IHS Forecasts Energy Efficiency Improvement Act of 2015 Could Help HVAC Market in USA

The United States Congress, with bipartisan support, has passed a bill titled the Energy Efficiency Improvement Act of 2015. The bill aims to promote energy efficiency in commercial buildings in three ways:

By developing a new voluntary energy program within the current Energy Star framework
By adopting new regulations for smart grid-enabled water heaters
Promote benchmarking and public disclosure of energy usage for buildings so tenants and building owners can better understand current energy performance level of their space

While it is presently unclear in the current language of the bill if or how the public disclosure of energy usage for individual buildings will be accessible to the general public, the heating, ventilation and air conditioning (HVAC) industry could greatly benefit from such legislation if that is indeed the case.

Currently in the United States, Energy Star certifications act as a way for building owners to show the general public that they are doing their part in limiting energy usage. However, these programs are voluntary and there are no penalties when standards are not reached.

If information on energy usage of buildings was accessible to the public, building owners and businesses that were found to use an exorbitant amount of energy could be put under pressure by environmental advocacy groups and the general public to find ways to cut power consumption. This could be an important development in promoting energy efficiency as many political leaders at the state and federal levels are unwilling to pass prescriptive and punitive energy reform measures for the fear of being branded anti-business.

The bad public relations which could arise from the disclosure of energy consumption could force buildings to upgrade old and inefficient HVAC equipment at a faster rate. For example, in the United States nonresidential retrofit market, IHS forecasted total units of air conditioners to grow from 475 thousand in 2014 to 513 thousand in 2017, a compound annual growth rate (CAGR) of 2.6%. With public pressure being an additional driving force behind replacement of inefficient air conditioning units, the CAGR could reach closer to 5.0%.

In addition to higher spending in HVAC equipment, buildings could also invest in more comprehensive HVAC controls systems and spend more on the service and maintenance of the new equipment and controls. This would lead to a further boost in retrofit and replacement HVAC business in cities with a high number of commercial buildings.

www.ihs.com

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