What is in this article?:
Sixteen HVACR industry leaders say that although the industry faces some challenges, HVACR contractors who have solid business practices and stay trained on the latest technologies have good reason to anticipate a bright future.
What ancillary niches do you see having the biggest impact on the HVAC industry — whole house automation? Wireless controls? Fire protection and security? Something else?
Michael Albertson: Energy management integrated into home automation is another area of growth for residential HVAC. Consumers really like the idea of being able to monitor and control their comfort levels from wherever they’re sitting — whether that’s on the couch or on the flight home. The public is realizing that thermostats don’t have to be an eyesore mounted to the wall if they’re an app on your mobile device or tablet. What’s more, with time-of-day rates and critical-peak pricing becoming a reality at electric utilities around the country, these systems provide an opportunity to really affect your pocketbook in a positive way.
Gary Bedard: We live in a very exciting time. The pace of technological change is really incredible. Moore’s Law, the doubling of computing capacity every 18 months, has been true for nearly the last 60 years. The cumulative effect of this change has been enormous. I’ve already talked about the impact of controls. The fact is, the availability of lots of data will allow us to create better control algorithms to make equipment run longer, cost less to operate, and provide greater comfort. Anything that can reduce a contractor’s labor costs, like wireless, will flourish. Directionally, there will be some convergence in home automation, but to some extent it’s already occurring on a consumer’s smart phone even without complicated systems that draw independently supported systems together like security and HVAC.
If we speak more broadly about the contracting business and technology, let me be clear. The impacts will not be niche or ancillary; they will directly impact the core of all of our businesses. One of the amazing developments is the integration of technology with how we engage socially. Reputations are rapidly becoming much more transparent, and this will fundamentally change how contractors market. Word-of-mouth advertising, always the friend of the quality contractor, will now begin to move at light speed. In the home, expectations for how retail salespeople present solutions will also start to change. We’ll no longer be marketing to groups — it will be individuals. And, after the sale, contractors will begin to look at the individual pieces of equipment that they monitor and communicate with on-line as part of their installed network. As both a manufacturer and a distributor, that changes our world as well. We are investing in the kinds of tools and infrastructure to help us flatten our organization and interact and collaborate with our customers in deeper, faster and more impactful ways.
At Lennox, we have a real sense of urgency about investing and moving in these areas because these changes are not in the future — they’re happening now. It’s impacting both the product side and the service side of the business at the same time. Our customers can also differentiate themselves from their competitors, provide a better customer experience, diagnose and repair more efficiently and ultimately be more successful. It’s truly an exciting time!
Gary Clark: Historically it’s considered a niche in the HVAC world, but indoor air quality (IAQ) components can offer a dealer potential sales growth and provide their customer with many benefits. Unfortunately, the primary trigger for a consumer to enter the HVAC world is the breakdown of the current system. Dealers are often under time constraints to get the old unit functioning again or installing a new component or system so the opportunity for a full discussion of IAQ products isn’t the norm. Most homeowners, when shown the benefits of various IAQ products readily see the value in them, and will purchase. But homeowners cannot purchase an IAQ product or system if the dealer never mentions this option.
Brian Cobble: Ancillary niches that can have a substantial impact on the HVAC industry will be formed around the merging and integration of residential automation systems that have or are becoming more affordable and practical, particularly for new construction applications. This will likely require more collaboration and coordination amongst various contractor segments because of the crossover skills that will be required. It will also require an evolution of those systems to achieve greater standardization over time in what seems now to have been more of a proprietary approach to certain applications.
John Galyen: In the residential market, the ability of the HVAC system to connect to the home network -- enabling whole house automation, wireless and mobile platform control, and link to an increasingly smart grid have a big impact on the HVAC industry. Consumers are accustomed to being connected and having information control whenever and wherever, so it’s natural they want to control their home environment remotely. At the current pace of communication and connectivity, we can expect to see continuous development with opportunities for manufacturers, contractors and homeowners.
Jerry Hurwitz: Wireless controls.
Hugh Joyce: Wireless automation.
David Kesterton: All of the above. Generally speaking, our industry is slow to adapt. The whole-house connectivity/automation sector will slowly grow and depend on third-party groups and forward-thinking manufacturers and distributors to push this segment along. Ultimately, an educated consumer will help “pull” the product through, but measureable growth will depend on how quickly dealers embrace these changes.
Mark Kuntz: In keeping with the super-efficient building concept, we are also advancing the notion of being able to deploy heat pumps in very cold climates. And this goes against the way people think about heat pumps, but the technology has advanced to the point where you can develop useful heat from a heat pump at temperatures as low as -13F and do it at coefficients of performance COPs approaching 2. So even at -13F we’re twice as efficient as a conventional strip heater, and this is facilitating the move to all-electric systems in these super-efficient buildings.
It’s a technology that’s little-known, it’s emerging, and it’s providing a whole bunch of solutions to contractors who now don’t have to worry about back-up systems, and integrating controls to control back-up systems, whether they be electric or fossil-fired.
The second area we’re pretty excited about is something called augmented reality. It’s a technology we’ve pioneered in our factory settings, where a virtual image is superimposed against an actual environment. You can do it photographically or even with glasses that you wear. In the factory environment, it enables a smart system to detect if you’re about to make a wrong move with regard to the assembly of a product. It shows you a virtual image of where the part you’re about to install goes, and as you put it in place it’s confirming that you’re doing it right. Of course that’s a tremendous boon in a factory environment for quality and improvement of a process.
We see this moving out into the field, which of course is a much more complex and uncertain environment but where the benefit could be even greater. Where a technician or an installer actually gets a visual cue of where the part is he’s trying to put in or replace. And instead of having to read through a manual, this actually walks him through the process of removing the damaged part, installing the new part, warning him if he’s doing any aspect of that incorrectly, and then confirming once it’s in place that it’s operating properly. We see this as tremendous aid in the speed with which technicians can diagnose problems, fix problems, and confirm that their diagnosis was correct. And we see it as having applications all over the place, from a homeowner being able to see what a new system would look like in their house, to the installer being able to visualize how best to install and route the system, to the technician who is servicing it and gets step-by-step guidance in how to do that exactly as the factory intended. It really brings that controlled environment of the factory out to the installed base.
We’re at the very baby steps of this. We have a system right now that would allow the homeowner to see how the system would look in their house, and we’re moving that into the servicing area. That’s our next phase.
David Meyers: The shift from HVAC system efficiency to whole home energy efficiency is a trend that has been gaining momentum over the past few years and one that is expected to have a potentially large impact on the industry. The recent proliferation of smart meters, an increased household broadband penetration and the explosion of smart devices has created a growing opportunity for consumers to become more engaged with their energy consumption and management. This engagement will drive consumers to think more holistically, moving beyond their standard HVAC system efficiency and thinking about whole-home efficiency.
Chris Peel: The potential for energy management and water conservation systems is huge. Presently, heating, cooling and water heating systems account for 60% of a home’s energy consumption (according to the ENERGY STAR program). Our products that integrate HVAC and water heating technologies have proven their ability to save energy and money. But, that’s just the first step. To deliver even more efficient products, we have to create technology that connects these systems and then provides valuable analytics to help homeowners better manage their energy and water consumption.
Rheem is laying the groundwork for future connectivity that will bridge across our HVAC, water heating, pool and spa heating product lines through our EcoNet™ controls platform. At the heart of the EcoNet system is a new user interface that allows monitoring and controlling of Rheem’s air conditioning, heating, water heating, and pool heating systems from a single access point, or remotely via smartphone/tablet apps. It will ensure optimal performance and energy savings for homeowners, while simplifying installation, maintenance and troubleshooting for contractors. Additionally, EcoNet is future-compatible with home automation, energy management and demand-response systems. Our recently launched Prestige Series Hybrid Heat Pump Water Heater and new gas furnaces are EcoNet-ready.
Ed Purvis: Facility management. The whole discussion of smart home is probably as old as I am in the industry. There has been a lot of discussion about how that will evolve. Not unlike many other industries, the adoption rate of advanced home technologies has been slow. At the same time, in the past few years there have been some important steps made in technology that we believe are going to drive faster adoption of connected homes and increase the ability to remotely manage both a residential home or a retail facility. Certainly Wi-Fi capability and reliability has driven a lot of that. But another vital factor is the ability to now build very cost-effective cloud architectures by which we can remotely manage lots of data which allows us to optimize the reliability and efficiency of all types of facilities. So what we’re going to see is more focus on enabling technologies such as distributed controls, wireless thermostats, and remote monitoring capabilities.
In my home my stereo system is completely wireless and I control it through my iPhone or iPad. That’s a technology that probably wasn’t ready two or three years ago because the infrastructure wasn’t there, but it’s ready now. We’re going to see similar technology being applied in the HVAC industry in the very near future.
This year we’re launching a “next generation” Wi-Fi thermostat. Initially this product will give homeowners basic capabilities for managing their homes more effectively, but over time those capabilities will become much more sophisticated in terms of remotely making decisions about how people want their home to operate. We have business models that we’re developing and launching with contractors to allow homeowners to remotely track the performance of their home comfort systems and dispatch contractors if there are issues with a home’s heating and cooling system. This type of connected solution is now becoming much more feasible, and in the next three to five years we’re going to see much more of that in homes.
In my own home, I have a pilot system of a new technology that will allow contractors and homeowners to track residential air conditioning and heating systems. I had these sensors installed recently and very shortly after they were installed, a heating problem was detected and an alert remotely sent to our monitoring service — specifically, my inducer fan and limit switch had failed to start on the heating cycle. I would never have known this until my wife woke up in the middle of the night cold! Instead, I had the fan and switch replaced and was quickly up and running with no downtime.
These capabilities are not technical challenges, they’re simply business model challenges: how to provide these capabilities in a way that everyone in the channel recognizes the value, is educated on how to deliver the value, and prepared to support the business models that emerge. That’s the only issue.
The reason this type of implementation hasn’t happened faster has less to do with equipment technology and capabilities and a lot more to do with connectivity of homes. To the credit of the Wi-Fi world, the reliability of connectivity in the past two or three years has dramatically improved. And that’s why we’ve seen many product and business models built around Wi-Fi starting to emerge. It’s a reliable platform now.
Mark Wagner: We are very excited about connected home solutions and home automation. Our research has shown that 84% of consumers want to be connected to their homes via their smart phone while they are away and we have industry leading Nexia products to support that need. Fully communicating equipment is another niche that is growing as the technology becomes more readily available and affordable. Equipment that can run self-diagnostics and send text messages to homeowners or servicers will be a growing future trend.