NEEP - VRF Market Strategies Report - Final5
NEEP - VRF Market Strategies Report - Final5
Strategies Report
September 2019
Table of Contents
Executive Summary ....................................................................................................................................................1
List of Regional Market transformation strategies ................................................................................................2
Introduction ................................................................................................................................................................4
VRF Technology and Market Assessment ..................................................................................................................6
Framing Assessment of VRF Market, Technology and Performance……………………………………………………………….. 6
VRF Technology and Applications…………………………………………………………………………………………………………………… 9
VRF Performance Metrics, Ratings, and Standards ............................................................................................. 10
Minimum Efficiency Standard for VRFs ............................................................................................................... 11
Performance Specifications for VRFs................................................................................................................... 12
Regional Efficiency Program VRF Performance Criteria, Incentives and Program Delivery.............................. 113
Building Energy Code impacts on VRFs ............................................................................................................... 15
Savings associated with VRF installations; Energy, Cost, Peak load, and Emissions ........................................... 16
VRF Market Size and Research Insights ............................................................................................................... 20
VRF Refrigerants and Regulation ......................................................................................................................... 25
VRF Market Adoption Barriers and Opportunities .............................................................................................. 27
Regional Market Transformation Strategies ........................................................................................................... 28
Strategy #1: Increase reporting of VRF performance and costs to improve models for predicting cost-
effectiveness, energy and GHG savings............................................................................................................... 29
Strategy #2: Support improved test procedures and performance criteria/standards to enable the promotion
of climate-appropriate VRF ............................................................................................................................... 300
Strategy #3: Develop a comprehensive regional strategy for addressing the climate and safety risks of
refrigerants in VRF systems. .............................................................................................................................. 311
Strategy #4: Increase state policy support and program valuation of all energy savings and non-energy
benefits of VRF .................................................................................................................................................. 388
Strategy #5: Increase HVAC workforce development and training on proper VRF design, installation and
maintenance. ..................................................................................................................................................... 399
Strategy #6: Reduce incremental costs and increased VRF market transformation through robust, streamlined
and aligned regional, state and efficiency program market promotional actions .............................................. 40
Strategy #7: Promote integration of existing building management systems and advanced VRF controls to
increase coordination and efficiency between building heating and cooling systems and other occupancy type
controls. ............................................................................................................................................................... 42
Regional Market Transformation Goal .................................................................................................................... 44
About NEEP
Founded in 1996, NEEP is a non-profit whose goal is to assist the Northeast and Mid-Atlantic region to reduce
building sector energy consumption three percent per year and carbon emissions 40 percent by 2030 (relative to
2001). Our mission is to accelerate regional collaboration to promote advanced energy efficiency and related
solutions in homes, buildings, industry, and communities. We do this by fostering collaboration and innovation,
developing tools, and disseminating knowledge to drive market transformation. We envision the region’s
homes, buildings, and communities transformed into efficient, affordable, low-carbon, resilient places to live,
work, and play. To learn more about NEEP, visit our website at http://www.neep.org.
Disclaimer: NEEP verified the data used for this white paper to the best of our ability. This paper reflects the
opinion and judgments of the NEEP staff and does not necessarily reflect those of NEEP Board members, NEEP
Sponsors, or project participants and funders.
©Northeast Energy Efficiency Partnerships, Inc. 2019
This report takes the framework of the residential ASHP initiative and adds a new focus on commercial
application of VRF and the respective market strategies that, if implemented by regional stakeholders, would
result in accelerated adoption of commercial VRF heat pumps in the Northeast/Mid-Atlantic region.
Like their smaller residential-scale heat pump technology counterpart, VRFs have continued to improve in
efficiency, introducing high performance cold climate versions designed to provide rated heating capacity even
in low ambient outdoor temperatures.
In Europe and Asia, market share of VRF heat pumps represent approximately 80-90 percent of installed HVAC
systems in commercial buildings. In the United States, however, the technology is still a nascent – but rapidly
growing – market. The rapid adoption of VRFs internationally and more recently in the U.S. is due to the
technology’s energy and non-energy benefits (e.g. efficiency, comfort, space savings, etc.). However, remaining
questions and limited field data on VRF installations – notably potential refrigerant leakage and verified energy
savings of VRF systems – continue to weigh on broader promotion of the technology.
Increased adoption of VRF offers the potential for significant gains in efficiency for cooling applications. As such,
it can become an important technology solution in NEEP’s broader ASHP electrification strategy for commercial
heating applications. However, increased regional coordination and collaboration is needed to realize the
potential for VRF as a GHG mitigation strategy in shifting away from fossil fuels.
This report maps out the critical strategies necessary for VRF market transformation. Like the 2016 NEEP ASHP
report, recommendations are framed for the broader community of regional stakeholders and sub-strategies
identify specific stakeholders for implementation.
To launch the initiative, NEEP convened a diverse group of stakeholders to collaborate on further market
development of ASHPs. NEEP conducted an initial study1 of the needs and opportunities associated with low-
carbon building technologies; and then commenced a multi-stage process for engaging and soliciting input from
VRF stakeholders to best identify and prioritize market barriers and opportunities for growth in the regional
market.
NEEP kicked off the new VRF initiative in October 2018 with the VRF working group, consisting of heat pump
manufacturers, efficiency program administrators, engineers, contractors, and other interested parties to better
understand the persistent barriers in the VRF market. Two initial actions were taken to support the framework
for NEEP’s variable refrigerant flow (VRF) market strategies report:
Presentation of the 2018 NYSERDA VRF report2 findings to the NEEP VRF working group, and
assessment of knowledge gaps to inform regional VRF market assessment and strategy
development
Survey regional VRF working group of program activity and prioritize key research focus areas
The results of this initial framing allowed for two primary areas of focus for market research - VRF market
development and VRF technology and performance. These focus areas were to be informed by individual
research areas important to developing actionable strategies to support the VRF market.
Factors that affect VRF Market Development
Cost
Market actors
Market interventions
Market size
Program strategies
Regional promotion
Following additional research informed by the working group, NEEP prepared draft market transformation
strategies. Regional stakeholders provided robust input after review of the draft report that included the market
assessment and market strategies.
Informed by the regional input, NEEP finalized this report. NEEP intends to use the strategy report to prioritize
regional activity that key market actors should focus on to accelerate the market adoption of VRF technology in
the coming years.
Cold climate
Have performance performance - the
specifications for more a system can
VRF operation and Most of this is covered reduce the capacity of
high efficiency in in the NYSERDA report. How does the industry the backup heating
PERFORMANCE
cold climate Cold climate concerns define “cold-climate” devices, usually
(Cold Climate)
applications been can be overcome with performance of VRF? natural gas boilers,
developed? (Do good design. the more it can be
they allow for cost-effective and the
differentiation?) more it can reduce
GHG emissions.
Achieving simultaneous heating and cooling of zones connected to one condensing unit is not possible without
the heat recovery module option, available from all major VRF manufacturers. The additional cost of adding heat
recovery technology is justified when there is diversity of heating and cooling needs in the same conditioned
space. Potential for heat recovery is best captured in the original system design, understanding that it is not
going to increase the system efficiency in all applications.
3 https://neep.org/sites/default/files/NEEP_ASHP_2016MTStrategy_Report_FINAL.pdf
Energy efficiency Ratio (EER) A ratio of the Total Cooling Capacity in Btu/h to the power input
values in watts [W] at any given set of rating conditions expressed in Btu/Wh.
𝑡𝑜𝑡𝑎𝑙 ℎ𝑒𝑎𝑡 𝑟𝑒𝑚𝑜𝑣𝑒𝑑 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝑐𝑜𝑛𝑑𝑖𝑡𝑖𝑜𝑛𝑒𝑑 𝑠𝑝𝑎𝑐𝑒 𝑑𝑢𝑟𝑖𝑛𝑔 95°𝐹 𝑡𝑒𝑠𝑡 (𝐵𝑡𝑢)
EER = 𝑡𝑜𝑡𝑎𝑙 𝑒𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑎𝑙 𝑒𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑛𝑠𝑢𝑚𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 ℎ𝑒𝑎𝑡 𝑝𝑢𝑚𝑝 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 95°𝐹 𝑡𝑒𝑠𝑡 (𝑊𝑎𝑡𝑡−ℎ𝑜𝑢𝑟𝑠)
Integrated Energy efficiency Ratio (IEER) The integrated energy efficiency ratio expressed in
Btu/Wh is a metric used to represent the annualized performance of the mechanical cooling
system, as well as to serve as a comparative metric for partial load performance of VRFs at (4)
different capacities defined in AHRI 1230:
A = EER at 100% net capacity at 95°F outdoor dry bulb
B = EER at 75% net capacity at 81.5°F outdoor dry bulb
C = EER at 50% net capacity at 68°F outdoor dry bulb
D = EER at 25% net capacity at 65°F outdoor dry bulb
As highlighted in the calculation of IEER below, the full load capacity represents only two percent of the
assumed operation of the VRF to reflect typical real building applications.
≥ 65,000 Btu/h w/o Heat Recovery 11.0 EER; 12.3 IEER 3.3 COP at 47°F
VRF Air-Cooled Heat Pump
< 135,000 Btu/h w/ Heat Recovery 10.8 EER; 12.1 IEER 2.25 COP at 17°F
w/o Heat Recovery 9.5 EER; 10.6 IEER 2.05 COP at 17°F
VRF Air-Cooled Heat Pump ≥ 240,000 Btu/h
w/ Heat Recovery 9.3 EER; 10.4 IEER
Table 2 ASHRAE Standard 90.1-2016 Table 6.8.1-10 for Air-cooled VRF systems above 65,000 Btu/h
VRF systems have the potential to be highly effective at load matching. The ability of the system to yield savings
at part load conditions is highly dependent on the controls algorithms used, and proper design and sizing. This
energy benefit is not currently captured in the efficiency standards using the current test procedure.
In January 2018, a VRF multi split air conditioners and heat pumps working group was formed by the U.S.
Department of Energy (U.C. DOE) Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) to
reach a consensus agreement for updates to federal test procedure and standards for VRF. The current federal
standards required for equipment manufactured after January 2010 must meet or exceed the ASHRAE Standard
90.1-2010 Table 6.8.1-10. This working group met on April 17-18, 2019 to review a proposed Controls
Verification Procedure Test Plan (CVT)4 to address advocate concerns around the current test procedure and its
ability to properly assess the impact of software controls on the performance of VRF.
The working group came up with a proposed repeatable, reproducible and representative controls verification
test (CVT) procedure. To vet this procedure and provide data to inform the finalization of a code-language
version, the working group also developed a recommended test plan and guidance document. The test plan
recommended by the working group includes the recommendation that DOE consultants be given access to
testing and test data under NDA for tests conducted by Original Equipment Manufacturers (OEMs) in-house to
4 https://www.regulations.gov/contentStreamer?documentId=EERE-2018-BT-STD-0003-0028&attachmentNumber=1&contentType=pdf
≥ 65,000 Btu/h w/o Heat Recovery 11.8 EER; 17.4 IEER 3.4 COP at 47°F
VRF Air-Cooled Heat Pump
< 135,000 Btu/h w/ Heat Recovery 11.6 EER; 17.2 IEER 3.4 COP at 47°F
≥ 135,000 Btu/h w/o Heat Recovery 10.9 EER; 16.4 IEER 3.3 COP at 47°F
VRF Air-Cooled Heat Pump
< 240,000 Btu/h w/ Heat Recovery 10.7 EER; 16.2 IEER 3.3 COP at 47°F
Consortium for Energy Efficiency (CEE) has developed advanced performance tiers for VRF7 (applied to both air-
source and water source within capacity bins)
5 https://www.energy.gov/eere/buildings/appliance-standards-and-rulemaking-federal-advisory-committee
6 https://www.energystar.gov/sites/default/files/Light%20Commercial%20HVAC%20Version%203.1%20Program%20Requirements_1.pdf
7 https://library.cee1.org/system/files/library/13655/Final_2018_CEE_HECAC_Initiative_Description.pdf
≥65,000 and w/o Heat Recovery 11.3 EER; 14.2 IEER 3.4 COP at 47°F
<135,000 Btu/h w/ Heat Recovery 11.1 EER; 14 IEER 2.4 COP at 17°F
In partnership with the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), CEE maintains a CEE
Directory of Efficiency Equipment. This directory of HVAC equipment can searched for the most efficient
residential and small commercial equipment on the market. Manufacturers work with AHRI to verify that their
equipment meets the criteria established by the federal ENERGY STAR® program and by CEE. This directory
leverages the AHRI Directory of Certified Product Performance along standing source of performance certified
heating, ventilation, air conditioning, and commercial refrigeration equipment and components.
Regional Efficiency Program VRF Performance Criteria, Incentives and Program Delivery
Commercial scale VRF heat pumps have been introduced into several NEEP member programs in the Northeast
and Mid-Atlantic. Incentive and performance criteria, as well as program requirements and delivery (e.g.
downstream customer incentives and midstream distributor incentives) vary from state to state – and in the
case of Massachusetts - between the utility-led Mass Save® and state-led Massachusetts Clean Energy Center
(MassCEC) programs.
Table 5 Regional Efficiency Program VRF Performance Criteria
Rebate
State HPSF EER IEER SEER COP
Incentive
For air cooled units ≥5.4
Massachusetts ≥11.0 ≥18.0 ≥3.4
tons = $125/ton
(Mass Save)
For water cooled units
≥12.0 ≥20.0 ≥4.3
≥5.4 tons = $125/ton
For units without heat
Massachusetts recovery ≥5.4 tons =
Must meet the minimum efficiency ratings established in the
(Clean Energy $800/ton
ANSI/ASHRAE/IES Standard 90.1-2016 Energy Standard for
Center)8 For units with heat
Buildings Except Low-Rise Residential Buildings
recovery ≥5.4 tons =
$1,200/ton
8Award levels for Public/Non-Profit = $1,000/ton without heat recovery, $1,400/ton with heat recovery; Award levels for Affordable
Housing = $1,600/ton without heat recovery, $2,000/ton with heat recovery. MA CEC revised incentive levels in early 2019 and plans to
sunset the VRF program in June 2019 for a transition to utilities.
Massachusetts Mass Save9 and Rhode Island10 are examples of regional efficiency programs supporting VRF
through midstream incentives delivered through participating HVAC distributors. One of the primary benefits
cited for customers through the upstream programs is the stocking of eligible, efficient products.
The NYSERDA report also highlights the importance of distributors as part of the supply chain and their role in
influencing the decision tree for selecting VRF.
“In all project types, the distributor is at the center of the efficiency discussion. This market actor is the vehicle
through which VRF equipment is connected to the mechanical engineer, architect, and DB [design-build]
contractor. VRF distributors have trained engineers that support market actors in both project types.
9 https://www.masssave.com/en/saving/business-rebates/upstream-electric-hvac-program/
10 https://www.nationalgridus.com/media/pdfs/bus-ways-to-save/ee7078-ci-upstream-hvac.pdf
Figure 3 Comparison of Daikin VRV IV to III heat pump performance for systems without (left) and with (right) heat recovery12
Manufacturers have dramatically increased VRF heat pump cold climate performance to broaden the
applications and performance in northern climates. Leading manufacturers promote strong heating capacity
performance down to -13 °F in heat recovery systems and 0 and -4 °F systems where heat recovery is not used.
Current ASHRAE heating COP reporting requirements and testing are limited to 47 and 17 °F. Increasing testing
and reporting requirements at lower temperatures would improve the ability to compare cold-climate
performance, support broader applications to replace conventional heating systems and improve cost-
effectiveness for NEEP programs and buildings in the Northeast climate.
The limited number of independent evaluations of VRF performance support robust energy savings in a small
sample of diverse heating fuel types, building use and type, and baseline equipment being replaced. Most of the
savings estimates are developed pre-installation through energy model simulations of buildings instead of more
difficult field monitoring of the HVAC post installation. Comments from NEEP VRF stakeholders highlighted that
energy modeling inputs and functionality to properly model VRF systems is lacking in some of the most common
12 https://www.daikinac.com/content/assets/DOC/Product%20Brochures/CT-VRV-Catalog-08-15.pdf
In 2012 the General Services Administration (GSA) commissioned a study assessing VRF performance through
model simulations against a variety of baseline technologies and fuel types (electric vs. natural gas). The model
simulations were based on previous models from independent sources and manufacturer simulations.
Table 6 Potential HVAC Only Energy Savings from VRF Systems Compared to Other Systems (GSA 2012)14
The Energy Trust of Oregon designed a pilot through its New Buildings program to capture the costs and savings
of VRF projects to support a prescriptive program development. Initial research findings found an average HVAC
energy savings of 2.9 kWh/sf/yr or 35 percent, with a range of 13 – 63 percent savings depending on baseline
13 http://mn.gov/commerce-stat/pdfs/refrigerant-technology-cold-weather.pdf
14 https://www.gsa.gov/cdnstatic/GPG_Variable_Refrigerant_Flow_12-2012.pdf
Table 7 Energy Trust VRF pilot program prescriptive savings and incentive (ACEEE 2016)15
In 2018, NYSERDA commissioned a market and technical study of VRF by VEIC and Energy Solutions to assess the
technology opportunity as part of the broader Renewable Heating and Cooling program.16 VEIC created a
building scenario energy model to estimate “energy savings offered by VRF systems installed in key building
types in New York City and the Northeast based on a variety of modeling input scenarios – by varying fuel prices,
building age, internal electrical loads, and shell characteristics – then applied to the building types and local
climate conditions.”
For the NYSERDA study, VEIC utilized OpenStudio, an open-source interface with EnergyPlus, an extremely
flexible and powerful BEM platform developed by the U.S. Department of Energy (U.S. DOE) and the National
Renewable Energy Lab (NREL). EnergyPlus is considered the replacement to the previous DOE-2 platform, on
which e-Quest (one of the most popular BEM tools) is built. Program implementers can use building energy
models to develop high-level estimates of performance or by capturing actual project specific building and HVAC
system details – along with energy use and costs -provide a robust model of VRF performance and savings.
For NYSERDA’s purposes to guide the aggressive state goals for emission reductions, GHG impacts were tracked
along with that of energy. The GHG impacts serve as alternative lens to assess the total VRF project value in
addition to the customer financial economics and program cost-effectiveness. In the case of office buildings,
GHG emission reductions from VRF ranged from a maximum of 41 percent for older, large office buildings in NYC
to a net increase of 10 percent for older, medium-sized office buildings in upstate New York. It should be noted
that the modeling assumed a generic VRF performance and is not necessarily representative of the higher
efficiency models being introduced in the Northeast market currently with higher IEER and COP levels. Increases
in energy savings and GHG reductions would be expected for the advanced cold-climate models.
In the VEIC analysis, the modeling results found significant heating fuel savings but the electrical savings for
cooling in some cases were offset by the increased heating electrical load.
15https://aceee.org/files/proceedings/2016/data/papers/3_345.pdf
16NYSERDA provided a public version of the “Market and Technical Analysis of Variable Refrigerant Flow Heat Pump Technology” report
to the NEEP VRF working group in October 2018.
The NYSERDA study also assessed the significant changes in seasonal peak demand from VRF
installations relevant to changing utility peak load profiles. The result is a more significant winter peak
increase in the heating dominated, fuel switching multifamily applications. Whereas the VRF
installations in office buildings create a more uniform peak between winter and summer, greatly
reducing the summer peak for baseline cooling systems.
Not modeled in the NYSERDA report is the potential to more effectively use the variable capacity
functionality of the VRF to serve load management purposes to mitigate or shift peak loads during
certain times of day or peak events.
17Joanna Turpin. VRF Market Expected to Hit $24B by 2022. ACHR News. February 2017. https://www.achrnews.com/articles/134465-
vrf-market-expected-to-hit-24b-by-2022
179,513 199,666
250,000
293,983 292,320
0,000
Dec-17 Dec-18
Figure 6 AHRI U.S. Heating and Cooling Equipment Shipment Data for Air Conditioners and heat Pumps in December 2017 and 201818
Historically, VRF has represented a small percentage of the overall HVAC market, but increases in performance,
flexibility in design, and broader awareness of the technology and its applications are accelerating its growth.
The non-energy benefits (i.e. comfort, space savings, and electrification benefits to a clean-energy electrical
grid) of VRF are often neglected at the building design stage with a primary focus on the upfront and operational
energy costs compared to traditional heating and cooling technologies.
Commercial air source heat pumps in the United States are comprised of three primary types:
18AHRI 2018 U.S. Heating and Cooling Equipment Shipment Data. February 2019.
http://www.ahrinet.org/App_Content/ahri/files/Statistics/Monthly%20Shipments/2018/December_2018.pdf
Rooftops
PTAC
Single Package
Portable A/Cs
Furnaces
Figure 7 US HVAC Industry volume comparison of Commercial and light commercial HVAC types19
Based on CBECS 2012 data, space heating, cooling, and ventilation in Northeast buildings represents
approximately 52 percent (36 percent heating, seven percent cooling and nine percent ventilation) of all energy
used in buildings or 50 kBtu per square foot of building area - a significant opportunity for efficiency and
greenhouse gas (GHG) mitigation. Within the NEEP region, as would be expected, buildings in New England have
a higher energy intensity for heating, while Mid-Atlantic buildings have a higher cooling and ventilation load.
45.0
41.0
34.1
31.6
30.0
Northeast
New England
15.0 Middle Atlantic
9.0 9.8
6.6 7.3 6.7
4.5
0.0
Space Cooling Ventilation
heating
Figure 8 Buildings energy intensity with existing heating system types in Northeast Commercial Buildings (CBECS 2012)
However, existing buildings and the HVAC market in general is characterized by a diverse set of conventional
heating and cooling technologies, with a significant amount incorporating non-heat pump technology. This
19 Steve Jones. Mitsubishi presentation at Texas Utility Innovations - Source AHRI and BSRI September 2012.
Boilers
Heat pumps
Figure 9 Existing heating system types in Northeast Commercial Buildings (CBECS 2012)
Central chillers
Figure 10 1 Existing cooling system types in Northeast Commercial Buildings (CBECS 2012)
Forthcoming commercial building studies commissioned by NYSERDA20 and other states will bring valuable
regional data to the potential market size for VRF. As part of this effort, NYSERDA will conduct a commercial
building baseline study, potential study, and market assessment for commercial unitary air conditioner systems.
20 https://www.nyserda.ny.gov/About/Publications/Building-Stock-and-Potential-Studies/Commercial-Statewide-Baseline-Study
Choose at least 2
Optimization replacement and system + O&M High efficiency or exterior
2) Evaluate and tenant efficiency or cavity
Retrofit Path 2 - Hydronic right sizing at end Hydronic cooling wall
installation of new spaces windows insulation
of life conversion insulation
Conversion system
Retrofit Path 3 - Electrification + 1) Upgrade Interior wall
Heating Load Reduction Air source or Remove or keep Air source or existing system, or Common area High Roof deck insulation
ground source existing system ground source 2) Evaluate and tenant efficiency or cavity
Retrofit Path 4 - Elecrification + heat pump as backup heat pump installation of new spaces windows insulation Exterior wall
Major Envelope Improvement system insulation
Additional Systems
Electric Loads
Domestic Hot Water Lighting Solar PV Required in commercial Tenant Engagement O&M Training
Encouraged in residential
Options Include: Options Include: Options Include: Options Include: Determined based on Building operators to
- Low-flow fixtures - Install LEDs - Install PV on roof - Upgrade fans and building needs receive Operations &
- Air source heat pump for - Upgrade fixtures - Community shared motors Maintenance training
hot water - Install controls and solar - Appliance efficiency
- On-demand electric sensors - Data center/server
resistance room optimization
The multi-path strategy is designed to align with a capital planning schedule for building upgrades and allow for
flexibility based on the specific building needs. The combination of efficiency, building shell improvements and
electrification of heating loads with air and ground source heat pumps serve as a comprehensive solution for
achieving the city GHG emission targets.
23 https://www.epa.gov/section608/managing-refrigerant-stationary-refrigeration-and-air-conditioning-equipment
Figure 12 Evolution of ozone depletion and global warming potential impacts of refrigerants in air conditioning & heat pump systems
Although VRFs represent a very small portion of the use of refrigerants compared to the larger refrigeration and
conventional air conditioning market, efficiency program administrators and energy advocates are concerned
about investing in a technology with associated risks of potential non-energy climate impacts. The risks are
categorized into three categories:
1. Global Warming Potential
2. Safety
3. System Obsolescence
Each of these refrigerant risk categories is explored further as part of the market strategy section of the report.
Climate- Need for the development of performance specifications for VRF system operation and high efficiency in
specific cold climate applications. Metrics have to be proved - show the math, using real numbers on upfront
Barriers costs, fuel savings, etc.
Lack of awareness that heat pumps even exist, or if there is awareness, there is especially a sense that
“they don’t work in cold climates”, or “they don’t work below freezing”.
Consumer Costs vary significantly, with a large range in pricing for the installed cost of essentially the same system.
Barriers In general, VRF is perceived as having a high cost.
With the drop in oil prices, comfort cooling was the main reason to buy in 2016. These issues are
becoming less significant.
Installers are available, but may not themselves yet trust or be willing to recommend this technology for
primary heat.
Design and Many installers in Northeast have limited experience with ducted heat pumps and don’t offer them as an
Installation option.
Barriers Poor informational feedback on how efficiently VRF units operate once installed, therefore there is a lack
of readily available accurate information on system economics relative to oil and gas-fired systems.
A general need to improve industry design and installation skills for VRF systems.
Need for regulators to allow electric utilities to promote fuel switching - this is the easiest way to get
greater heat pump adoption. Doing this will create the larger carbon savings than energy efficiency
programs, at no additional cost.
Furthermore, the incremental electric sales will reduce electric rates. Regulators very rarely understand
Policy Barriers
that electricity, when used in efficient heat pumps, is by far the cleanest heating fuel in terms of carbon
emissions. Heat pumps in New England reduce natural gas home heating CO2 emission by 40 percent and
oil emission by 60 percent. There is considerable policy misalignment between the jurisdiction with
climate change response mandates and utility regulatory bodies’ rules.
Program General inability to develop savings calculations without believable seasonal COP values.
Barriers Need for better models for savings for different types of equipment or in differing installation use cases.
Promotion
Broad lack of regional awareness about the VRF technology, and its related non-energy benefits.
Barriers
Refrigerant
Potential for collision between VRF deployment and HFC phase out.
Barriers
Standards Lack of real-world performance data, and difficulties in understanding how to design and size a VRF
Barriers system, as it is different for each manufacturer.
Technology CO2-based systems may be available in the near future with 1/2000 of the global warming potential of
Opportunity today’s refrigerants.
This section describes seven key regional market transformation strategies, including tactical details for each of
them. While they are framed as recommendations to the broad community of regional stakeholders, the sub-
strategies identify specific stakeholders for implementation. Earnest deployment of the recommended market
strategies outlined here should produce the necessary market conditions for accelerated and sustained uptake
of VRF systems throughout the Northeast and Mid-Atlantic regions.
1. Increase reporting of VRF performance and costs to improve models for predicting
cost-effectiveness, energy, and GHG savings.
3. Develop a comprehensive regional strategy for addressing the climate and safety
risks of refrigerants in VRF systems.
4. Increase state policy support and program valuation of all energy savings and non-
energy benefits of VRF.
6. Reduce incremental costs and increased VRF market transformation through robust,
streamlined, and aligned regional, state, and efficiency program market promotional
actions.
Industry and efficiency programs utilize a variety of proprietary and open-source building modeling tools to
assist in selection, system design, prediction of performance, and cost savings of VRF installations. However, the
limited amount of field-verified data, limitations of existing test procedures and standards, as well as minimal
documented installed, incremental, and avoided costs serve as a barrier to increased confidence in VRF as a
cost-effective measure for efficiency programs and their customers. Below are examples of the impact on
different stakeholders due to the absence of established performance of ASHPs from the NEEP 2016 report:
For consumers, it remains difficult to assess investing in VRF without knowing the likely savings;
For contractors, it is challenging to provide accurate projections for savings in comparisons to the
systems currently operated;
For regulators and program administrators, it is very difficult to establish proper policies, programs,
and incentive levels if savings and other benefits are in question. There is inadequate data to
support one-size-fits-all deemed savings estimates.
Due to nascent market of VRF and its broad applications across different commercial building types, fuel
sources, building-specific size and system requirements, as well as the variety of conventional HVAC alternatives,
it is important to increase reporting of both the technical design and costs accessible to programs and industry
partners.
Strategy 1a) Regional energy efficiency program administrators should introduce reporting requirements
to capture project-specific details on system design, upfront and operational costs, and estimated or
modeled savings. Additionally, longer-term supplemental field evaluations, verification, and pre/post
monitoring studies are of critical importance for documentation of field VRF performance - including
changes in energy use, ongoing operational performance in relation to changing building loads,
supplemental systems, and weather conditions.
Ideally, data should be captured at a regional level and with standardized reporting and field evaluation
protocols to serve to provide the most value to a variety of stakeholders. As highlighted earlier in the report, this
field-verified data can be instrumental in improving the accuracy of the building energy models that industry and
efficiency programs rely on to inform savings and system design decisions.
One attribute of the advanced controls native to VRF systems is the ability for industry to monitor and track real-
time performance of installed systems, potentially reducing the typically high cost of adding supplemental
metering and increasing the accuracy of evaluating system performance. This functionality of certain
manufacturer VRF controls was highlighted at the December 2018 in-person NEEP VRF workgroup meeting as a
supplemental area of focus for collaboration.
Strategy 1b) Regional VRF working group and manufacturers collaborate to assess the opportunity to
leverage existing or additional on-board metering of VRF systems to inform field-verified performance.
As noted earlier in the report, there are existing proprietary and non-proprietary building energy modeling
software currently being utilized by industry and efficiency program administrators to evaluate VRF design
tradeoffs and estimate energy savings based on building-level and locational parameters. The existing building
and HVAC models continue to improve in function and accuracy, but increasing confidence and investment in
VRF will require ongoing collaboration for improvements. With the recent introduction of new, high efficiency
cold climate VRF models, it will be necessary to update models with a diverse set of VRF performance curves to
reflect the wide variation in heat pump and heat recovery performance.
Strategy 1c) Regional stakeholders collaborate to develop best practices for VRF building energy modeling
and share updates to VRF performance curves (e.g. cold-climate models), field-verified building models,
and system costs.
On-board VRF control systems may serve as a valuable source of data to improve building energy modeling tools
for VRF at different building load and weather conditions.
Figure 132 Daikin product brochure demonstrating broader operational range of new VRF/VRV models26
NEEP stakeholders emphasized the need to work with AHRI in “creating the next generation of standards in VRF”
to better reflect and align with the manufacturer focus on properly optimizing the overall performance and life
cycle cost of the unit. The current set of test procedures and standards reflect a more traditional focus on IEER
and full load COP.
NEEP has demonstrated a successful role in developing and maintaining a cold-climate specification and eligible
product list for residential-scale ASHPs, addressing a critical need for manufacturer reporting of ASHP
performance at temperatures below that required for AHRI 1230 (Cold Climate Air Source Heat Pump
Specification (Version 3.0) at 5°F). Leveraging NEEPs established working group and partnership on the current
cold climate specification might serve as a template for developing similar standardized reporting for
commercial VRF products at a wider range of temperatures. However, any future developments from the
federal working group on VRF will be important to monitor and inform any future efforts in this area.
Strategy 2a) NEEP VRF working group should monitor and support development of national test
procedures, standards, and advanced specifications that improve the correlation and accuracy to
real-world and climate-specific applications. The working group should evaluate the benefits of
developing regional climate-specific performance reporting requirements and advanced criteria for
VRF.
Strategy #3: Develop a comprehensive regional strategy for addressing the climate
and safety risks of refrigerants in VRF systems.
Global Warming Potential (GWP) is a metric used to describe the relative impact of a compound’s
contribution to global warming. GWP is given as a value relative to the baseline of CO2, which has a GWP of 1.
On an equal mass basis, a substance with a GWP of 2 would therefore have two times the impact of CO2. R-
410A has a GWP of 2090. In effect, this means that one pound of R-410A released into the atmosphere would
have the same impact on global warming as 2090 pounds of CO2. Based on our characterization of an “average”
VRF system, the refrigerant contained within has the potential impact of 188,000-376,000 pounds CO2 if it were
all to be released.
VRF systems are a key strategy being utilized for CO2 reduction in commercial buildings and by design are not
intended to leak refrigerants. However, the number of field connections of refrigerant lines and lengths of piping
potentially exposed to physical damage from external elements increases the chance of a system leak. Properly
designed and installed, VRF can displace aging fossil fueled heating systems and inefficient air conditioning,
saving money, energy and significantly reducing the CO2 associated with space conditioning. However, there is a
concern that the targeted CO2 reduction benefits of VRF will not be realized if a high rate of refrigerant leak
exists.
The net CO2 impact of VRF is dependent on a variety of factors. These factors include:
Figure 14 Modeled NYC GHG emissions assuming a 10% per year leakage31
Strategy 3a) NEEP VRF working group should initiate and collaborate in research aimed to identify
current VRF leakage rates, as well establish data-informed best practices for VRF installations and
servicing.
There are a variety of low GWP refrigerant options that are being developed, tested, and anticipated to come on
the market soon. However, initially these new refrigerants may come with increased costs, lower performance
(efficiency), or difficulty in entering the market due to existing building safety codes with respect to
flammability.32
R-32: Most market attention has been focused on R-32 as a viable alternative to 410A, as it has a
moderate GWP value of 675, or about 1/3 that of 410A. However, R-32 is classified as an A2 for
flammability, making it “moderately flammable” according to regulatory prohibitions. As a
result, this refrigerant is not a viable alternative to 410A.
HFOs: A new class of refrigerants being tested for replacement of HFCs is hydrofluoroolefins
(HFOs), which have ultra-low GWP values while maintaining 0 ODP.
Natural refrigerants (NR): Compounds such as propane (R-290) and CO2 (R-744) are included as
potential alternatives and although new VRF products (and existing installations) are not
currently commercially available utilizing these refrigerants. Other technology sectors such as
32 https://dms.hvacpartners.com/docs/1001/Public/0E/ENG_NEWS_3_2.pdf
https://www.ashrae.org/technical-resources/bookstore/standards-15-34
Strategy 3b) NEEP VRF working group should invest in early support for industry evaluation of new
refrigerants for VRF installations, as well as incentivizing their early-market adoption. As new low-
GWP refrigerants will potentially require re-piping for proper safety or performance, early planning
and incentives may be required for avoiding barriers to market growth of VRF.
Figure 15 Illustration of ASHRAE 15 safety requirements for minimum occupied space to refrigerant volume33
33 https://www.daikinac.com/content/assets/DOC/White-papers-/TAVRVUSE13-05C-ASHRAE-Standard-15-Article-May-2013.pdf
34 https://www.daikinac.com/content/assets/DOC/White-papers-/TAVRVUSE13-05C-ASHRAE-Standard-15-Article-May-2013.pdf
Strategy #4: Increase state policy support and program valuation of all energy
savings and non-energy benefits of VRF
VRF is experiencing double digit growth in the HVAC market in part due to the potential energy
savings for customers, but more commonly as a recognition of VRF providing comfort, space, and design
improvements over conventional technologies. With additional verification of performance – as highlighted
earlier in the report – case studies of applications of VRF can serve to educate and support broader adoption of
the technology.
However, most efficiency program administrators are currently limited in program activities to support and/or
claim electric only (kWh) savings from VRF installations and, in some cases, are not allowed to support or claim
for fuel switching applications (e.g. natural gas to VRF electric heating). This frequently creates a misalignment
between state GHG reduction goals tied to fossil fuel use and electric utility ratepayer funded programs.
Recent regulatory orders in individual states have begun to address this market barrier, directing utilities to
prioritize beneficial electrification and peak demand reduction. In Massachusetts, 2019-2021 energy efficiency
plans include plans to support the switch to renewable energy and other clean energy technologies – though all
are required to meet cost-effectiveness requirements.35
However, as part of the cost-effectiveness calculations, assessing the incremental costs of VRF equipment, as
well as the avoided costs associated with less material improvements – including space savings and increased
comfort cooling – will continue to be an area of increased reporting and studies.
35 https://fileservice.eea.comacloud.net/FileService.Api/file/FileRoom/10317061
Strategy 4) Regional state policy and efficiency programs should address policy barriers to the full
valuation of VRF in reducing fossil fuel use through beneficial electrification and peak demand
reduction. Additionally, the development of VRF case studies to show installations in a diverse set of
building types, as well as increased field performance monitoring, will increase the confidence in
VRFs as a solution for building owners and highlight their important role in state GHG mitigation
strategies.
Strategy #5: Increase HVAC workforce development and training on proper VRF
design, installation and maintenance.
Workforce development is a critical area of focus for states in achieving aggressive goals in GHG
reduction in buildings, as the growth of trained HVAC contractors needs to keep pace with the scale of
deployment of new clean energy technologies. New partnerships between manufacturers, states, and efficiency
program administrators are looking to address barriers to a growing and well-trained HVAC workforce.
NYSERDA has recently committed $70 million over the next 10 years to increasing clean energy workforce
development and training strategies and resources.36 The NYSERDA Clean Energy Workforce Development
program includes the targeted opportunities:
Strategy 5a) Regional stakeholders, including manufacturers and program administrators, should
increase the level of investment in HVAC workforce development and training to ensure that a
sufficient number of “clean energy contractors” are trained in installation best practices of new
electrification technologies like VRF.
In the United States, VRF is disrupting a traditional commercial rooftop and Variable Air Volume (VAV) market
that has required contractors and building professionals to have specific skills to design, install, and maintain the
necessary ductwork and plumbing. Increases in adoption of VRF will require workforce training and demand for
contractors with the experience and skills for designing, installing and maintaining refrigerant-based systems.
36 https://www.nyserda.ny.gov/All-Programs/Programs/Clean-Energy-Workforce-Development
Strategy #6: Reduce incremental costs and increased VRF market transformation
through robust, streamlined, and aligned regional, state, and efficiency program
market promotional actions
Various studies and reporting of VRF costs have demonstrated a significant incremental cost of the VRF
equipment, and more importantly, the final installed system cost. There is an important role for more traditional
efficiency program administrators and local and state organizations to influence the selection of not only VRF –
but increasingly the highest efficiency VRF models for commercial new construction and HVAC retrofit
opportunities.
Although incremental costs of VRF over alternative conventional HVAC solutions can be obtained through
inquiries with factory representatives and distributors, capturing the full incremental costs (and avoided costs)
of the system design are typically only available at the project completion phase. For this reason, it is equally
important that programs encourage the final reporting of system costs for evaluating the cost-effectiveness of
the VRF energy savings, as well as ensuring that incentives are set appropriately to achieve the desired
outcomes. Reporting from the Massachusetts Clean Energy Center (MassCEC) program in May 201937
highlighted the following VRF program performance:
37 MA CEC program performance and findings reported by Peter McPhee to NEEP. May 9, 2019.
It is important to highlight that the MassCEC incentives are in some cases approximately an order of magnitude
greater than those provided through regional efficiency programs, enabled in part by the primary goal of GHG
reduction over electricity savings. MassCEC developed incentives based on the following guiding criteria:
Incentive level sufficient to change minds of project decision makers to upgrade from traditional
heating and cooling to VRF
Incentive should move the payback for some projects from unattractive to attractive
VRF incentives are in line with our incentives for less expensive mini‐splits ($625/12,000 BTU/hr)
(5° F) and more expensive ground‐source heat pumps (about $3,000/12,000 BTU/hr)
Strategy 6a) Regional VRF working group members should better track and report VRF costs
(incremental, installed, and avoided), as well as assess the level of incentive necessary to drive
sustainable, yet accelerated growth in the VRF market.
The table of regional efficiency program promotional activity for VRF earlier in the report (and referenced in the
Error! Reference source not found.Error! Reference source not found.) reflects a somewhat diverse approach
and level of investment in supporting VRF. There are notable differences in the VRF performance criteria,
incentive levels, and program delivery (project level, customer-oriented downstream incentives, and equipment-
level, distributor-oriented midstream incentives). Although midstream HVAC programs are a relatively new
advancement in program delivery for regional HVAC programs, the results from increased program participation
and streamlined incentive delivery and industry promotional partnerships are getting strong recognition in the
industry. However, as distributors are frequently operating at a regional level, increasing the level of
coordination of program strategies, performance criteria and less critical incentive levels can increase the
market impact and efficiency. One important element often lost in shifting away from downstream incentives is
38MA CEC rebates were reduced recently from these original levels, and the program incentives are anticipated to end on June 30,2019
with a transition towards utility program implementation. https://files-cdn.masscec.com/get-clean-energy/business/clean-heating-
cooling/VRF_Program_Manual_EFFECTIVE_FEB_2019.pdf
Performance-based incentives may offer another future mechanism for long-term building investments in VRF
systems. NYSERDA is introducing a pay-for-performance (P4P) for residential and small commercial buildings,39;
nationally and regionally, P4P and other market-based solutions are anticipated to play a critical role in the build
out of efficiency in buildings.
Strategy 6b) Energy efficiency and renewable heating and cooling programs should evaluate
opportunities to align program delivery strategies – notably midstream distributor partnerships – and
coalesce around regional performance criteria similar to the success of the ccASHP specification.
Programs should also seek to leverage industry partnerships and conduct standardized surveys to
continue to gather detailed cost and system design data to inform program design improvements.
Increasing confidence in VRF performance and reducing risk/impacts of refrigerants will give greater emphasis to
adopting VRF as a standard technology in sustainable/high performance building programs, voluntary programs
(i.e. ENERGY STAR Commercial Buildings, LEED, etc.), and future building energy codes. NEEP VRF stakeholders
have emphasized the need for educating architects, engineers, contractors, designers, and other building
professionals on the existence of VRF, opportunities, costs, and so on. These building professionals are the
“decision-makers in building design” and an increased awareness of VRF systems, along with their attributes and
advancements in performance, will improve acceptance and installation rates.
Strategy 6c) Regional VRF working group members should work to develop a multi-year market
transformation strategy for increased voluntary building and equipment efficiency standards, as well
as educate building professionals, to support VRF adoption and accelerated transition to low-carbon
national and state building energy codes.
A whitepaper on VRF and Building Integrations (Mitsubishi 2017)40 breaks down VRF building integration into
several options:
39https://www.recurve.com/blog/nyserda-and-dps-announce-plans-for-pay-for-performance-efficiency-in-new-york
40“VRF and Building Integrations - Options and How to Choose Among Them”. Mitsubishi August 2017.
https://www.esmagazine.com/ext/resources/images/WhitePapers/Building-Integrations.pdf
Strategy 7a) Regional VRF working group members should invest in increased building operation
training, best practices in system design, and assessing program or state building code strategies to
increase VRF control and building energy management system integration. These investments and
collaboration with industry will help achieve the highest building level HVAC energy savings and
comfort in VRF installations.
NEEP projects that earnest implementation of the recommended market strategies outlined in the Regional
Market Transformation Strategies section will produce the necessary market conditions in order for accelerated
and sustained uptake of VRFs throughout the Northeast and Mid-Atlantic region.
The following graph suggests what a projected market trajectory would will look like if the region is successful in
implementing the key strategies identified in the report. The market transformation scenario is in relation to a
business as usual scenario.
Figure 3: Market Transformation for VRFs in the Northeast/Mid-Atlantic Region
50%
40%
30%
20%
10%
0%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Rebate
State HPSF EER IEER SEER COP
Incentive
For air cooled units ≥5.4
Massachusetts ≥11.0 ≥18.0 ≥3.4
tons = $125/ton
(Mass Save)
For water cooled units
≥12.0 ≥20.0 ≥4.3
≥5.4 tons = $125/ton
For units without heat
recovery ≥5.4 tons =
Must meet the minimum efficiency ratings established in the
$800/ton
ANSI/ASHRAE/IES Standard 90.1-2016 Energy Standard for
For units with heat
Buildings Except Low-Rise Residential Buildings
Massachusetts recovery ≥5.4 tons =
(Clean Energy $1,200/ton
Center)41 For units without heat
recovery <5.4 tons = ≥10.0 ≥11.0 ≥17.0
$800/ton
For units with heat
recovery <5.4 tons = ≥10.0 ≥11.0 ≥17.0
$1,200/ton
Rhode Island Air-cooled units ≥5.4
≥11.0 ≥18.0 ≥3.4
(Program ensures tons
that efficient
Water-cooled units ≥5.4
equipment is ≥12.0 ≥20.0 ≥4.3
tons
available)
New York Flex Tech program: cost-shared energy efficiency technical analyses and strategic energy
(NYSERDA) management assistance to existing facilities, can include investigation of VRF
<5.4 tons = $125/ton
≥8.5 ≥12.5 ≥15.0
(Tier 1)
<5.4 tons = $230/ton
≥9.0 ≥13.0 ≥16.0
(Tier 2)
≥5.4 & <11.25 tons =
≥11.3 ≥14.2 ≥3.4
$125/ton
PSEG- Long Island
≥11.25 tons & <20 tons =
≥10.9 ≥13.7 ≥3.2
$80/ton
≥20 tons = $80/ton ≥10.3 ≥12.5 ≥3.2
Water source unit
≥14.0 ≥4.6
<11.25 tons = $80/ton
41Award levels for Public/Non-Profit = $1,000/ton without heat recovery, $1,400/ton with heat recovery; Award levels for Affordable
Housing = $1,600/ton without heat recovery, $2,000/ton with heat recovery. MA CEC revised incentive levels in early 2019 and plans to
sunset the VRF program in June 2019 for a transition to utilities.
42 https://www.veic.org/documents/default-source/resources/reports/veic-ramping-up-heat-pump-adoption-in-new-york-state.pdf
43 Heat & Cool: Heat Pump Systems, https://www.energy.gov/energysaver/heat-and-cool/heat-pump-systems
44 NYPA. https://www.nypa.gov/about/geothermalchallenge.
45 NYSERDA, 2017. “Clean Energy Fund Investment Plan: Renewable Heating & Cooling Chapter.” https://www.nyserda.ny.gov/-
/media/Files/About/Clean-Energy-Fund/cef-renewable-heating-and-cooling-chapter.pdf.