Using data provided in Cold Hard Facts (CHF) 4, CCN provides a snapshot of Australia’s residential air conditioning market today.
Sales of single split systems including wall hung, cassette, and consoles in 2022 reached 1.14 million units.
This is in addition to another 36,000 sales of multi split systems, excluding VRV/VRF systems, and around 200,000 small self-contained units including window/wall units and portable air conditioners.
According to CHF, single split systems are projected to grow at a compound annual growth rate of around four per cent through to the year 2036.
Analysis of pre-charged equipment (PCE) imports in 2022 indicate that non-ducted single split systems, designed primarily for residential use, made up about 84 per cent by quantity (pieces of equipment) and about 54 per cent by refrigerant volume of all stationary AC imported into Australia.
The adoption of HFC‑32 has continued to grow strongly in non‑ducted split systems, particularly in units with charge sizes between 800 grams and 2.6 kg.
In fact the penetration of HFC‑32 charged equipment reached 94 per cent of new equipment imports in 2022.
According to CHF 4, imports of split systems have grown rapidly from 2015 to 2022 climbing from 1,091,622 in 2015 to 1,455,682 in 2022, a 33 per cent increase in equipment numbers in this seven‑year period.
Despite the significant growth in equipment numbers, corresponding HFC imports have only grown by 17 per cent due to a reduction in average charge size in spilt systems from 1.3 kg in 2015 to 1.1kg in 2022.
New regulations
The Australian government has banned the import and manufacture of small air conditioners using refrigerant with a GWP over 750 from 1 July 2024.
This applies to equipment for stationary uses, including portable air conditioners, window/wall units and non-ducted single split systems.
Restrictions on the import and manufacture of outdoor units for a multi-head split air conditioning system will come into force from 1 July, 2025.
Another useful measure of activity in the Australian market is the level of expenditure on new installed equipment in 2022 including installation costs.
In 2022, Australia's GDP reached $2.33trillion. The total expenditure of the refrigeration and air conditioning industry on new equipment installation, maintenance, wages, and energy consumed accounted for over two per cent of the nation's GDP supported by a workforce that represents 2.6 per cent of total employment in Australia.
From 2016 to 2022 there has been an increase across all equipment categories of more than 50 per cent or a compound annual growth rate of between seven and eight per cent per annum.
As a comparison the Australian Bureau of Statistics (ABS) consumer price index (CPI) for Australia has increased by 19 per cent from December 2016 to December 2022, a compound annual growth rate of only 2.9 per cent.
Increases in investment in all equipment categories can be partially attributed to a variety of inflationary pressures during this time, as well as an overall increase in demand for new equipment.
For example, the cost of the most commonly purchased air conditioning product, wall hung split systems installed increased by 15 per cent during this period.
At the same time, the average selling price of commercial refrigeration equipment (condensing units and evaporators) and systems has increased by between 20 and 50 per cent over this six year period.
Adding to this is the cost for RAC technicians, encompassing vehicle and tool expenses, rising by approximately 30 per cent. This increase factors in a 22 per cent rise in wages.
Finally, the wholesale sell price for refrigerant has increased significantly for the main species, for example HFC-404A by more than 50 per cent and HFC-410A by around 25 per cent.
Heat pumps
Australia is experiencing a surge of domestic heat pump sales that is expected to continue at least into the mid-2030s as they continue to replace gas appliances in both existing and new buildings.
The Australian domestic hot water systems market has long been dominated by gas fueled and electric resistive systems, with gas instantaneous and electric storage hot water systems being the most common.
The market is estimated at between 850,000 to 1,000,000 units sold in 2022, with 80 to 85 per cent sold into the residential market.
Hot Water Heat Pump (HWHP) systems, which are a much newer technology, has benefitted from government incentives that have been driving the surge in sales.
The recent introduction of new financial incentives to install heat pumps in New South Wales, South Australia and Victoria has resulted in installations of HWHPs increasing more than fourfold from a 2019 low of 100,000 units sold in 2021, and 117,000 sold in 2022.
Although incentives are available in other states and territories, their impact is comparatively lower.
This product category is expected to continue to grow strongly over the next decade and increase to around 600,000 HWHP sold in the year 2036.
Business activity
One useful measure of the number of businesses or contractors operating in this industry is the number of Refrigerant Trading Authorisations (RTAs) issued by the Australian Refrigeration Council (ARC).
At the end of 2023, there were 20,944 RTAs issued by ARC.
RTAs are required for a business to buy, sell and store refrigerant.
This 15 per cent growth (additional 2,810 RTAs) between 2016 to 2023 points to the strength of underlying business activity in the sector.
The main business types recorded in the licensing database as at the end of 2023 are 51% automotive air conditioning, 26% stationary RAC, 17% split system AC installation and 4% domestic RAC.
A second useful metric is the number of Refrigerant Handling Licences (RHLs) issued by the ARC to individuals, many of whom work in businesses holding RTAs.
The total number of RHLs has grown by 26 per cent between 2016 and 2023.
A significant trend has seen the number of trainee refrigeration and air conditioning licences grow from 1,961 in 2018 to 5,880 in 2023.
Growing workforce
The total labour force in Australia at the end of 2023 was 14.232 million total direct employment in RAC industry in Australia in 2023 coming in at 378,000.
In 2023 the RAC industry provided 2.6 per cent of total employment in Australia.
The average age of an RHL holder in 2017 was around 40 years. The average age in 2023 has increased slightly to 41 years with the dominant age group between 30 and 34 years representing 15 per cent, followed by the age group of 35 and 39 years representing 14.8 per cent with only 9.4 per cent below 25 years of age.
The number of females with RHLs has grown from 168 in 2020 to 291 in 2023 with the dominant age group 25 to 29 years of age representing 31 per cent of women with RHLs.