Taking action on Climate Change

by Michelle Agha-Hossein, BSRIA Building Performance Lead

Most nations now recognise climate change as an established, perturbing fact that needs immediate attention. We can see the effects in the worsening and more frequent extremes of weather: flash floods, droughts, strong winds, heavy snow, heat waves, etc.

UK temperatures in 2019 were 1.1°C above the 1961-1990 long-term average and it was a particularly wet year across parts of central and northern England. Still fresh in the memory are storms Ciara and Dennis in February 2020 with strong winds and heavy rain that caused significant damage to homes and commercial buildings. There is growing evidence that periods of intensely strong winds and heavy rain are likely to increase in the future.

The UK is not the only country affected by climate change. Many other countries are (and will be) suffering disproportionately. The world’s leading climate scientists have warned that we might have just 12 years to keep global warming at a maximum of 1.5°C. After this point, the risk of extreme weather conditions will significantly increase. The increased frequency and intensity of extreme weather will affect all but is most likely to bring catastrophic consequences in many less economically developed countries, where food shortages and water scarcity can trigger deep social changes.

Immediate radical action is required to limit carbon emissions, and the built environment industry can play a crucial role by changing the prevailing culture.

Most building-related carbon emissions are generated from energy use in buildings. However, there are choices that building owners/operators can make and initiatives that they can undertake to lessen the related negative impact on the environment:

In brand new buildings, the most effective way for addressing emissions is reducing consumption through energy efficient design. In existing buildings, the issue can be addressed by efficient retrofitting and effective maintenance strategy. Adopting renewable energy technologies in both cases can significantly reduce building emissions.

Steps building owners and operators can take today.

There are several initiatives/activities that can help building owners/operators combat climate change:

  • Consider ‘net-zero carbon’ targets for your building: UKGBC launched its Advancing Net Zero programme in 2018 and published the ‘Net Zero Carbon Buildings: A Framework Definition’ in 2019. The framework provides the construction industry with clarity on the outcomes required for a net zero carbon building.
  • Ensure the required outcomes for a ‘net-zero carbon’ building are achieved: As advised by UKGBC in the framework definition, initiatives like BSRIA Soft Landings should be adopted in new build as well as in refurbishment projects to ensure a net zero carbon building will be achieved. The BSRIA Soft Landings framework provides a platform for project teams to understand the required outcomes for their project and ensure all decisions made during the project are based on meeting those outcomes.
  • Maintain your net zero carbon building effectively: Business-focused maintenance is a methodology developed by BSRIA that can be adopted to help building operators maintain critical assets effectively and efficiently to sustain a net zero carbon building within budget.
  • Investigate failure quickly: Is the energy bill for your building higher than it should be? Investigate the problem as soon as you can. The first and easiest step would be looking at the energy end use breakdown to see which areas are using more energy than expected. If the issue is related to the HVAC system, check the system’s setting points and monitor the indoor air temperature and relative humidity. Thermal imaging of the fabric of the building can also help to identify, thermal bridging, missing/damaged insulation and areas of excessive air leakage.
  • Promote a healthy diet among building occupants: This is a non-technical initiative that building owners/operators can adopt in their buildings. Eating less meat and gradually shifting to more plant-based foods is vital for keeping us and our planet healthy.  It is important to think about initiatives such as using signage or lunchtime talks, to educate building occupants about healthy diets and encourage them to eat more fruit and vegetables. Research has shown that adhering to health guidelines on meat consumption could cut global food-related emissions by nearly a third by 2050. Healthy diet is also supported by Fitwel and the WELL building standard.

Building owners and operators, to play their role in combating climate change, should ensure their decisions and the way they create and run their buildings contribute positively to the wellbeing of our planet and its citizens.

So, make a start today and choose the first thing you are going to assess/change in your building to help combat climate change.

To find out more about how BSRIA can help you improve building performance, visit us here.

The wellbeing and environmental effects of agile working

by David Bleicher, BSRIA Publications Manager

How many times in the last few months have you started a sentence with “When things get back to normal…”? For those of us whose work mostly involves tapping keys on a keyboard, “normal” implies commuting to an office building five days a week and staying there for eight or more hours a day.

When lockdown restrictions were imposed, things that were previously unthinkable, such as working from home every day, conducting all our meetings by video call, and not having easy access to a printer, became “the new normal”.

One thing the pandemic has taught us is that changes to our work habits are possible – we don’t have to do things the way we’ve always done them. Since lockdown, agile working has been high on companies’ agendas; but agile working has a broader scope than flexible working. It is defined as “bringing people, processes, connectivity and technology, time and place together to find the most appropriate and effective way of working to carry out a particular task.”

Working from home with a cat

The triple bottom line

Agile working is indeed about much more than changing people’s working hours and locations. It’s about how people work – becoming focused on the outcome rather than the process. It’s about making the best use of technology to achieve those outcomes and it’s also about reconfiguring workplaces to better suit the new ways of working. But, when considering these outcomes, we should be looking further than the financial bottom line. The term triple bottom line is a framework that also brings social and environmental aspects into consideration.

How, when and where people work has a major impact on their wellbeing. The past few months have served as an unintentional experiment in the wellbeing effects of mass home working. Some people are less stressed and more productive working from home, providing they have regular contact with their colleagues. Other people – particularly those who don’t have a dedicated home working space – returned to their offices as soon as it was safe to do so. It depends on the individual’s preferences, personal circumstances and the nature of the work they do.

On the face of it, it would seem that increased working from home or from local coworking spaces would be a win-win for the environment. Less commuting means fewer CO2 emissions and less urban air pollution. But a study by global consulting firm and BSRIA member, WSP, found that year-round home working could result in an overall increase in CO2 emissions.

In short, it reduces office air conditioning energy use in the summer, but greatly increases home heating energy use in the winter – more than offsetting carbon savings from reduced commuting. Perhaps what this highlights most is just how inefficient the UK’s housing stock is. If we all lived in low energy homes with good level insulation and electric heat pumps, the equation would be very different. Perhaps a flexible solution allowing home working in summer and promoting office working in winter would be best from an environmental perspective.

A possible long-term effect of increased home working is that some people may move further away from their offices. For example, someone might choose to swap a five-days-a-week 20 km commute for a one-day-a-week 100 km commute. If that is also a move to a more suburban or rural location with more scattered development, less public transport and fewer amenities within walking distance, then (for that individual at least) there’ll be an increased carbon footprint. Not very agile.

Impact of technology

There’s another aspect that may not yet come high up in public awareness. Remote working is dependent on technology – in particular, the video calls that so many of us have become adept at over the past few months. All this processing burns up energy. The effect on home and office electricity bills may be negligible because the processing is done in the cloud. This isn’t some imaginary, nebulous place. The cloud is really a network of data centres around the world, churning data at lightning speed and, despite ongoing efforts, still generating a whole lot of CO2 emissions in the process. Videoconferencing definitely makes sense from both an economic and environmental perspective when it reduces the need for business travel, but if those people would “normally” be working in the same building, isn’t it just adding to global CO2 emissions?

We don’t yet know what “the new normal” is going to look like. Undoubtedly, we’re going to see more remote working, but responsible employers should weigh up the pros and cons economically, environmentally and socially. Terminating the lease on an office building may seem like a sensible cost saving, but can a workforce really be productive when they never meet face-to-face? Does an activity that seemingly reduces CO2 emissions actually just increase emissions elsewhere? Any agile working solution must take all of these things into account, and not attempt a one-size-fits-all approach to productivity, environmental good practice and employee wellbeing.

For more information on how BSRIA can support your business with energy advice and related services, visit us here: BSRIA Energy Advice.

What makes a good PICV?

by Andrew Pender, National Sales Manager at FloControl Ltd.

Over the last 5 years, PICVs have been widely accepted as the best method of terminal control in variable flow systems due to their energy saving potential.  The surge in popularity has led to an influx of products with varying designs, features and functionality.  This article reviews some of the mechanical PICV design elements and how they can impact on the PICV’s performance in an applicational context.

Where do we start?

To help specifiers and project engineers assess which PICV is best suited for an application, the BSRIA BTS1/2019 standard has been developed to provide a consistent test method for PICV manufacturer’s products to be benchmarked against.

Manufacturers should be able to provide test results in line with this technical standard which covers:

  • measured flow vs nominal flow
  • pressure independency or flow limitation
  • control characteristics, both linear and equal percentage
  • seat leakage test

Repeatability & Accuracy are central to the tests and they are key to good temperature control and realising the full energy saving potential of a PICV installation.

An accurate PICV means the measured results will be equal or very close to the manufacturer’s published nominal flow rate each time it is measured, known as low hysteresis.

Accuracy has a positive impact on a building’s energy consumption.  “Measured over time, a 1% increase in the accuracy of a PICV can result in a reduction of around 0.5% in the building’s overall hydronic energy consumption” (FlowCon International).

Valve accuracy is driven by the design, manufacturing process and material used for the internals of the valve.

  • The design of the PICV should allow for Full Stroke Modulating Control at all flow settings without any stroke limitation.  The flow setting and temperature control components should operate independently.  Some PICV designs use the stroke of the actuator stem to set the flow rate resulting in limited stroke and control.  This can cause issues at low flow rates whereby the PICV effectively becomes on/off irrespective of actuator selection.  
  • The manufacturing process and the component materials also contribute to accuracy. For example, injection-moulded, glass-reinforced composite materials cope better with water conditions that valves can be exposed to.  They also have less material shrinkage than other materials, delivering higher accuracy than valves that use alloy components.

What else should be considered?

The importance of accuracy and repeatability are paramount when selecting a PICV however there are other factors that should be considered:

  • Wide flow rate range – including low flow rates for heating applications, ideally covered by a small number of valves.
  • Setting the flow rate – setting the PICV can influence the accuracy. There are various scales used including set points related to flow rates and percentages. PICVs with very detailed scales with small increments between set points are more difficult to set accurately, leading to higher tolerances than the BSRIA standard recommended + 10%.
  • Wide ΔP Range – low start up pressure. To operate satisfactorily, the PICV requires a minimum pressure differential to overcome the initial spring resistance within the PICV, enabling the spring to move and take control. Care should be taken to ensure the minimum pressure differential is as low as possible to maximise the energy saving potential of the system.  The maximum DP should also be considered to ensure the PICV operates effectively under part load conditions.
  • Dirt tolerance – the Valve Control Opening Area [A] on all PICVs, irrespective of the manufacturer, is identical for each flow rate. The shape of the Control Area can be different depending on the valve design. A Rectangular flow aperture is more tolerant than an Annular flow aperture. Debris will pass through the rectangular aperture more easily.
  • Removable inserts – deliver the greatest flexibility and serviceability.  Products can be easily serviced in line without disruption. This is especially of value when water quality is poor or when flow requirements change due to changes in space usage.  Inserts can also be removed during flushing.  Valve bodies can be installed with blank caps eliminating the risk of damaging or contaminating the PICV element, whilst having a full-bore flushing capacity.
  • Installation – PICVs in general have no installation restrictions however in line with BSRIA BG29/20, it is recommended that PICVs should be installed in the return branch as small bore PICVs will have a high resistance which will hinder the flushing velocity during the forward flushing of terminal units.

Making the right choice

There are many aspects for specifiers and project engineers to consider when selecting the right PICV for an application.  The BTS1/2019 standard provides an excellent benchmark, but the individual designs also need to be carefully considered.  A correctly selected PICV will ultimately lead to a more comfortable indoor climate with better control of the space heating and cooling as well as potentially reducing the pump energy consumption in a building by up to 35%.

This post was authored by Andrew Pender, National Sales Manager at FloControl Ltd. All views expressed are those of the author. If you belong to a BSRIA Member company and wish to contribute to the BSRIA Blog, please contact marketing@bsria.co.uk

Shift in Construction Technology for a ‘post-Covid, pre-vaccine’ era

by Amy Butler, JB Associates

In 2017, McKinsey Global Institute slated construction for evolving at a ‘glacial pace’ due to its ranking as the least-digitised industry in Europe. While plenty of technological advances were pitted as ‘on the horizon’, many companies were reluctant to take the necessary steps to push forward with digitisation. Critics warned that a lack of innovation would lead to companies folding, although it took a global pandemic before this prophecy materialised and those without suitable digital infrastructure in place were shaken.

The pandemic is now considered a catalyst for industry improvement, propelling construction out of its ‘glacial’ evolution and deep into the digitised era. A recent study undertaken by Procore found that two thirds of the surveyed construction companies had rolled out new technology during the lockdown, with 94% of these seeing an improvement to productivity and teamwork. However, what exactly are these technologies and where do we go from here?

Smart Buildings

While we are all now experts in the world of Zoom and Microsoft Teams, the challenge lies in returning safely to offices and various other workspaces. With many UK companies pushing for their teams to be back in work physically, how do we ensure that commercial buildings remain safe? Smart Building technology is reshaping the workplace and ensuring safety as well as energy optimisation. Buildings with integrated BMS systems and IoT sensors were already an option before the pandemic. Now, they are a wise choice for business owners.

Essential for a post-Pandemic and pre-Vaccine era, IoT systems can control air quality and ventilation. High-performance air filters and moisture controls will now be key due to Covid-19’s airborne nature. OKTO Technologies (Smart Buildings specialists) have even launched an Artificial Intelligence-led air filtration solution that is reportedly so advanced it can eliminate 99.98% of SARS-CoV-2 (the virus that causes Covid-19) from the air in 10 minutes.

Similarly, density control counters and heat detection cameras can be incorporated into BMS systems to ensure that viruses are less likely to spread or enter into a facility. Airports have been trialling infrared cameras to measure body temperatures for a fever and several companies offer leases or installations for these cameras. While they are not a definitive medical diagnosis, they add a level of reassurance. This may be the aim of much of this technology; a form of due diligence in protecting staff.

BIM & VR

Technological advances are also prominent on site. Construction News reported that contractors employed for the Nightingale Hospital projects found huge value in Autodesk programs. A vital tool for tracking constant streams of updates in rapid working conditions, construction management software proved its worth in recognisably challenging projects across the UK.

As social distancing measures remain in place, it is imperative that technology is prioritised; virtual communication is still far safer than face-to-face. Software like BIM is also providing insights and tools to manage projects during a more challenging time. Even more impressively, companies are merging BIM models with the cloud, GPS and Virtual Reality software. This development means a ‘digital twin’ of a facility can be created and it opens a world of opportunities for Project Management and Design efficiency.

Remote working could even be a trend that stays long past pandemic precautions. Drones have been used previously to reduce safety hazards for technicians and now may be utilised in future remote inspections. Similarly, researchers at the University of Strathclyde have been given £35,000 in funding to create a remote inspection system. The 3D immersive building environment program aims to reduce risks by eradicating the need for Quantity Surveyors or Health and Safety Inspectors to be physically present on site.

Whether enabling remote working, improving the health and safety of commercial buildings or aiding on-site processes, technology has become a necessary tool for construction in the last 6 months. The companies that had embraced digitisation long before 2020 were undoubtedly the ones able to continue thriving in the tough lockdown period. The next step is for many companies is to streamline their management processes or workplace systems to ensure technology works for them as efficiently as possible. Breaking out of its inertia, construction’s ‘glacial evolution’ is firmly in the past and technological advances are here to stay.

This post was authored by Amy Butler of JB Associates – building consultancy specialists. The views expressed are those of the author.

BSRIA Members wishing to make a guest contribution to the BSRIA Blog should please contact marketing@bsria.co.uk

Maintenance of drainage systems to prevent flooding and water pollution

By David Bleicher
BSRIA Publications Manager

Every building has a drainage system. In fact, most have two – a foul drainage system that takes waste from toilets, showers etc. and a storm/surface water drainage system that takes rainwater from roofs and paved areas. Older buildings may have a combined system, and in some locations the infrastructure buried under the street is a combined sewer – a legacy from the pioneering days of city sewerage systems.

As with maintenance of any building services systems, the first step is to know what you’ve got. Every site should have a drainage plan, showing which drains are located where, what direction they flow in and what they connect to. If there isn’t one, it’s not hard to create one – even though the pipes are buried, there’s plenty of evidence above ground in the form of manholes.

When there is a drainage plan, it’s worth checking how correct and up-to-date it is. Sometimes, the exercise of doing this brings up evidence of mis-connections, such as a new loo discharging into a storm manhole. It’s also worth marking drain covers with the service (F for foul or S for storm) and a direction arrow.

Drainage manhole over showing 'S' arrow to indicate storm drainage and direction of flow.

In foul drainage systems, the biggest headaches are caused by things going down the drain which shouldn’t – like wet wipes, sanitary products and hand towels. So the best form of preventative maintenance is to keep building occupants informed, with polite notices and clearly-marked bins in strategic places. Then there is the fats, oils and greases (FOG) that go down the plughole in catering establishments. If these find their way into the drains and sewers, they’re pretty much guaranteed to solidify and cause blockages – sometimes known as ‘fatbergs’. That’s why there should always be an interceptor in place, also known as a grease trap. This needs maintenance – the generic frequency for cleaning out a grease trap, stated in SFG20 (a common approach to planned preventative maintenance), is monthly. But this will be highly dependent on how the facility is used.

If blockages go unchecked, they may also go unnoticed. That is until sewage starts backing up into the building, or overflowing into storm sewers, which eventually discharge into lakes and rivers. These are delicate ecosystems, and the introduction of detergents and faecal matter can be very harmful to aquatic life and of course humans.

Rain, can pick up contaminants from both the air and the land, so once it has reached a storm/surface water drainage system, it has picked up dirt, oil and chemicals from air pollution, roofs and paved areas. Traditional systems have no means of dealing with this, and also must be sized for occasional extreme storm events, so the pipes are very large and mostly used at a fraction of their capacity. Sustainable drainage systems, or SuDS, attenuate the flow of rainwater to watercourses and emulate the way natural ecosystems treat this water. But they need maintenance. For example, any tree routes that could block a soakaway should be trimmed annually, and green roofs may require weeding on a weekly basis during the growing season.

For more information on the maintenance of drainage systems, please explore the BSRIA Information Service

COVID-19 pandemic’s impact on US businesses and real estate

Zoltan Karpathy
Operations Manager, BSRIA Worldwide Market Intelligence

Nobody can predict with a high degree of certainty how long the current COVID-19 pandemic will last and what will be the full impact on the economy. We are witnessing US states, including Florida, opening up and having to tighten measures again as the virus flares up.

To contain the pandemic regulations started to push businesses towards investments to increase health safety and prevent spreading the COVID-19 virus. While necessary to fight the pandemic and speed up the recovery, businesses sometimes suffer temporary loss of productivity when the measures are implemented.

Another hike of investment as the direct consequence of the economic shock triggered by the pandemic is often related to the need of diversifying suppliers; and purchases from a variety of suppliers are often done with less favourable prices. Increasing inventory levels of critical raw materials/components/products are also becoming an issue.

Verticals served by the HVAC&R sector have been hit at various levels of degree by the COVID-19 pandemic. Venues, such as live entertainment, sports, restaurants and travel-related establishments are likely to struggle due to concerns over contracting the virus, even when they become fully open. It is expected that consumer will shift away from these types of spending to alternatives such as durable goods, which in turn can have a positive effect on housing in the future.

Nevertheless, on the residential side, housing starts plummeted by 43% in the three months from February to April, even though several US states allowed construction sites to operate. Sales of existing homes also declined, with April’s transaction level at three-quarters of the February level. Residential construction is expected to slow down in the medium term, as consumers are unable or unwilling to purchase new houses, even though mortgage rates are very low.

Economists are drawing up various scenarios and assess likelihoods of these potential outcomes. According to Deloitte the most probable scenario is that the US economic recovery will not take place at least until the middle of 2021; growth can return to the pre-COVID level by the end of 2023, but the economy will not be able to achieve full employment again until 2025.

In the context of such uncertainty, manufacturers active in the HVAC&R and Building Controls sector are facing a wide range of unknown factors:

  • customers building up stock for an eventual second COVID-19 wave;
  • concerns over debt payments;
  • increasing payment periods;
  • increasing raw material prices;
  • pressure to maintain the price of their final products/solutions.

In terms of the product mix, HVAC companies started to receive more enquires for certain types of filters, more emphasis on increasing volume of fresh air and generally an increasing focus on Indoor Air Quality.

This goes hand in hand with the fact that the current situation is also encouraging building owners and businesses to offer a safe working environment, in which employees trust and feel comfortable. Therefore, increasing investment levels can be expected to make commercial buildings ‘smarter’ and more efficient to use, with the uptake of solutions such as contactless access control, occupancy analytics, employee tracking services, proximity sensing and analytics (using indoor location mapping solutions) and Indoor Air Quality (IAQ) sensing and monitoring, alongside air purification and disinfection solutions.

The COVID-19 pandemic has a significant impact on the real estate market, challenging the building owners and operators at unprecedented levels. According to JLL, the effects in the short term, will be the accelerated large-scale uptake of home working, leading to problems for traditional offices, but also co-working centres and flexible offices, putting a strain on the sustainability of certain flexible space business models. Social distancing considerably increase the space allocated for individuals which means that many flexible offices will record very low space utilisation rates and could even remain nearly empty.

The COVID-19 pandemic has challenged the role of the traditional office and it reinforced the need for the office to act as a communal space which encourages innovation and collaboration, while nurturing company culture. A future solution seems to be an increased focus on technology enabled workplaces which can be used for collaborative meetings and hosting clients.

To assess the full impact of COVID-19 on the US HVAC&R sector, BSRIA will publish an update of its market studies at the end of September 2020.

To find out more about BSRIA HVACR & Controls market studies contact us at:

• America sales enquiries: BSRIA USA: sales@bsria.com ¦ +1 312 753 6803, http://www.bsria.com/us/
• China sales enquiries: BSRIA China: bsria@bsria.com.cn ¦ +86 10 6465 7707, http://www.bsria.com.cn
• All other sales enquiries: BSRIA UK: wmi@bsria.co.uk ¦ +44 (0) 1344 465 540, http://www.bsria.com/uk/

2019 China Heating Market Dynamics

China has by far the largest heating market in the world in terms of units manufactured and sold. In 2019, a little over 40,000,000 units, including, boilers, water heaters and heat pumps, were sold in China. The country also has the world’s largest network of pipes supplying gas for heating systems. China has been developing its gas network very actively over the last years and consequently the country’s total building area covered by gas pipework has more than doubled in the past 15 years. Growing accessibility of gas across the country, coupled with government’s efforts to tackle air pollution and green house gas emissions underlines the potential for continuous growth of heating in the country. To give it some perspective, the sales of gas domestic boilers have grown 10-fold in the last 11 years.

 

boilers6

Source:  BSRIA

 

Today, the heating market is shaped by three areas of sales impact, each having its own dynamic:

  1. Government policy represented mainly by “Coal to gas” and “Coal to electricity” projects

Coupled with expansion of the gas network, stronger governance, better product quality and more competitive gas prices this policy is continuing to strongly impact sales of gas fuelled products, in line with the Chinese government’s 5-year plan (2016-2020 – 3th 5-year plan.

The policy has also a strong impact on the progression of the heat pump market, mainly for water heating, although growth of heat pumps for both, heating and hot water provision has also grown in the recent years.

Compared with the vigorous “coal-to-gas” and “coal-to-electricity” projects in the domestic market, commercial boilers have higher requirements for large-scale, stable and constant fuel supply and corresponding infrastructure construction, which makes the transition from coal to cleaner energy more difficult. Nevertheless, a moderate growth was also seen in the commercial gas boiler and commercial heat pump markets.

  1. Regular project market (new build)

New build is currently driving sales of heating products thanks to the existing pre-decoration policy, which is currently supported by local government to deliver fully fitted buildings, with operational heating systems installed.

The importance of the new build market is significant in China as it delivered sales of some 1.5 million gas boilers and over 900 thousand heat pumps to the new residential dwellings.

  1. Retail market (replacement and high-end new build)

Retail distribution chain has a strong impact on sales of all heating products as it is the most common place of provision of products for clients. Those replacing old, inefficient appliances or willing to install the appliances of their own choice in the newly acquired dwellings source them in retail shops. This market is very sensitive to economic situation and changes quickly depending on the consumer confidence level. It represents a large opportunity as there are millions of heating systems in China, which are older than 10 years – the time after which replacement is normally considered. Similarly, in many new houses owners opt to have better quality heat systems than those installed by the contractor as part of the pre-decoration policy.

With regards to district heating, the market has accelerated in recent years as policies to deal with air quality have been promoted and investments have been made. There are currently more than 400 projects underway and nearly 100 enterprises engaged. The industry generally believes that the development of smart district heating projects opens attractive strategic opportunities.

However, China is in a period of low economic growth and dealing with the aftermath of COVID-19 implications. Both will have an impact on the performance of the country’s heating product sales this year.

BSRIA is preparing the updated view on 2020 market performance and short term forecast for boilers and heat pump markets that will be available in September 2020.


By Socrates Christidis, Research Manager Heating & Renewables,

BSRIA, World Wide Market Intelligence


Notes to editors:
For further information, please contact:

 

Thoughts on the COVID-19 impact on China’s HVAC industry

by Martin Li, BSRIA APAC

Some economic background data

After carrying out many conservative policies like Complete City Lock-down, China has started to recover from the COVID-19 related downturn. The economy has been opening since late March 2020 and is in wider re-opening stage by May 2020.

In the first two months of 2020, China’s total import and export value of goods trade reached 4.12 trillion RMB, a decrease of 9.6% comparing with the same period last year, with export, experiencing a particularly bad fall by 15.9%.

According to the latest statistics, both Manufacturing and non-Manufacturing PMIs slid down to the range far below 50% in February 2020, with 35.7% for manufacturing sector and 29.6% for non-manufacturing one. Manufacturing sector has been hit hard, and the central government is mobilizing companies returning to production to catch up with delays as soon as possible.

Construction industry represents a more mixed picture. According to Xinhua Finance, the total sales of residential housing by Top 100 developers dropped by 20.7% under the influence of the pandemic, but 24 among them, have achieved over 10 billion RMB sales, indicating that the competitive environment is going to become more concentrated in the coming months.. Another set of data from KERUIRC in its research on 27 Key Cities showed a decline of sales by 80%, and half of the cities in the sample pool supplied no new housing in February 2020.

2020 Prospects for China’s HVAC industry

Different impact in residential and commercial segment

Both global and domestic demand have fallen significantly in the first quarter of the year. Under severe lockdown rules, sales, installation, or integration work were not allowed and according to CICC, in January 2020, the entire domestic and overseas sales of AC fell by 34% and 28% respectively. The situation worsened in February and March, but the visible recovery has been noted in May.

Similar situation has been recorded in the domestic boiler market where during the first quarter 2020, sales remained heavily subdued with slow recovery noted from the April. Overall Chinese domestic heating sector shrank by 60% in the first quarter of the year.

HVAC products, like RAC-CAC or wall-hung boilers, belong to the “must have” category of products, hence market demand for those has mostly shifted and is expected to “make up”, in the coming months, for lost sales in the first quarter of the year. The whole year performance is expected to come close to the 2019’s sales levels, with the caveat, that there will be no second wave of the virus outbreak.

Commercial AC and Commercial/Industrial heating sectors have not been so severely affected by the pandemic, with many companies reporting successful achievement of their Q1 budget.

Strategic changes related to the offering and distribution business models

This pandemic seems to have forced transformation of conventional business activities. Owners of physical stores and off-line distributors have become acutely aware of the weakness of their business model. Many are now in the process of moving their operation to on-line platforms, which is likely to also accelerate their embrace of the global e-commerce.

From a product mix point of view, companies have become more aware of the importance of the variety of product offer and disadvantages of concentrating on sales of one product family type. An integrated shop/store, selling the idea of Comfort Home with a bunch of products delivering what is ultimately needed by the end user is expected to become a mainstream ideology. Integrating sales of Water, Air, Heating, Automation and Smart systems is where the industrial consensus is heading after the pandemic.

In summary, assuming the outbreak of COVID-19 can be contained and will not reappear in China, its impact on sales levels will possibly be limited in the overall year perspective. However, when debt, assets holding costs and opportunity costs will be considered, HVAC business owners will be looking for more options to mitigate unforeseeable risks in the future. In the short term some distribution and offering trends that have started to emerge before the pandemic will accelerate. In the longer-term higher market integration is likely.

Note to editors:

For more information about BSRIA’s research, please contact:

Domestic boiler market grew again in 2019

 

While cooling is often mentioned in the context of the impact climate change might have on its rising demand and consequently on the energy demand that growth in cooling need is likely to cause, heating is often somewhat neglected in global discussions on changes that are needed to reduce the CO2 emission levels.

It is therefore worth having a closer look at the global heating markets performance as it provides a picture worth considering in further discussions about the net 0 Carbon future.

The latest release of BSRIA heating reports with global outreach reveals that the world domestic boiler market has grown by 6% year on year in 2019 and sales of non-condensing boilers accounted for 48% of total sales across the world.

 

condensing boilers
While condensing boilers dominate in the EU markets and are making stronger inroads in Turkey and the North American market, the non-condensing wall hung and floor standing boilers are prevalently sold in European countries outside the EU and across Asia.

Gas boilers, that account for the vast majority of sales worldwide, are still considered as good news in parts of the world, where coal has been a basic heating fuel not that long ago. Gas prices, that, with few exceptions, are usually lower than the price of electricity, help retaining consumers.

Out of the total of some 15.6 million units sold globally, 68% are sold as replacement of older units and 32% are still installed in the newly build dwellings.

Boilers are usually installed to provide both heating and domestic hot water – such units accounted for some 83% of the global market in 2019. They are a convenient solution for both, end users and installers.

So, what does the future hold for this market segment? Technologies that could displace boilers in homes are already available (heat pumps) and in some parts of the world policies are providing strong support for their uptake. Overall, heat pumps accounted for some 19% of the domestic heating market globally.

Research and development are intensifying to roll out green gas solutions, that includes the use of biogas and hydrogen, with some serious challenges still to overcome.

With strong regional differences in future performance, BSRIA has forecasted the overall global boiler market to remain broadly flat between 2019 and 2024, before taking the impact of COVID-19 pandemic into consideration. The latter is likely to cause strong disruption in 2020 which will be assessed by BSRIA team later in the year.

BSRIA global research programme on domestic and commercial boiler markets allows for analysis of the market dynamics on a global, regional and country levels, with country in-depth analysis available to support more strategic decision taking process.

The studies provide a full understanding of the latest market trends in terms of sales development by product type, price evolution, structure of the supply, long-term forecast and analysis of driving forces.

By Aline Breslauer, Research Consultant, BSRIA WMI.

 

For more information, please contact us at:

  • Americas sales enquiries: BSRIA USA: sales@bsria.com ¦ +1 312 7536803 www.bsria.com/us
  • China sales enquiries: BSRIA China: bsria@bsria.com.cn ¦ +86 10 64657707 www.bsria.com.cn
  • All other sales enquiries: BSRIA UK: wmi@bsria.co.uk ¦ +44 (0) 1344 465540 www.bsria.com/uk

In industrial applications gas boilers are still important while renewables are growing slowly


BSRIA has researched the market of industrial boilers
– boilers used for industrial processes and/or district heating in seven major countries: the UK, France, Germany, Italy, Poland, Russia and China.

Despite dynamic progress on renewables in many other heating markets, gas boilers still remain the most prominent product in the industrial segment.

The use of ground to water, water to water heat pumps and energy from waste heat is growing and they are increasingly becoming installed in a primary system. However, gas and to a lesser extent, oil or biomass boilers are used most often as a secondary source for a backup system to either provide an operational safety related redundancy level or to support the peak load demand.

Gas boilers still benefit from lower investment cost and even though technologies that use renewable energy sources are increasing their penetration in the industrial segment, current research supports the view that gas boilers will keep playing a significant role in the market in the next decade.

China, with its nearly 50,000 units sold per year is the largest among the researched markets.  Following government push towards reduction of air pollution, there is a significant shift in sales from coal to gas boilers. The country has a preference for large output boilers while in Western Europe BSRIA sees the opposite trend, with smaller capacity, condensing boilers gaining significance.

boilers

Heat networks are an important and growing segment for industrial boilers; they accounted for some 20% of all industrial boilers sold in 2018. In all seven researched countries, industrial processing in chemical, food and cement industries is also growing in prominence.

As technology progresses the value of the industrial boiler market is growing, moreover, in all countries the service and maintenance part of the business is also growing significantly. Focus on energy efficiency supports the trend towards regular seasonal check and more frequent upgrades.

In terms of technology, most industrial boilers sold in the researched countries are fire tube units.

By Socrates Christidis,
Senior Market Analyst, Worldwide Marketing Intelligence, BSRIA Ltd


Notes to editors:

 

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