This year’s AHR Expo, the world’s largest trade show for the HVAC industry, was cancelled due to the COVID-19 pandemic. Last year, the show was in Orlando, FL and had over 70,000 attendees. When you think about that many people in one space today, you understand quickly what the expression, “the difference a year makes” really means.
Today, holding a trade show that size would be unthinkable, but it also makes you think about how the industry itself has changed over the past year, and what was being focused on then versus what is being focused on today. As we reported last year in our 2020 AHR Report, the industry was growing, fueled by a shift in climate technology to run green systems. The industry was shifting to mobile, and the ideas around connected HVAC equipment to HVAC software was still new to some businesses.
Now, it’s part of what we could call the ‘new normal’ of HVAC. Businesses today have had to dramatically adjust to remote field service operations, which has brought on unforeseeable challenges. The industry has also been forced to move in a direction that it was probably going to be heading to anyways in the next five to 10 years, except because of COVID-19, that timeline was cut down to one year.
In this report, we’ll focus on the trends that are defining the HVAC and refrigeration industry in 2021, and what is driving the industry forward. There has undoubtably been a lot of change in just one year’s time, but some trends have remained the same, however, some are looked at differently in today’s climate compared to even just a year ago.
A Rebounding Industry
It’s almost needless to say, 2020 was a challenging year for everyone. The HVAC industry was no different, as COVID-19 closed down commercial businesses, which meant less repair and construction work was needed on air conditioning and heating systems. According to a recent survey by Air Conditioning, Heating and Refrigeration (ACHR) Magazine, over 50% of respondents said their business was slowing down or dropped off significantly, with an additional 20% saying business had totally stalled and they were worried about keeping their doors open.
There was some growth for some businesses, as commercial HVAC businesses have seen an increase in service calls for essential buildings such as hospitals, healthcare facilities and grocery stores, as they remain fundamental during the pandemic. And some businesses are taking the opportunity to use the time with their employees away from the office to have new systems installed and maintenance completed without disrupting what would be a normal office workday.
Unfortunately, the lack of work forced some businesses to lay off employees which was a sharp contrast from a year ago when worker shortage was a constant problem for the industry. Luckily for most, it was only temporary as restrictions were lifted and new safety measures were put in place. In the meantime, some businesses focused on education for their employees, getting them additional training to advance their skills. This had a positive effect on technicians by keeping them motivated to return to work when business returned to normal.
Heading into 2021, the rebound for the industry is on-going as commercial businesses, health and educational facilities focus on new climate-friendly technology and retrofitting their outdated systems. Government funding has helped increase new construction projects in these sectors, and climate policy is fueling the desire for many to upgrade old systems with new green technology.
While 2021 is still dealing with the pandemic, professionals in the HVAC industry remain optimistic about the year ahead. They’re planning for a rebound with new measures and procedures in place for a safe working environment, and new work being ordered that requires technicians to get back to work.
Continued Push Towards Green and Smart Technology
The focus, now more than ever, is on green technology. Government regulations and policies have drastically shifted many countries’ approach to climate change which has resulted in incentive programs for businesses to shift to green technology. Commercial businesses are taking the government up on the offer, retrofitting their out-of-date HVAC systems with new green technology. This includes new technology, such as solar panels and an increased interest in geothermal heat pumps which are becoming a clear-cut favorite.
According to Energy.gov, eco-friendly HVAC systems are as much as 65% more efficient than traditional HVAC systems. However, they do come at a considerably higher cost which is why building owners are taking advantage of government resources to upgrade their systems.
A push is also underway to use smart thermostats that connect to Wi-Fi and enables the user to control heating and cooling levels from anywhere with a smart phone. This allows the temperature to be increased or decreased as needed based on the occupancy of the building without having to be on the property. It also allows for further programming of thermostats to ensure a constant temperature is kept as opposed to making adjustments which will result in higher energy bills.
This demand for green energy and smart technology is pushed by consumers who are willing to pay more for expensive, eco-friendly systems. According to GlobalWebIndex, 61% of Millennials are willing to pay more for eco-friendly products, while only 46% of Baby Boomers are willing to pay for them. As the world’s more eco-friendly, younger generations start to take over building maintenance and assets, the shift to eco-friendly and green technology will follow.
The ‘Internet of Things’ World
Smart technology is also being grouped together with other systems such as alarms, visitor entry systems, phone systems and central hubs to create a complete network. These are being monitored by the Internet of Things (IoT), creating smart offices and buildings. According to Prescriptive Data’s forecast, office buildings will have 152% more IoT devices installed by 2022, going from 1.3 billion devices in 2017 to 3.3 billion by 2022. Retail spaces, which had 409 million devices in 2017, is second in their forecast with 967 billion IoT devices by next year.
HVAC businesses are getting in on what IoT can offer them in the service world as they are connecting these IoT devices to their HVAC software for predictive maintenance. As the industry changes to keep equipment from failing and maintaining higher levels of efficiency, businesses no longer need to wait until there is a shutdown.
These connected devices are also reducing energy costs as the Department of Energy reports that HVAC accounts for 42% of Americans’ utility bills. By upgrading to a more sophisticated system with IoT, they can reduce energy costs by 30% on average.
With smart, green technology and IoT, energy consumption is dropping without any interruption in service. And now someone is able to monitor these devices from within HVAC software to ensure their efficiency. This reduces energy consumption and costs, as well as reduces repair costs and emergency maintenance.
The HVAC Industry Is Optimistic About the Future
Despite the struggles handed to the HVAC industry by COVID-19, the industry in 2021 is looking at a possible growth year during which things are getting back to normal, and more money is coming into the industry through the expansion of green technology.
According to the U.S. Bureau of Labor Statistics, the HVAC industry is expected to grow by 4% between 2019 and 2029, with building construction and commercial HVAC being the growth factors. As project work gives way, maintenance work will be in high demand in the HVAC industry to maintain these new, highly efficient and green systems.
Many leaders in the HVAC industry believe it is just a short-term stall before the industry is booming again. However, there is real discussion about the fact that perhaps more construction projects will be cancelled to maintain cash reserves in case of another bump in the road from the pandemic. And the commercial HVAC industry is preparing for a slow burn
in 2021 if businesses continue to let their employees work from home and not return to the office, even closing office spaces full-time in favor of a completely remote workforce.
HVAC is an essential service, so there will still be a demand for maintenance, repairs and retrofits moving forward. And while the recovery may be slow and bumpy at times, there is optimism that the industry will return to the high levels we saw in 2019 within just a few short years. And much of it will be fueled by the incentive for new, smart technology to automate buildings and provide green, eco-friendly results.
A Change in HVAC Service Management
Many businesses moved to a remote working environment in 2020 due to the COVID-19 pandemic. As we start out in 2021, many businesses are now seeing it as a better way to operate by reducing the overhead expenses associated with running a large office space, allowing flexibility for their employees, and ensuring safety and wellness during the second year of the pandemic.
HVAC service has also been affected as offices were closed and operations moved to homes with remote working becoming the new normal. This was a trend that was appearing to be five to 10 years away from happening, but it had to be rushed in quickly as many businesses sought to stay operational when lockdowns and restrictions were imposed. With increased productivity and less overhead expenses, going back to an office is now optional, but it has required changes to how HVAC service management is performed. Mainly, through the use of technology like HVAC software.
As HVAC systems get smarter and more integrated, so too are the people providing maintenance. Cloudbased HVAC software systems are
rising in popularity because they allow for large groups of people to work remotely, but still be as connected as they were in an office setting. Work orders can change hands through mobile applications, projects are planned through modules with job costing abilities, and the entire service enterprise can run from a cloud-based system that enables access from anywhere in the world.
With IoT and smart systems, technicians are starting repairs remotely, limiting the exposure they have to customers to keep everyone safe. HVAC software with a full-service history available is making it so that technicians can diagnose problems before going on site, offering solutions to customers and walking them through the repair themselves if possible or necessary. Contactless service management is also being used to reduce exposure to customers, reducing the risk for everyone involved.
It’s a change in service for many who are now focused on scheduled maintenance as opposed to emergency repairs, so that they can schedule their technicians for the safest times possible. This means more preventive maintenance contracts, and the use of IoT to usher in the predictive maintenance age of HVAC service management.