LBNL- XXXX

Market Assessment of Multi-split Air Conditioning Systems in the Chinese and Global Market

Authors:

Nina Khanna, Chao Ding, Won Young Park, Nihar Shah, and Jiang Lin

Energy Analysis and Environmental Impacts Division Lawrence Berkeley National Laboratory International Energy Analysis Department

April 2019

This work was supported by Energy Foundation China and the Kigali Cooling Efficiency Program under Lawrence Berkeley National Laboratory Contract No. DE-AC02-05CH11231.

DISCLAIMER

This document was prepared as an account of work sponsored by the United States Government. While this document is believed to contain correct information, neither the United States Government nor any agency thereof, nor The Regents of the University of California, nor any of their employees, makes any warranty, express or implied, or assumes any legal responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by its trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof, or The Regents of the University of California. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof, or The Regents of the University of California. Ernest Orlando Lawrence Berkeley National Laboratory is an equal opportunity employer.

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ContentsListofFigures.............................................................................................................................................................................iv ListofTables................................................................................................................................................................................v ExecutiveSummary..................................................................................................................................................................vi 1. Introduction..........................................................................................................................................................................1 2. MethodologyandDataSources....................................................................................................................................2 3. MarketOverviewandDrivers......................................................................................................................................2 4. ChinaMarketAssessment..............................................................................................................................................8

4.1MarketDistributionbySizeandConfigurations...........................................................................................8 4.2MarketDistributionbyEfficiency....................................................................................................................10

4.2.1Model-weighteddistributionbyenergyefficiency.................................................................10 4.2.2Sales-weighteddistributionbyenergyefficiency...................................................................12

4.3MarketDistributionbyPrice..............................................................................................................................15 4.4ManufacturingIndustryOverview...................................................................................................................16

5. AssessmentoftheGlobalMarket.............................................................................................................................17 5.1GlobalMarketTrends............................................................................................................................................17 5.3EmergingTechnologyTrends............................................................................................................................19

5.3.1EfficiencyImprovement.....................................................................................................................19 5.3.2RefrigerantChoiceandAlternativeLow-GWPRefrigerants..............................................19

6. Conclusions........................................................................................................................................................................21 References..................................................................................................................................................................................24

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ListofFigures

Figure1.RegionalSharesandDistributionofMulti-splitACMarket.................................................................3 Figure2.AverageRoomAirConditionerHouseholdOwnershipRatebyRegion,2016and2017.......4 Figure3.Comparisonof2016RegionalSharesofDemandforACsbyEnd-useSectors............................5 Figure4.MonthlyChineseCommercialMulti-SplitACProductionValueandYear-on-YearGrowth..6 Figure5.VRFGrowthinChina’sCommercialACMarket.........................................................................................7 Figure6Distributionofinstalledresidentialmulti-splitcapacitybycapacityofoutdoorunits............8 Figure7.DistributionofIndoorUnit(IU)Configurationsfor16kWVRFSystem.........................................9 Figure8.2012-2016Model-weightedAverageIPLVforMulti-splitACs,inW/W.....................................11 Figure9.2015and2016Fixed-speedMulti-splitACSalesDistributionbyEnergyEfficiencyGrade13 Figure10.2012-2016ChangeinFixed-SpeedMulti-SplitACEnergyEfficient(Grades1and2)Share

ofSales.................................................................................................................................................................................14 Figure11.2015and2016Variable-speedMulti-splitACSalesDistributionbyEnergyEfficiency

Grade....................................................................................................................................................................................15 Figure12.2015and2016DigitalScrollMulti-splitACSalesDistributionbyEnergyEfficiencyGrade

.................................................................................................................................................................................................15 Figure13.Chinese2017Multi-splitACModelSharesbyMajorManufacturers.........................................16 Figure14.ComparisonofGlobalandChineseVRFSalesfrom2009–2016,inthousands...................17 Figure15.GlobalVRFSalesMarketSharebyRegionin2016.............................................................................18 Figure16.China'sCommercialMulti-SplitACExportsbyMonth,2016-2018..........................................18

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ListofTables

Table1.ComparisonofChangeinMarketSharesofCommercialACProductCategories,2015-20177 Table2.DistributionofIndoorUnitConfigurationsforCommonResidentialVRFSystemwith1

OutdoorUnit,5IndoorUnits........................................................................................................................................9 Table3.China’sCurrentMEPSandMandatoryEnergyLabelEfficiencyThresholdsforMulti-split

Systems................................................................................................................................................................................10 Table4.2015and2016AverageEnergyEfficiencyLevelofChineseVariable-speedMulti-split

Models..................................................................................................................................................................................12 Table5.2015and2016Sales-weightedAverageEfficiencyLevelofChineseMulti-splitSystemsby

ProductSubcategory.....................................................................................................................................................13 Table6.MostEfficientCertifiedDuctlessVRFSystemsbyProductCategoryinU.S.AirConditioning,

HeatingandRefrigerationInstituteDatabase....................................................................................................19 Table7.2017RefrigerantSharesforCommercialPackagedandVRFACSystemsbyRegion.............20 Table8.ProbabilityofFireAccidentforR32VRFSystemunderSpecifiedIndoorandOutdoor

OperationCases...............................................................................................................................................................21

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ExecutiveSummary

Commercialairconditioningsystemspresentakeyopportunityforreducinggreenhousegasemissionsbyreducingfossilfuel-basedelectricityconsumptionthroughimprovedefficiencyandthroughtransitioningtorefrigerantswithlowgreenhousegaswarmingpotential(GWP).Inparticular,variablerefrigerantflow(VRF)isarapidlygrowingcategoryofmulti-splitairconditioning(AC)systemsthatnowaccountsforaquarterandmorethanhalfoftheglobalandChinesemarkets,respectively.Thisreportreviewsthemulti-splitACmarketinChinaanditskeydemandgrowthdrivers,followedbyadetailedmarketassessmentoftheChinesemulti-splitmarketbysizeandcapacity,byefficiencylevels,andbymanufacturers.Asummaryoftheglobalmarketandrecenttechnologytrendsandrefrigerantchoicesisalsoprovidedtoinformrevisionofthe2008Chinaminimumenergyperformancestandards(MEPS)formulti-connectedACequipmentandrevisionofMEPSformulti-connectedACequipmentglobally.China’scommercialairconditioningmarketisdrivenbythecountry’seconomicgrowth,strongrealestatemarketandreboundingconstructionmarket.VRFsareincreasinglyreplacingchillers,andarealsodrivenbydemandfromexpandinghomeimprovementandfurnishingsales,e-commerceplatformsandgrowingdemandfromyoungergenerationsofhomeowners.TheregionaldistributionofVRFsalesremainfairlysteady,withhalfofthesalescomingfromtheeconomicallydevelopedEasterncoastalregionwhichstillhassignificantpotentialforgrowth,followedbythehotandtropicalSouthernregion.NorthandCentralChinatogetheraccountsforanotherquarterofsales.Intermsofspecificend-usesectors,EastChinadominatesintermsofresidential,officeandcommercialACdemand,whileNorthandSouthChinafacestrongerdemandforcommercialACsthanresidentialACs.Asaresultofthesedemanddrivers,VRFshavegrownfromthesecondlargestproductcategoryamongstpackagedmulti-splitACproductsintermsofmarketvalue,with11%marketsharein2015growingto50.3%marketsharein2017withtotalmarketvalueof40billionRMB.AfterVRFs,chillersandunitaryACsarethesecondandthirdlargestproductcategories.Forbothresidentialandcommercialmulti-splitACs,commonconfigurationsincludelargeoutdoorunitcapacitywith4ormoreindoorunitsofvaryingcapacities.ForresidentialVRFs,themostcommonconfigurationincludes5indoorunitswitheachmainroomoftheresidence(includingbedroomsandlivingrooms)havingoneindoorunitwhileforcommercialVRFs,mini-VRFsystemwith4indoorunitsarethemostcommon.DefiningthespecificnumberofindoorunitsfortestinginthetestmethodsthataccompanytherevisedMEPSwillhelpaddresspossibleefficiencycomparabilityissuesbetweenmodelswithdifferentconfigurationsandnumberofindoorunits.Intermsofefficiency,ChinaintroduceditsMEPSformulti-splitACsthatincludeVRFsystemsinthesameproductcategoryasfixed-speed,variable-speedanddigitalscrollunitsin2008.ThiscurrentMEPSappliestoallunitswithnominalcoolingcapacityof28,000Worgreater,andusesIntegratedPartLoadValue(IPLV)forcoolingastheenergyefficiencymetric.Since2012,marketsurveydatashowsthatthemodel-weightedefficiencyofallproductshasincreasedbymorethan50%varyingbythecapacity.Forvariable-speedmulti-splitunitsinparticular,themodel-weightedaverageefficiencyisrelativelyhighintherangeofIPLVcoolingvaluesof7to8W/Win2015butcouldincludeprototypemodelswithlimitedavailability.In2016,however,themodel-weightedaverageefficiencydeclinedslightlyinforthesmallestcoolingcapacityclassassome

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lowerefficiencymulti-splitmodelsenteredthemarket.IntheChinesemulti-splitACmarket,thereisasignificantdifferenceinthesalesdistributionbyenergyefficiencygradeasdefinedbytheChinaEnergyLabelefficiencythresholdsincludedinthe2008MEPSforfixed-speedmulti-splitACsversusvariable-speedanddigitalscrollmulti-splitACs.Whiletheaverageefficiencyofvariable-speedanddigitalscrollmulti-splitunitsarealreadyintherangeofGrade1(mostefficient)efficiencyasdefinedbythe2008MEPS,fixed-speedunitsaregenerallyintherangeofGrade3and4efficiency.Therewaslittlechangeinthesalesdistributionbyefficiencyclassforallthreeproducttypes.Thissuggeststhatwiththeexceptionoffixed-speedmulti-splitsthatcontinuetolaginefficiencyimprovements,existingefficiencythresholdsbasedonthe2008MEPSarenolongereffectiveindifferentiatingamongtheefficienciesofvariable-speedanddigitalscrollmulti-splitssoldonthemarket.Intermsofthelandscapeformanufacturers,theChinesemulti-splitACmarkethashistoricallybeendominatedbymajorJapanesebrandsincludingDaikin,Hitachi,MitsubishiElectric,andToshiba,whichhadthelargestmarketpresenceandcontinuetoshowrobustgrowth.Overthelastfewyears,however,JapanesebrandsarefacinggrowingcompetitionfromdomesticChinesemanufacturersincludingGree,Midea,andHaierwithacombinedmarketshareofnearly30%in2017.ThemarketisalsoseeingverysmallbutgrowingsharesfromAmericanbrandsincludingJohnsonControls,Carrier,Trane,andYorkandMcQuayandEuropeanbrandssuchasDunham-bushandBosch.Globally,ChinahasalsobeenakeydriverofglobalVRFsales,reachingover1.3millionsystemsin2016.In2016,ChinaaccountedforthemajorityofglobalVRFsaleswith54%share,followedbyEurope,Japan,andSouthKorea,eachwithsharesofaround10%.Intermsofglobaltechnologytrends,thehighestefficiencyVRFsystemsintheU.S.markethaveachievedIntegratedEnergyEfficiencyRatio(IEER)ofover9W/WandEnergyEfficiencyRatio(EER)ofover4W/Wforunitsinthe20to28kWcoolingcapacityrange.MitsubishiElectrichasalsointroducedthefirsthybridVRFsystemthatutilizesahybridbranchcontrollertoprovidesimultaneousheatingandcoolingwithheatrecovery,withamodelintroducedinMay2018fortheUnitedKingdommarketthatusesalternative,low-GWPR-32refrigerant.BecauseR32isconsideredamildlyflammablebutsaferefrigerant,researchgroupssuchastheJapanSocietyofRefrigerationandAirConditioningEngineershavestartedtoconductriskassessmentstounderstandtheprobabilityoffireincidentsunderdifferentscenarios.FurtherresearchwillhelpaddresspossiblesafetyconcernswithusingR32asanalternativerefrigerantforVRFsystemsinthefuture.Weconcludethat:

� Demandformulti-splitsisgrowingrapidlynotonlywithinChinaasaresultofstrongeconomicgrowthandcommercialbuilding(aswellassomeresidential)demandforcoolingservices,butisalsodrivingglobalVRFsales.

� Domestically,Chinesemanufacturersareemergingasnewplayersinthemulti-splitACmanufacturingindustry.

� Marketsurveydatashowthattheaverageenergyefficiencyofallthreetypesofmulti-splitACsystemshavefarsurpassedtheexisting2008MEPSefficiencyrequirements,suggestingthatmorestringentrequirementsareneededtoreflectrapidlychangingmarketconditions.

� Improvingthestringencyofmulti-splitACMEPSinChinawillbringsignificanteconomic,energyandemissionsbenefitstoChinaandgloballyastheChinesemulti-splitmarket

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continuestoexpand.� Includingspecificationsontheconfigurationandnumberofindoorunitsinthetestmethod

willhelpaddresspossiblevariationsinenergyusefromthevaryingnumberofindoorunitsbetweendifferentproductmodels.

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1. Introduction

Afterresidentialcooling,commercialairconditioningunitspresentsanotherkeyopportunityforreducingdirectgreenhousegasemissionsbyreducingfossilfuel-basedelectricityconsumptionbyreducingindirectgreenhousegasemissionsthroughtransitioningtorefrigerantswithlowgreenhousegaswarmingpotential(GWP).Globally,coolingaccountsforabout20%ofbuildingelectricityconsumption(IEA,2018).InChina,coolingisestimatedtoaccountfornearlyone-thirdofcommercialbuildingelectricityconsumption(LBNL,2018).Akeytechnologyintheglobalcommercialairconditioningmarketisvariablerefrigerantflow(VRF)systems,whichdiffersfromothersmallsplitsystemsinthatitincludesatleastoneinverter-controlledvariable-speedcompressorthatusesrefrigeranttodeliverheatingandcooling.Inrecentyears,VRFhasaccountedfornearlyaquarteroftheglobalcommercialairconditioningmarketandin2017,reachedmorethanhalfoftheChinesecommercialairconditioningmarket(ThorntonandWagner,2012;CAMAR,2018).VRFproductsarewidelyusedinChina,India,theEuropeanUnionandEasternEurope,withgrowingsharesintheU.S.marketaswell.VRFsystemsincludeoneormoreoutdoorcompressorunitsthatareeitherair-sourceorwater-sourceservingmultipleindoorfancoilrefrigerantevaporatorunits.Thespecificproductcategoryofcommercialcoolingsystemsanalyzedinthisreportisthemulti-splitsystem,ofwhichasubsetofproductsareconsideredVRFsystems.Thespecificproductdefinitionsconsideredinthisreportinclude:

Multi-splitsystem:Amechanicalrefrigerationairconditionerorheatpumpsystem,itconsistsofanoutdoorcompressor-containingunit,twoormoreindoorunitstosupplycooledorheatedairtothespacebeingconditionedwiththeoutdoorandindoorunitsbeingconnectedbyrefrigeranttubing.Theapplicationsaregenerallycommercial,butsomeinstallationsoccurinhigh-endresidentialbuildings.VRFMulti-splitsystem:Thissystemconsistsofequipmentinwhichthecooling(andheating)circuitstotheindoorunitsareoperatedandcontrolledindependently,allowingindividualzonecontrolandsimultaneousheatingandcooling.

ThisreportprovidesamarketassessmentofVRFandothertypesofmulti-splitcoolingunitsincludingfixed-speedanddigitalscrollmulti-splitunitsontheChinesemarket,withemphasisonthecommercialairconditioningmarketbutalsorecognizingresidentialmarketasadriverforVRFsales.Thisreportalsoincludessupplementaryinformationontechnologytrends(includingalternativerefrigerantswithlowgreenhousewarmingpotential)intheglobalmarket,toinformtherevisionofthe2008Chinaminimumenergyperformancestandards(MEPS)formulti-connectedair-conditioning(heatpump)equipment.Therestofthereportisorganizedasfollows:Section2summarizesthemethodologyandkeydatasourcesforthemarketassessment,followedbyanoverviewofthemulti-splitmarketinChinaandkeygrowthdriversinSection3.Section4providesdetailedmarketassessmentoftheChinesemulti-splitmarketintermsofdistributionbyunitsizeandconfigurations,byefficiencylevelsandbymanufacturers.Section5summarizestheglobalmarketforVRFsandthelatestemerging

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technologytrendsandalternativerefrigerantchoices.Section6concludesthereportwithkeyfindingsandimplicationsfortheMEPSrevision.

2. MethodologyandDataSources

Thismarketassessmentisbasedonamixofprimaryandsecondarydatasources,includingaggregatedataonmodelregistrationsfromtheChinaEnergyLabeldatabase,Chineseandglobalairconditioningindustryreports.Thekeyspecificdatasourcesofmarketdatapresentedthroughoutthisreportinclude:

1. BSRIAPublishedMarketingReportonLargePackagedAirConditionersinChina:this2016marketreportbytheBritishconsultingcompany,BSRIA,isbasedon16in-personinterviewsand22telephoneinterviewswithvariousindustrystakeholders.

2. ChinaCentralAir-ConditioningMarket2017AnnualReport(inChinese)publishedbyMechanicalandElectricalInformationfortheCentralAirConditioningMarketmagazine:thisannualindustryreportisbasedonanalysisofdataobtainedfromupstreamsuppliers,industries,engineeringcompanies,andnationalandregionalretailers.

3. 2017ResearchReportontheActualOperatingConditionsofChina’sAirConditionerswrittenbyChengJianhongofChinaNationalInstituteofStandardization(CNIS):thistechnicalreportpublishedbyCNISisbasedonatechnicalandmarketsamplesurveyof200,000units.

3. MarketOverviewandDrivers

China’scommercialairconditioningmarkethasandcontinuestobedrivenbythecountry’srapideconomicgrowthandconstructionboom.In2017,China’stotalfixedassetinvestmentincreasedby7.2%comparedto2016levels,withnotablyhigheryear-on-yearincreaseof9.5%forinvestmentinthetertiarysector.TotalnationalinvestmentintheChinesecommercialrealestatemarketreached109.8billionRMBin2017,growingby7%comparedto2016levels(MEI,2018).Thisismostlydrivenbyrapidgrowthinthecentralandeasternregions.Alongsidethiscontinuedeconomicgrowth,airconditioningpenetrationintheChinesecommercialsectorisexpectedtogrowfrom56%in2014to60%by2018(Chu,2016).WithinthecommercialACsector,growthindemandformulti-splitunitsandVRFsinparticularareexpectedtobedrivenbyanexpandingrealestatemarketandareboundingconstructionmarket.VRFsareincreasinglyreplacingchillers,whichcontinuestofacedecliningmanufacturingmarketshares,inthecommercialsector.Additionally,strongdemandforhomeimprovementandfurnishingservices,theriseofe-commerceplatformsandgrowingdemandfromyoungergenerationarealsodrivingresidentialdemandforsmallmulti-splitACproducts(MEI,2018).Figure1belowshowsthegeographicdistributionofChina’smulti-splitACmarket,withmarketsharesshownforeachgeographicregionin2016and2017.Overall,therehasnotbeenanynotable

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changesinregionaldistribution1ofdemandformulti-splitAC.TheeconomicallydevelopedEasterncoastalregionholdsnearlyhalfofthedemandformulti-splitACsinChina,followedbythehotandtropicalSouthChinaregion.NorthandCentralChinatogetheraccountforaboutaquarterofmulti-splitACdemand,withhighershareoftotaldemandfromNorthChinathanCentralChina.Fromalong-termperspective,theEastChinaregionstillhasenormouspotentialforgrowth,withakeydriverbeingtheincreasinglypopularresidentialdécorretailmarket(MEI,2018).

Figure 1. Regional Shares and Distribution of Multi-split AC Market Source:MEI,2018Intermsofdemandforairconditioningproductsbyend-usesectors,Figure3showstheregionalsharesforACdemandinresidentialsector,officebuildingsubsector,othercommercialsectors,aswellasforVRFsspecifically.TheregionalmarketsharesaregenerallysimilaracrossACend-usesectors,withafewexceptions.TherelativelyaffluentandrapidlygrowingEastChinaregiondominatesintermsofregionalmarketsharesforresidentialACdemand,aswellasofficeandothercommercialACdemand,andVRFdemand.EastChinaaccountsforbetween40%toover50%ofnationaldemand,butonlyaccountsfor29%ofnationalpopulationWithinEastChina,theHotSummerColdWinterclimatezoneisalsooneofthemostdenselypopulatedandeconomicallydevelopedregionswithrapidlygrowingdemandforcoolinginsummerandheatinginwinterforresidentialbuildings(Zhangetal.2018).TheuseofVRFsinresidentialbuildingsisalsoincreasinginthisspecificclimatezonebecauseofvariousfactors,including:highperformanceatpart-loadconditions,zonalthermalcomfortcontrol,designandappealtoconsumers,easeofmaintenance,andlowerminimumoperatingtemperaturesthatmakeheatpumpsmoreappealing(Zhangetal.2018).Thehighdemandforcooling,particularlyinresidentialbuildings,isreflectedinthemuchhigherairconditionerownershipratesinallprovincesandmunicipalitiesconsideredintheEastChinaregionwhencomparedtootherregions,asshowninFigure2.

1 Regional groupings are defined in MEI, 2018 as follows: East China includes Shanghai, Jiangsu, Zhejiang and Anhui; North China includes Beijing, Tianjin, Hebei, Shandong, Shanxi, Inner Mongolia; South China includes Guangdong, Fujian, Jiangxi, Hainan, Guangxi; Central China includes Henan, Hubei, Hunan; Southwest includes Chongqiang, Sichuan, Guizhou, Yunnan; Northwest includes Shaanxi, Xinjiang, Ningxia, Gansu, Qinghai; and Northeast includes Liaoning, Jilin, Heilongjiang

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Figure 2. Average Room Air Conditioner Household Ownership Rate by Region, 2016 and 2017 Source:datafromNBS,2018basedonregionalgroupingsdefinedinMEI,2018However,unlikeforresidentialACdemand,NorthandSouthChinahavestrongerdemandforcommercial(includingoffice)ACproductsandVRFs,withmuchhighermarketsharesfortheseproductswhencomparedtotheregionalsharesforresidentialACs.Basedonasurveyof200,000multi-splitunitsacrossChina,MEI2018foundthatSouthChinahasthesecondlargestregionalshareforofficeACandVRFmarkets,butthesecondsmallestshareforresidentialACs.Thissuggeststhataseconomicgrowthcontinuesintheseregions,residentialdemandforACs(includingforVRFs)willlikelygrowasresidentialACownershipcontinuestoincrease,particularlyinspecificprovinceswherehouseholdACownershipratesarebelowthenationalaverage.

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Figure3.Comparisonof2016RegionalSharesofDemandforACsbyEnd-useSectorsSource:MEI,2018Asaresultofthesemacroeconomicandmarketdrivers,commercialmulti-splitunitsincludingVRFshavebeengrowingrapidlyoverthelastfewyears.Thedomesticoutputofmulti-splitACshaveincreasedyear-on-yearforeverymonthoverthelastthreeyears,withmuchhigheroutputinthefirstfourmonthsof2018comparedtotheprevioustwoyears.

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Figure 4. Monthly Chinese Commercial Multi-Split AC Production Value and Year-on-Year Growth Source:ChinaIOL.com,2018,http://data.chinaiol.com/ecdata/index#Ofallthemulti-splitACproducttypes,VRFshavebeengrowingthefastestoverthelastfewyears.In2015,VRFswerethesecondlargestproductinChina’slargepackagedandcentralplantmarketintermsofitsmarketsharebyvalueandaccountedforUS$3.6billionmarketvalue(Chu,2016).Byvolume,VRFsaccountedforonly1.5%ofthelargepackagedandcentralplantmarket2in2015.However,from2015to2017,VRFshaveundergonesignificantrapidgrowthandnowaccountsformorethanhalfofthecommercialACindustryintermsofmarketvalueasseeninFigure5below.Withdouble-digitannualgrowthratesofmorethan20%from2015to2016,and2016to2017,VRFsreached50.3%marketshareoftheChinesecommercialACmarket,withtotalvalueof40billionChineseRMB.

2 Packaged and central plant products include windows, portable units, splits, indoor packaged and rooftops, chillers, air handling units, and fan coils.

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Figure5.VRFGrowthinChina’sCommercialACMarketSource:MEI,2018Table1comparesthechangeinmarketsharesofdifferentcommercialACproductcategoriesfrom2015through2017inChina,comparedtoVRFs.AfterVRFs,chillersandunitaryACsarethesecondandthirdlargestproductcategories.However,mosttypesofchillersexceptmodularunitsarelosingmarketsharestoVRFs,alongwithdecliningsharesinheatpumpACs,terminalACunitsandlithiumbromideACunits.ThecontinuedgrowthinVRFsalesandmarketsharessuggestthatthisproductcategorywillbethemostimportantininfluencingthefutureenergyconsumptiontrendsofthecommercialACsector.Table 1. Comparison of Change in Market Shares of Commercial AC Product Categories, 2015-2017

ProductCategoryType

SubcategoryType 2015 2016 2017

PercentagePointChangeinMarketSharefrom2016

Chiller

Centrifuge 6.82% 6.59% 5.65% -0.94%Air-cooledscrew 1.58% 1.68% 1.50% -0.18%Water-cooled

screw 7.20% 6.03% 4.61% -1.42%

Modularunits 6.90% 7.68% 7.76% 0.08%

VRF Variablemulti-split 41.94% 45.92% 50.27% 4.35%

Lithiumbromideunit Lithiumbromide 2.48% 2.20% 1.82% -0.38%

Water/groundsourceheatpump(incl.water-loop)

Water/groundsourceheatpump(incl.water-loop)

2.58% 2.54% 1.87% -0.67%

Unitaryunit Unitaryunit 18.60% 16.53% 16.56% 0.03%Terminalunit Terminalunit 9.45% 9.38% 8.58% -0.80%

Source:MEI,2018

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TherestofthisreportwillfocusprimarilyonrecentchangesintheVRFmarketdistribution,within-depthanalysisofVRFmarketdistributionbycapacityandunitsize,byefficiency,andoverviewoftheVRFmanufacturingindustrysituationinChina.

4. ChinaMarketAssessment

4.1MarketDistributionbySizeandConfigurationsAsseeninFigure6below,mostoftheresidentialmulti-splitACshaveverylargeoutdoorunitcapacities,withmorethanhalfoftheinstalledmarketsharedominatedbysystemswith14orhigherkWcapacityforoutdoorunits(Cheng,2017).

Figure6Distributionofinstalledresidentialmulti-splitcapacitybycapacityofoutdoorunitsSource:adaptedfromCheng,2017Figure7showsthedistributionofindoorunits(IUs)configurationforcommonmulti-splitsystemwith16kWoutdoorunitcapacity.Itcanbeobservedthatmostofthe16kWsystemshavefiveindoorunits.ForresidentialVRFs,residentstypicallyinstalloneindoorunitineachroomoftheresidence,particularlyinbedroomsandthelivingroom.Sincemosturbanfamilieshavethreebedroomsandtwocommonrooms(e.g.,livingroom,diningroom,kitchen)orfourbedroomsandtwocommonrooms,themostcommonlyinstalledsystemsinclude1~1.5horsepowerIUforsmallerrooms(suchasbedroomandreadingroom)anda2.5~3horsepowerIUortwo1.5~2.5horsepowerIUsforthecommonroom.

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Figure 7. Distribution of Indoor Unit (IU) Configurations for 16kW VRF System Source:adaptedfromCheng,2017Table2showsthedistributionsharesofindoorunitconfigurationsforamulti-splitsystemwithoneoutdoorunitandfiveindoorunits,themostcommonresidentialsystemseeninFigure6.

Table 2. Distribution of Indoor Unit Configurations for Common Residential VRF System with 1 Outdoor Unit, 5 Indoor Units

OutdoorUnit

Capacity

NumberofOutdoorUnits

IndoorUnitConfigurations Percentage

16kW 5

1x3hp+2x1.5hp+2x1hp 9.48%1x3hp+1x2hp+1x1.5hp+2x1hp 9.42%

1x3hp+3x1.5hp+1x1hp 7.35%1x2.5hp+1x2hp+2x1.5hp+1x1hp 6.82%1x2.5hp+1x2hp+1x1.5hp+2x1hp 6.08%1x3hp+1x2hp+2x1.5hp+1x1hp 5.87%1x2.5hp+2x1.5hp+2x1hp 5.01%1x2.5hp+3x1.5hp+1x1hp 4.56%1x3hp+1x1.5hp+3x1hp 3.79%

1x2.5hp+2x2hp+1x1.5hp+1x1hp 3.00%1x3hp+4x1.5hp 2.76%

1x3hp+2x2hp+2x1hp 2.64%1x3hp+1x2hp+3x1hp 2.25%1x2.5hp+2x2hp+2x1hp 2.22%

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2x2hp+2x1.5hp+1x1hp 2.21%1x2.5hp+1x2hp+3x1.5hp 2.18%

Others 13.73%Note:1horsepower(hp)=745.7WSource:Cheng,2017Forthecommercialcoolingsector,anecdotalobservationsfrommajormanufacturers’experiencessuggestthatthemostcommoncommercialVRFsystemsaremini-VRFsystemswith1outdoorunitand4indoorunits.Oneexampleofapopularmini-VRFsystemisHaier’ssystem,whichconsistsof1outdoorunitwith48,000Btu/hcapacityand4indoorunitswithtwo9000Btu/hunits,one12,000Btu/hunit,andone18,000Btu/hunit(CSC,2018).However,giventhevariationinconfigurationsamongstexistingmodelsonthemarket,itwouldbeimportanttoincludespecificationsrelatedtotheconfigurationandnumberofindoorunitsinthetestmethodthatisusedtosettheefficiencymetricsandthresholdsintherevisedMEPS.Thiswillhelptoensurethevariationinenergyusefromvaryingnumberofindoorunitsisaddressed,andensurecomparabilityinefficiencybetweenmodelsonthemarketandtheefficiencythresholdsdefinedintherevisedMEPS.4.2MarketDistributionbyEfficiencyChina’sminimumenergyperformancestandardwithmandatoryenergyinformationlabelingefficiencythresholdsforGrade1(mostefficient)toGrade5(leastefficient)formulti-splitsthatincludeVRFsystemswasadoptedin2008.InthisGB21454-2008standard,allmulti-splitsystemsarecategorizedinthesameproductcategory,andincludefixed-speed,variable-speedanddigital-scrollmulti-splitunits.TheefficiencymetricisIntegratedPartLoadValue(IPLV)forcooling,whichdescribestheenergyperformanceofanairconditionerunderpart-loadconditions.Table 3. China’s Current MEPS and Mandatory Energy Label Efficiency Thresholds for Multi-split Systems

Nominal Cooling Capacity(CC) [W]

IPLV (C) Level [W/W] Grade 5 (MEPS)

Grade 4 Grade 3 Grade 2 Grade 1

CC≤28,000 2.80 3.00 3.20 3.40 3.60 28,000<CC≤84,000 2.75 2.95 3.15 3.35 3.55

CC>84,000 2.70 2.90 3.10 3.30 3.50 Source:GB21454-20084.2.1Model-weighteddistributionbyenergyefficiency

Sincetheadoptionofthe2008MEPS,themodel-weightedefficiencyofallproductsproducedinChinahascontinuedtoincreasefrom2012through2016acrossthethreemaincoolingcapacitygroupsbasedonrecentmarketsurveydatapresentedinCheng,2017.Forthesmallestunitswithcoolingcapacitylessthan28kW,themodel-weightedefficiencyofsurveyedproductsbasedonthemetricofaverageIntegratedPartLoadValue(IPLV)usedinthestandardincreasedby53%from

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4.77W/Win2012to7.31W/Win2016.Forlargerunits,theefficiencyimprovementamongstsurveyedproductswasslightlygreater,withIPLVincreasingby65%from5.0W/Win2012to8.23W/Win2016forunitswithcoolingcapacityofbetween28kWand84kW,andincreasingby64%fromIPLVof4.83W/Win2012to7.92W/Win2016forunitswithcoolingcapacitygreaterthan84kW.Theincrementalimprovementsinmodel-weightedaverageIPLVacrossthesethreecapacitygroupsareshowninFigure8.

Figure8.2012-2016Model-weightedAverageIPLVforMulti-splitACs,inW/WSource:adaptedfromCheng,2017Table4detailsthe2015and2016model-weightedaverageIPLVefficiencyvaluesaswellastheminimumandmaximumIPLVvaluesofvariable-speedmulti-splitmodelsontheChinesemarket.Asseeninthetable,thereisawiderangeofIPLVs,particularlyonthelow-endofefficiencyvalues,ofthemodelsavailableontheChinesemarket.From2015to2016,thelowestIPLVvalue(i.e.,leastefficient)ofmodelsregisteredonthemarketactuallydroppedfortwoofthethreecapacityclasses,from4.6W/Wto3.95W/Wforunitswithcoolingcapacityoflessthan28kW,andfrom4.8to3.56W/Wforunitswithcoolingcapacitygreaterthan84kW.Forunitswithcoolingcapacityoflessthan28kW,therewasalsoadeclineinthemodel-weightedaverageefficiencybetween2015and2016,withtheaverageIPVLdroppingfrom7.75W/Win2015to7.31W/Win2016.Thissuggeststhatforunknownreasons,evenlowerefficiencymulti-splitmodelsenteredthemarketin2016.

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Table 4. 2015 and 2016 Average Energy Efficiency Level of Chinese Variable-speed Multi-split Models

CC≤28000W 28000W<CC≤84000W CC>84000W

IPLV(W/W)

2015

Min 4.60 4.80 5.00Model-weighted

Average7.75 7.95 7.10

Max 9.50 9.20 7.55

2016

Min 3.95 3.56 6.00Model-weighted

Average7.31 8.23 7.92

Max 9.50 9.20 8.55

2008MEPS

Grade5/MEPSrequirement

2.80 2.75 2.70

Source:Cheng,2017Itshouldbenotedthatthemodel-weightedaverageefficienciesincludedinthesurveydatamayincludeveryhigh-efficiencyprototypemodelsregisteredintheChinaEnergyLabeldatabasethatmayhavelimitedavailabilityonthemarket.Inaddition,theenergyefficiencylevelsofVRFunitsareonlydirectlycomparablebetweenmodelswiththesameindoorunitconfigurations,butthereiscurrentlynodataonindoorunitconfigurationsintheChinaEnergyLabeldatabase.Nevertheless,thegeneraltrendshownbythesurveydataonmodel-weightedaverageefficienciesandthepresenceandavailabilityofhigherefficiencyvariable-speedmodelsacrossallthreecapacityclassesontheChinesesuggestthatthecurrentmarkethasmovedfarbeyondthecurrentMEPSlevels.OnechallengeisthatthecurrentMEPSsetsthesameminimumefficiencyequipmentforthreeproducttypesoffixed-speed,digitalscrollandvariable-speedmulti-splitunits,andmoreefficientvariable-speedunitsfacethesameefficiencyrequirementsaslessefficientfixed-speedunits.ThissuggeststhathavingmoreambitiousMEPSrequirementsandpotentiallyaseparateproductcategoryMEPSforvariable-speedmulti-splitscanhelpensuretherevisedMEPSrequirementsareeffectiveandaccuratelyreflectcurrentmarketsituations.BasedonthecurrentMEPS,dependingonthecapacityclasssize,thereissignificanttechnicalimprovementpotentialofuptoorevenbeyondILPVvaluesof7-8W/Wforvariable-speedmulti-splits,fromthecurrentMEPSIPLVrequirementsof2.7–2.8W/W.4.2.2Sales-weighteddistributionbyenergyefficiency

IntheChinesemulti-splitACmarket,thereisasignificantdifferenceinthesalesdistributionbyenergyefficiencygradeasdefinedbytheChinaEnergyLabelefficiencythresholdsincludedinthe2008MEPSforfixed-speedmulti-splitACsversusvariable-speedanddigitalscrollmulti-splitACs.Specifically,Grade1representsthemostefficientproductswithGrade5representingtheleastefficientproductsasdefinedspecificallybytheMEPSefficiencyrequirement,andGrade1and2consideredefficientproductsunderthevoluntaryefficiencycertificationprogram.Table5comparesthesales-weightedefficiencylevelsofvariable-speed,digitalscrollandfixed-speedmulti-splitACunitsontheChinesemarketin2015and2016basedonanassumedaverage

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efficiencyrepresentedbythemodel’senergyefficiencygrade.BecausenospecificIPLVvalueswereavailablebysales,modelswereassignedtheminimumratedefficiencyfortheefficiencygradethemodelwasratedat.Forexample,aGrade1modelwouldbeassignedarepresentativeIPLVefficiencylevelof3.6.Thus,whiletheaverageefficiencyofvariable-speedanddigitalscrollmulti-splitunitsarealreadyintherangeofGrade1efficiencyasdefinedbythe2008MEPS,fixed-speedunitsaregenerallyintherangeofGrade3and4efficiency.Moredetailedmarketdistributionoftheseproductsbyefficiencygradearediscussedbelow. Table 5. 2015 and 2016 Sales-weighted Average Efficiency Level of Chinese Multi-split Systems by Product Subcategory

Sales-weightedEfficiency Variable-speed DigitalScroll Fixed-speedCoolingIntegratedValue

(制冷综合性能系数)[W/W]2015 3.6 3.50 2.902016 3.6 3.55 3.30

Source: Cheng, 2017 Forfixed-speedmulti-splitACs,mostoftheproductssoldinboth2015and2016arethelowerenergyefficiencygrades,withthemajorityofsalesbelongingtoGrade3andGrade4products.DespiteaslightincreaseintheshareofGrade2productssoldfromaround10%in2015to11.5%ofthemarketin2016,therearenosalesforhighlyefficientGrade1fixed-speedmulti-splitACs.TherelativelyslowincreaseinGrade2’sshareoffixed-speedmulti-splitACsalesoverthelastfiveyearsisalsoshowninFigure10.Nevertheless,thesales-weightedefficiencyoffixed-speedmulti-splitACshasalsoimprovedovertimeandisnowhigherthantheMEPSIPLVrequirementsof2.7–2.8W/Wforthedifferentcapacityclasses.

Figure9.2015and2016Fixed-speedMulti-splitACSalesDistributionbyEnergyEfficiencyGradeSource:adaptedfromCheng,2017

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,.Figure10.2012-2016ChangeinFixed-SpeedMulti-SplitACEnergyEfficient(Grades1and2)ShareofSalesSource:adaptedfromCheng,2017

Forvariable-speedanddigitalscrollmulti-splitACunits,theoppositeistrueforACsaleswherealloftheproductssoldintheChinesemarketfrom2015to2016arealreadyenergyefficientproducts,withthevastmajorityqualifyingasGrade1productsasseeninFigure10andFigure12.Infact,thereisverylittlechangeintheefficiencydistributionofproductssold,withonlyaveryslightdecreaseintheshareofGrade2productsbetween2015and2016.Thisindicatesthatbasedonthe2008energyefficiencylabelingthresholdsformulti-splitACs,themarketisalreadyfullysaturatedwithGrade1productsandthattheseexistingefficiencythresholdsarenolongereffectiveindifferentiatingbetweenthedifferentefficienciesofproductssoldonthemarket.Thisalsoindicatesthattheexistingthresholdsforthedesignated“efficient”Grades1and2maybetoolow,asnearlyalloftheproductssoldhavealreadyexceededormettheseefficiencyrequirementsandthemodel-weightedaverageefficiencyshownpreviouslyinTable4aremuchhigherwithIPLVvaluesintherangeof7–8W/W.

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Figure11.2015and2016Variable-speedMulti-splitACSalesDistributionbyEnergyEfficiencyGradeSource:adaptedfromCheng,2017

Figure12.2015and2016DigitalScrollMulti-splitACSalesDistributionbyEnergyEfficiencyGradeSource:adaptedfromCheng,20174.3MarketDistributionbyPriceMarketdistributionbypricedatawasnotreadilyavailableinthemarketsurveyreportswefound.Completingthissectionwillrequireeitherinputsfromthein-the-fieldmarketsurveybeingconductedbyCNISinsupportoftheVRFMEPSrevision,and/orsamplesurveyofonlineretailers

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withinputbymanufactureronthemostcommonmodelsbeingsold.4.4ManufacturingIndustryOverviewIntermsofthelandscapeformanufacturers,themulti-splitACmarkethashistoricallybeendominatedbymajorJapanesebrandsincludingDaikin,Hitachi,MitsubishiElectric,andToshiba,whichhadthelargestmarketpresence.Japanesebrandscontinuetoshowrobustperformanceinthemarket,withDaikin,Hitachi,Toshiba,MitsubishiHeavyIndustries,MitsubishiElectric,MitsubishiHeavyIndustriesHaier,Fujitsu,andPanasonicallshowingsteadygrowthwithcontinuouslyexpandingmarkets.Amongthem,Hitachi,Toshiba,MitsubishiHeavyIndustriesHaierandothershaveachievedexplosivegrowthintheretailmarketandareleadingalongwiththedominantleader,Daikin(MEI,2018).

Overthelastfewyears,however,JapanesebrandsarefacinggrowingcompetitionfromdomesticChinesemanufacturersincludingGree,Midea,andHaier.AmericanbrandsincludingJohnsonControls,Carrier,Trane,YorkandMcQuayandEuropeanbrandssuchasDunham-bushandBoscharealsoenteringChina’sVRFretailmarketbyrecruitingdistributorsandsettingupretailstoresbutstillfacesbarriersintermsofbrandrecognition(Chu,2016,MEI,2018).Asaresult,theirindividualmarketsharesoftotalACmodelproductsbythesebrandsremainverysmallatunder2%asseeninFigure13.

Figure 13. Chinese 2017 Multi-split AC Model Shares by Major Manufacturers Morespecifically,Midea,GreeandHaieraretheleadingdomesticChinesebrands.In2017,theirdevelopmentisextremelyrapid,havinggainedacombinedmarketshareofnearly30%.Inaddition,otherdomesticbrandssuchasHisenseandTianjiahavealsoemergedintheChineseVRFmarketandachievedrelativelyfastgrowthin2017.Inaddition,Koreanbrands,suchasSamsungandLGhaveachievedrapiddevelopmentintheChineseVRFmarketandaresteadilyincreasingtheirmarketshares.

Daikin, 24.90%

Hitachi, 16.00%

Midea, 13.95%

Gree, 12.12%

Toshiba, 8.21%

Mitsubishi Electric, 3.20%

Hisense, 3.02%

Haier, 3.01%

Mitsubishi Heavy Industries, 3.01%

Mitsubishi Heavy Industries Haier, 2.40%

Johnson Controls York, 1.51%

Samsung, 1.40% McQuay, 1.19%Fujitsu, 1.10%

LG, 1.08%

Panasonic, 1.00% Tianjia, 0.85% Others, 2%

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Insummary,thetraditionalVRFmanufacturinglandscapeinChinahasnotchangedsignificantly,althoughthehistoricallyJapanesemanufacturingleadersarefacingincreasingcompetitioninthemarket.StrongJapanesebrandshaveformedadeep-rootedretailchannelbaseandcontinuetoexertstrongmarketinfluence.ThisisfollowedbyrapidlyexpandingdomesticChinesebrands,particularlyMideaandGree,followedbyKorean,EuropeanandAmericanbrands.

5. AssessmentoftheGlobalMarket

5.1GlobalMarketTrendsDrivenlargelyinpartbytheChinesemarket,globalVRFsaleshavealsobeenrisingsteadilysince2012asseeninFigure14.

Figure 14. Comparison of Global and Chinese VRF Sales from 2012– 2016, in thousands Source:JRAIA(2016)In2016,ChinaaccountedforthemajorityofglobalVRFsaleswith54%share,followedbyEurope,Japan,andSouthKorea,eachwithsharesofaround10%(Figure15).TheleadingglobalmanufacturersaresimilarasthemajormarketplayersinChina,includingDaikinwithabout30%marketshare,Hitachi,Toshiba,MitsubishiElectric,Midea,Gree,Haier,Samsung,andLG.

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Figure 15. Global VRF Sales Market Share by Region in 2016 Source:JRAIA,2016Chinaisalsobecomingamajorglobalexporterofcommercialmulti-splitACs,includingVRFs.Figure16showsChina’srisingexportvalueforcommercialmulti-splitACssince2016,withstrongexportsonamonthlybasisthroughouttheyear.Comparedtothedomesticmarketvalue,however,exportsarestillrelativelysmallwithlessthan10%ofthedomesticmarketvalue.ThisagainhighlightsChina’sdominanceasakeyconsumerofcommercialACproducts,especiallyVRFsystems,intheglobalmarket.

Figure 16. China's Commercial Multi-Split AC Exports by Month, 2016 - 2018 Source:ChinaIOL.com,2018

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5.3EmergingTechnologyTrends5.3.1EfficiencyImprovement

Overthepastyears,therehavebeenimportantadvancementsinVRFtechnologyandcomponents,includingin:

� Advancementininverter-drivenvariablespeedcompressors.� Directdrivenfanstovariablefrequencydrive,inverter-drivenfans� Betterheatexchangersurfaceswithmulti-segmentedcoils� Improvedcontrolsanddiagnostics� Betterrefrigerantchargeandoilmanagement

Thehighest-efficiencyVRFsystemsintheU.S.marketareprovidedbyglobalmanufacturersincludingSamsung,MitsubishiElectricandDaikinasseeninTable6.ForVRFsystemsinthe20to28kWcoolingcapacityrange,themostefficientductlessVRFsystemscertifiedintheAHRIdatabasehaveachievedIEERofover9W/WandEERofover4W/W.Table 6. Most Efficient Certified Ductless VRF Systems by Product Category in U.S. Air Conditioning, Heating and Refrigeration Institute Database

Manufacturer CoolingCapacity(kW)

IEER*(W/W)

EER(W/W)

HeatPumpAir-cooled Samsung 20 9.8 4.2

HeatPumpWater-cooledMitsubishiElectric

27 8.9 5.7

HeatRecoveryAir-cooled Samsung 20 9.8 4.2

HeatRecoveryWater-cooled

Daikin 27 9.0 NA

Source:selectedfrom~2,800modelsinU.S.AHRIDatabase,2017*Note:IEERisnotdirectlycomparabletoIPLV,asitbuildsuponIPLVasameasurethatexpressescoolingpart-loadEERefficiencyonthebasisofweightedoperationatvariousloadcapacities.

MitsubishihasalsointroducedthefirsthybridVRFsystemthatprovidessimultaneousheatingandcoolingwithheatrecovery(Mitsubishi,2018).Thishybridsystemusesrefrigerantbetweentheoutdoorunitandhybridbranchcontroller,andwaterbetweenthehybridbranchcontrollerandtheindoorunits.Italsorequiresachangeinproductconfigurationthatwillchangetheproductcategory,efficiencymetricandtestproceduresfromtraditionalvariable-speedorfixed-speedmulti-splitunits.5.3.2RefrigerantChoiceandAlternativeLow-GWPRefrigerants

InChina,74%ofpackagedACsoutsideofVRFsstilluseHCFC-basedrefrigerantswhileglobally,theHCFCshareofrefrigerantusevaryfrom0%inNorthAmerica,Japan,andOceaniato42%inOtherAsiaand60%intheMiddleEast.UnlikeothercommercialpackagedACsystemsthatstilluseamixofHFCandHCFCrefrigerants,VRFsalreadyuse100%HFC-basedrefrigerantsgloballyasseenin

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Table7.ForVRFs,thekeylow-GWPalternativerefrigeranttoreplaceR410AisR32.Table 7. 2017 Refrigerant Shares for Commercial Packaged and VRF AC Systems by Region

Non-VRFPackagedAC VRF

InverterRatio(%)

RefrigerantShares(%) Inverter

Ratio(%)

RefrigerantShares(%)

HFC HCFC Other HFC HCFC OtherChina 20% 26% 74% 0% 100% 100% 0% 0%Japan 99% 100% 0% 0% 100% 100% 0% 0%OtherAsia 26% 58% 42% 0% 96% 100% 0% 0%MiddleEast 10% 40% 60% 0% 100% 100% 0% 0%Europe 91% 100% 0% 0% 100% 100% 0% 0%NorthAmerica 2% 99% 0% 1% 100% 100% 0% 0%Oceania 99% 100% 0% 0% 100% 100% 0% 0%Source:JRAIA,2018Drop-intestsofDaikinVRFsystemsreplacingR410AVRFswithR32hasshown9.5%improvementinIEERwithimprovedheatingandcoolingcapacities,buthigherdischargetemperatures(TsujiiandImada,2013).TheoreticalanalysishavealsoshownimprovedCOPof5%forheatingand6%forcoolingmodewiththerefrigerantreplacementofR32forR410A(Yildrimetal.2017).InMay2018,MitsubishiElectriclauncheditsfirstR32-basedlarge-scalemulti-hybridVRFsystemfortheUnitedKingdommarket.SimilartothehybridVRFsystemdiscussedearlier,thisR32-basedmodelalsofeaturesatwo-pipeheatingandcoolingsystemwithahybridbranchcontroller(AirCentric,2018).ThishybridconfigurationandtheuseofR32enablessmallerchargesizesthathelpsreduceflammabilityrisksformildlyflammablealternativerefrigerants.R32isconsideredmildlyflammablebutsafewithanA2LsafetyclassificationunderASHRAEStandard34-2013’srefrigerantsafetyclasses.TheJapanSocietyofRefrigerationandAirConditioningEngineershaveconductedriskassessmentstudiesofmildlyflammablerefrigerants,includingacomprehensiveriskassessmentofR32useinVRFsystems(JSRAE,2015).TheirfindingsontheprobabilityoffireignitionareshowninTable8below,andindicatesworstcasescenariosforbothindoorandoutdooroperationwherethefireignitionprobabilityexceededallowablelevels.

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Table 8. Probability of Fire Accident for R32 VRF System under Specified Indoor and Outdoor Operation Cases

Source:JSRAE,2015

6. Conclusions

Chinaisemergingasakeydriveroftheglobalmarketformulti-splitcoolingsystems,particularlyforvariablespeedmulti-splits,andnowaccountsformorethanhalfofglobalVRFsales.Atthesametime,ChinesemanufacturerssuchasHaier,GreeandMideaarealsoemergingaslarger

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playersinthemulti-splitACmanufacturingindustry,particularlyforthedomesticChinesemarket,wheretheynowcloselyfollowthetraditionallystrongJapanesemanufacturersintermsofmarketshares.Allofthesetrendssuggestthatthereissignificantopportunitytocaptureenergysavingsandbothdirect(i.e.throughenergyuse)andindirect(i.e.throughrefrigerantchoice)greenhousegasemissionsemittedthroughtheuseofmulti-splitcoolingsystems.TheupcomingrevisionofChina’s2008MEPSformulti-splitACsystemsisonesuchopportunity.Bothmodel-weightedandsales-weightedmarketdatafromrecentmarketsurveysshowthattheaverageenergyefficiencyoffixed-speed,variable-speedanddigitalscrollmulti-splitairconditioningsystemsintheChinesemarkethavefarsurpassedthe2008MEPSlevels.Intermsofvariable-speedmulti-splitmodelsavailableonthemarket,boththeminimumefficiencyandmodel-weightedaverageefficiencylevelsofmodelsacrossallcapacitysizesalreadyfarsurpassedtheMEPSrequirements,withminimumIPLVcoolingvaluesrangingfrom3.5to6W/WandaverageIPLVcoolingvaluesrangingfrom7.3to8.2W/W.WhilesomeofthesemodelsmayonlybeprototypemodelsthatareregisteredintheChinaEnergyLabeldatabaseandnotyetavailableatacommercialscaleandmaydifferfromthemarketaveragebaselinemodelintermsofnumberofindoorunits,thereisageneraltrendofincreasingefficiencyacrossallcapacityclasses.Forbothvariable-speedanddigitalscrollunits,thevastmajorityofunitssoldhavealsoalreadyreachedefficiencyGrade1(mostefficient)productswithIPLVcoolingvaluesofaround3.6W/W,comparedtoMEPSIPLVcoolingvaluesof2.7to2.8W/W(dependingoncapacitysize).Forfixedspeedunits,thereisstillawidedistributionofefficiencygradesbeingsold,withclusteringofsalesmostlyinefficiencyGrades3and4,andsales-weightedaverageefficiencyof3.3W/WforIPLVcoolingvaluein2016.Thetrendoverthelastfewyearsreflecttheslowimprovementtowardsmoreefficientfixed-speedunits,butaverageefficiencylevelshaveneverthelesssurpassedthe2008MEPSlevelwithgreatertechnicalpotentialforimprovementremaining.Globally,themostefficientunitsontheU.S.marketandtheemergenceofnewtechnologiessuchasMitsubishi’shybridVRFsystemdemonstratethatthereisstillsignificantroomfortechnicalefficiencyimprovement.TheintroductionofnewVRFconfigurationssuchasthehybridsystemwillalsorequiremoreresearchtounderstandanddevelopnewefficiencymetricsandtestproceduresforthisnewproductcategory.Atthesametime,researchaddressingpossiblesafetyconcernsofR32,amildlyflammablelow-GWPalternativetothecurrentR410refrigerantusedinVRFsystems,aswellascommercialdevelopmentofthefirstR32-basedhybridVRFsystem,underscoretheexistenceoflow-GWPalternativerefrigerantsthatcanbeconsideredinChina’snewMEPSandenergylabelingrevisions.Thereforeweconcludethat:

� Demandformulti-splitsisgrowingrapidlynotonlywithinChinaasaresultofstrongeconomicgrowthandcommercialbuilding(aswellassomeresidential)demandforcoolingservices,butisalsodrivingglobalVRFsales.

� Domestically,Chinesemanufacturersareemergingasnewplayersinthemulti-splitACmanufacturingindustry.

� Marketsurveydatashowthattheaverageenergyefficiencyofallthreetypesofmulti-splitACsystemshavefarsurpassedtheexisting2008MEPSefficiencyrequirements,suggestingthatmorestringentrequirementsareneededtoreflectrapidlychangingmarketconditions.

� Improvingthestringencyofmulti-splitACMEPSinChinawillbringsignificanteconomic,energyandemissionsbenefitstoChinaandgloballyastheChinesemulti-splitmarket

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continuestoexpand.� Includingspecificationsontheconfigurationandnumberofindoorunitsinthetestmethod

willhelpaddresspossiblevariationsinenergyusefromthevaryingnumberofindoorunitsbetweendifferentproductmodels

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