Air conditioning installations rise as Europe continues to sizzle

As Europe sweats through another summer of record-high temperatures, the heat has got us Brits talking about the weather even more than usual. According to figures released from the Met Office, the last three years rank among the UK’s top five warmest on record – with 2024 the fourth warmest year since records began in 1884. Across the continent of Europe, temperatures are warming twice as fast as the global average. 

Outside of the United States (US), cooling systems have historically been seen as a luxury rather than a necessity. But with temperatures rising and sweltering-summer heatwaves becoming the new norm, people are increasing looking for ways to escape the heat. Many homeowners are now considering air conditioning units as essential investments, with installations projected to almost double by 2050. 

HVAC – a market on the rise

The Heating, Ventilation and Air Conditioning (HVAC) market is growing. Valued at around $294 billion in 2023, it's expected to grow steadily at 5.6% a year from 2024 to 2032. What’s driving this? A growing need for energy-efficient and eco-friendly cooling solutions.

The industry breaks down into several key segments: heating equipment, ventilation equipment, air conditioning equipment, chillers, and cooling towers. Air conditioning leads the pack, making up 42% of the market. It’s set to grow from $123 billion to $210 billion between 2023 and 2032, with a 6% annual growth rate.

Looking at where HVAC systems are used, the market splits into residential (50%), commercial (30%), and industrial (20%).

According to the International Energy Agency (IEA), if we don’t improve energy efficiency, energy use for space cooling could more than double by 2050. Installed cooling capacity is forecast to jump from 850GW to 2700GW, growing at an annual rate of 4.2% over 28 years. Plus, the number of households with air conditioners is expected to rise from 36% in 2022 to 60% by 2050.

Governments are also pushing for change. In the US, for example, the Department of Energy introduced new energy efficiency standards in March 2023 for room air conditioners and portable air cleaners. These rules kick in 2024 for air cleaners and 2026 for room ACs, aiming to cut household energy costs and emissions.

Climate change is a big factor behind this growth, with more people looking for systems that are both energy-efficient and environmentally responsible. Tech innovations like inverter-based systems, smart controls, and Internet of Things (IoT) integration are gaining traction across homes, offices, and industrial sites. These upgrades offer better energy management, remote monitoring, and cost savings.

Globally, HVAC is a huge and fragmented market. The top 5 companies hold just 25-30% of the global share. In contrast, the US commercial and industrial market is much more consolidated - four companies control about 90%. The US residential market is more spread out, with the top 10 players making up only 10% of the share. 

Regional breakdown

• Americas: this region holds 40% of the global HVAC market, with the US making up over 80% of that. Growth is expected to be around 5% annually through 2032. The US has high HVAC adoption, with 88% of households using AC, and two-thirds relying on central AC or heat pumps. Advanced tech like VRF systems and smart thermostats are popular here.
• Europe: also accounting for 30% of the global market, Europe is expected to grow at a similar pace to the Americas. Energy efficiency is a top priority due to strict regulations and high energy costs. Heat pumps are becoming more common, and district heating systems – which distribute heat from central plants to multiple buildings – are gaining ground.
• Asia Pacific: matching Europe with 30% of the market but growing faster at 7% annually from 2024 to 2032. Rapid urbanisation, rising incomes, and government support for sustainable infrastructure are fuelling this growth, making Asia Pacific the fastest-growing region in HVAC.