How well connected is your air conditioning?


21 November 2017
BSRIA smart controls connected henry lawson
Henry Lawson of BSRIA
Henry Lawson, Senior Market Research Analyst, BSRIA World Market Intelligence, looks at the growth of smart connected HVAC systems.
Put yourself in the shoes of someone who is responsible for a chain of offices or other buildings. These could be hotels or restaurants; shops, banks, offices or petrol stations to name just some possibilities. A key part of your job will be keeping these buildings comfortable for staff and customers alike, while also keeping costs down. This means not just energy costs, with all the associated environmental issues, but also the costs of maintenance and repair.

Heating and cooling is now increasingly taken for granted in non-residential premises, even in temperate climates like the UK. Where it functions poorly or breaks down altogether, the effects are soon felt in dissatisfied or absent customers, as well as in demotivated and less productive staff.

For larger buildings, a building automation or control system (or BACS) can help address this, as well as providing a lot of other benefits. The costs of installing and running a BACS, along with its relative complexity, means that it is generally only viable for larger and more complex buildings. Even in the USA, only about 15 per cent of all non-residential buildings have a BACS and these are heavily skewed towards the upper end.

Another related challenge is that for smaller buildings it is also unlikely to be cost-effective to have an engineer available “on site” to deal with any problems, resulting in additional downtime when a problem occurs.

While “lighter” versions of BACS are emerging, for many smaller buildings, especially those that form part of a chain, an alternative is emerging in what is commonly known as “smart connected HVAC”. As the name suggests, the HVAC unit, such as a chiller, rooftop or VRF unit, is fitted with a device which is connected to the “network” – which usually means the internet.

Significant business
By this means, all of the information that the unit generates about its state and performance can be passed to an application in the Cloud, which is accessible to the maintenance engineers. This means that faults can be detected and an engineer despatched to address it along with the correct parts, often before the client has noticed a problem.

More significantly, the data collected can be analysed, often from large numbers of air-conditioning units in different buildings. Patterns can be detected indicating, for example, that units are performing inefficiently, or that a unit or part is likely to fail within a given timeframe. This can potentially transform the service and maintenance operation.

In the USA, smart connected HVAC is already a significant business, worth in excess of over 600 million US dollars in 2016, with a majority of this being accounted for by services. The business is also growing at more than 20 per cent annually.

In a majority of cases the device connecting to the internet is “factory fitted” to the air-conditioning unit, which lowers the cost and makes it available to be used later. However, there are also a large number of “retrofit” installations, which makes sense when a chiller for example can easily be in service for 15 years or more. The service tends to focus on equipment that is high value, like a chiller, or very widely deployed, like rooftop units in the USA.

In the USA, smart connected HVAC is being offered mainly by companies that are already strongly established as HVAC suppliers, as building controls suppliers, or by ones that are strong in both areas. Some suppliers are moving into the commercial market from the large residential market. The HVAC supplier has the advantage that they can easily read and interpret all of the data supplied by the unit. A third part supplier, in contrast, has to interpret what may well be proprietary protocols to get the complete picture. The result is likely to be less rich and granular information.

Some HVAC suppliers are using smart connected HVAC as a tool to help to support and build up their own service and maintenance business. This can even underpin a value proposition where air-conditioning is provided as a service and where the client rents rather than purchases the equipment.

However, smart connected HVAC is also proving highly attractive to dedicated service and maintenance companies and facility managers.

Internet connections
Here in Europe, the air conditioning market is somewhat different to that in the USA. While major global players like Daikin still lead, there are also a lot of regional players. The types of air conditioning units favoured also differ. Here in the UK only about one per cent of the value of the market is accounted for by rooftop units compared to 20 per cent in the USA. In contrast, VRF and large splits are much more favoured in the UK than in North America.

However, the principle of smart connected HVAC can be applied to any type of air-conditioning unit, though it may not be cost-effective where large numbers of very low-value units are deployed. And of course, similar processes can be implemented for other types of HVAC equipment such as boilers.

In Europe maintenance companies are already starting to use internet connections to monitor air-conditioning equipment remotely. BSRIA will be reporting further on these developments going forward.

Much more detailed information and analysis of the US market for Smart Connected HVAC is available from BSRIA in the report “US Smart Connected HVAC in Commercial Buildings Study 2017”, published in July 2017.
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