trends in the marketplace and looking to see who the right partners may be. We launched a product about six years ago, but the channel partnership we had wasn’t as holistic a relationship as we have with Hitachi today. It’s been about two years since JCI went all-in behind VRF, and that decision was created through our partnership with Hitachi, the best partner we could find.”
Patrick noted that Johnson Controls has had close to $30 million in VRF projects quoted over the last three to four months. York® VRF indoor units operate quietly with sound ratings as low as 24.5 dBA. The mini-cassette indoor unit features a compact size that enables installation in tight spaces with an efficient turbo fan for low-noise performance. The units also feature optional motion and radiant heat sensors for shutoff and activation in response to room occupancy.
“It’s [VRF] growing at a faster pace than many other areas of the industry because of its ease of installation, selection, and design,” Patrick said. “It’s a technology that’s here to stay. It’s gaining traction in the market and becoming a force.
“The other thing that’s critical to the success of VRF is the regionalization or modification of the Asian product to meet the needs we have here in North America,” continued Patrick. “You see ducted units and ceiling cassettes, and we’re now offering vertical air handlers that fit inside the same cabinet as a furnace, which makes it more appealing in the U.S.”
DRIVING COMMERCIAL GROWTH
The VRF market continues to expand as manufacturers adapt the product to more applications, according to Jade Culbertson, national sales manager, ECOI/VRF solutions, Panasonic Heating and Air Conditioning Group.
“Currently, the market is around 38,000-40,000 new [non-residential] installations per year,” Culbertson said. “Projections call for this to double over the next 10 years. Remember, the products we have here in North America are only a portion of what is available globally, and, as these new products make their way here and are tested, certified, and rated for the North American market, many applications being served by traditional HVAC systems will be candidates for VRF, as well.”
Culbertson noted the commercial market is the largest sector for growth as manufacturers develop products with larger indoor air-handling capabilities, fresh-air solutions, and integrated control systems. The residential market is growing, but mostly in multifamily installations where efficiency, space, and amenities are paramount in the designs, he added.
“The primary factors that are driving growth are efficiency, total life cycle cost, and flexibility,” Culbertson said. “While VRF can be tricky when performing energy models, the installed performance of VRF systems have proven to yield considerably less energy consumption when compared to conventional HVAC systems to include standard air-to-air heat pumps, packaged RTU [rooftop unit] systems, and chiller/boiler systems. We must realize North America is really the only major air conditioning market in the world whereby VRF and/or ductless systems are not the mainstream choice of air conditioning. We’re just now starting to see other VRF technologies make their way here to North America, such as hybrid VRF systems that can produce hot water/chilled water, condition outside air, and condition larger spaces with single units. These innovations help to solve many of the issues that have been limiting VRF in the past.”
Panasonic highlights flexibility with its Multi-Port solenoid valve kit, which helps reduce labor up to 50 percent and allows both the installer and the engineer to have maximum flexibility in both the design and installation of Panasonic’s new ECOi-EX VRF systems. The new design allows each indoor unit to operate individual heating or cooling modes and recover energy from one another.
Within the U.S., VRF growth averages around 25 percent annual growth, and last year, about 18-19 percent of that growth was within the commercial market segment, said Chris Bellshaw, VRV product director, Daikin North America LLC.
“Like any new technology entering a market — it’s all about its adoption,” Bellshaw said. “The technology is becoming adopted by a much wider customer base in the engineering and contracting communities as well as the owners. So, it’s starting to grow and be accepted as a new technology that works in the North American market. As people become more familiar with this, they’re gaining real-life experience, and data is showing that this technology is doing what everyone said it would.”
Additionally, Bellshaw noted that VRF is being accepted as a solution that will work in both cooling-dominant climates and heating climates. “Again, that comes from a lot of proof of these systems being installed in colder climates for many years and actually producing effective heating and efficiency, as well.”
EXPANSION IN VERTICAL MARKETS
As the technology continues to catch on in America, it’s being utilized in a wider array of applications.
“From an application point of view, VRV really fits into any application,” said Marc Bellanger, director of marketing and communications, VRV/light commercial division, Daikin North America. “While traditional systems tend to be limited to some market segments, VRV can really cross over all those applications, from schools to offices, retail, hotel, multifamily, and many others. This really helps the penetration of VRV in the market because it’s being used in a wider scope of applications.”
“Because it’s very modular in its buildup, it fits into various different project sizes,” added Bellshaw. “The efficiency, the zoning, the installation flexibility, and the ability to connect into centralized control systems make it as easy for VRF to be applied in a 10,000-square-foot office as it is in a 200-room hotel, 30-classroom school, or 500,000-square-foot building. It’s a very flexible technology.”
Daikin’s new VRV IV provides a customizable solution for multifamily residential to large commercial applications desiring heating or cooling. The VRV IV features larger-capacity single modules that now range up to 14 ton. Modules can be combined to provide up to 38 ton from three modules on a single piping network, saving on installation costs by reducing piping and electrical connections. It also features Daikin’s new variable refrigerant temperature (VRT) control, which automatically adapts to the unique requirements of the building and climate, significantly reducing seasonal operation costs.
Because of more competition among VRF manufacturers, cost is coming down, which is also driving growth, noted Jackson Willis, mid-Atlantic sales engineer, Fujitsu General America Inc.
“A lot of the issues with first cost in the past where VRF would look much higher than conventional equipment, the difference between the two is coming down,” he said. “That’s one of the reasons for the continued growth. The other is that people are becoming more comfortable with it, and so we’re seeing different sorts of applications in more types of buildings than we used to.
“VRF used to be seen in hotels and offices; now, we’re seeing more of a mixture of technologies in one building,” he continued. “It used to be a lot of large K-12 schools would have big chiller systems, but now we’re seeing not only entire schools going VRF, but a lot of times the classrooms will use chiller systems and the administrative rooms will use VRF. Because the classrooms are closed all summer long, there’s no reason to run the entire chiller system just to cool a few offices in the administration area. Putting those areas on a VRF system can help save a lot of energy.”
Fujitsu recently released a vertical air handler for its VRF indoor lineup. The units are optimized to fit in narrow spaces. “It makes for an easy retrofit because you still get the efficiency, zoning, and controls with minimal installation requirements,” Willis said.
Marc Zipfel, director, product marketing and planning, LG Electronics USA, agreed that engineers are feeling more comfortable specifying VRF technology, and contractors are more comfortable installing it, which is helping with VRF market penetration. Additionally, the technology is being directed toward specific verticals in the market. Multifamily housing and hospitality are two really big areas of growth, Zipfel noted.
“Traditionally, VRF has been seen in office buildings, but, now, we’re seeing people get a little more focused on how they want to apply it,” Zipfel said. “And with that comes the specific design of products that can meet the flexibility required for those different types of applications.”
LG recently introduced its new Multi V IV, which features Vapor Injection Technology for maximum performance in cold climates and in low-ambient conditions without the need for an additional low-ambient kit. Continuous compressor operation is also guaranteed from minus 13° to 122°F, where the heating capacity will not be compromised by long pipe lengths or change as the outdoor air temperatures fluctuate down to 15°F. Cooling capacity is not impacted by fluctuations in the outdoor air temperatures up to 105°F.
Despite continued growth, the VRF market still faces ongoing challenges. Two of the biggest include ensuring the technology is the right application for the building and the evolving environment around refrigerant regulation, said Michael Enderlin, ductless products business leader, Trane, a brand of Ingersoll Rand.
“When selecting the right system for a commercial building to meet application needs, it’s important you consider strengths and weaknesses of all systems,” Enderlin said. “For example, VRF systems can simultaneously heat and cool multiple areas within a building, but they require additional considerations, such as a dedicated outside air source. VRF systems can also carry higher first costs compared to standard HVAC solutions.
“Additionally, there are many changes in our industry related to refrigerants, specifically around ASHRAE-15. This can be a challenge for VRF systems because the refrigerant piping is run through most of the building as opposed to traditional systems that have piping confined to a smaller area. As the industry moves to next-generation refrigerants, the management of these future refrigerants will be critical in order to ensure safety. Customers must be aware of these regulations and should choose a manufacturer that’s well educated on the standards to ensure their VRF installations comply with ASHRAE-15 guidelines.”
Trane’s latest addition to its portfolio, the Trane U-Match, is a high-efficiency, commercial-grade mini-split. “It’s a robust product that can be installed in a wide range of applications,” Enderlin said.
Cost can be another challenge when it comes to choosing VRF over traditional HVAC systems, according to Chris Drury, vice president of VRF sales, Lennox Commercial.
“In terms of cost comparison, VRF can be anywhere from 10 to 50 percent more expensive than traditional systems,” Drury recently wrote in his article, “How VRF Will Save You Money Over Time.”
“But with focus limited on just the initial price, designers, engineers, and building owners may not be familiar with the long-term cost benefits of a more precise and resilient system. Advanced technology ensures VRF systems have a decreased margin of error, keeping maintenance and repair costs lower while extending the life cycle of the system,” Drury continued. “VRF systems achieve some of the highest efficiencies available in the HVAC marketplace, helping attain LEED certifications or meeting local regulations. Higher efficiency and lower maintenance lead to lower total cost of ownership. … When keeping the customer in mind, VRF is an easy sell. The initial cost measured against the total life cycle, technology, energy efficiencies, and overall benefits of the system make it a smart purchase. Additionally, easy-to-install and lightweight VRF units are compatible with older systems already in place, reducing the investment to attain the benefits. In terms of VRF’s uptick in the commercial HVAC marketplace, the growth will soon be exponential with the realization that VRF is a cost-saving alternative.”
Kevin Miskewicz, senior manager, commercial marketing, Mitsubishi Electric US Cooling & Heating Division, said a lack of product knowledge is the biggest challenge facing the market. “While manufacturers have done a great job getting the market to the point where the technology is understood, there’s still a fight, if you will, in working to get out of its niche status from an application standpoint. So, it’s about growing the knowledge of not only how to apply and install the projects, but also where to apply and when to think VRF. We need to get over the hump that VRF is not just a hot- or cold-spot solution in a building to supplement an existing system; it’s used for whole-building designs anywhere from one story to 50 stories. VRF should be looked at as a first technology and not just as a problem solver.”
An additional challenge is ensuring VRF products are designed properly for U.S. market conditions, Miskewicz noted. Mitsubishi Electric’s CITY MULTI® L-Generation Air Source system helps address the challenge. Not only does it have a 30 percent smaller footprint than previous models, making the system ideal for tight mechanical spaces, but it also features a significant reduction in system refrigerant charge and an improved high-ambient cooling operating range with guaranteed cooling operation up to 126°F.
“We’ve got a unique market here in the U.S. We go from very high temperatures during some parts of the year to very low temperatures during other parts of the year, which is unique from a one-country perspective around the world,” Miskewicz said. “So, making sure products meet those market conditions is really something we’ve got to do a better job of as manufacturers. We have to offer solutions to the challenges our customers have in the marketplace.”
Publication date: 11/23/2015