Cold as brass

And just as computers in our offices encouraged computers in our homes, so our increasing acquaintance with internal climate control is encouraging its uptake in homes and small scale premises. At least that's the view of the latest report from BSRIA, which examines the market drivers and possible barriers to growth of small scale air conditioning.

It estimates the market for small scale air conditioners at 178 000 units, worth around £65 million. The residential sector makes up the largest number of units at 109 000, though at £17 million barely a quarter of the market value (see figure 1).

All aspects of small scale air conditioners have been under pressure in terms of price and competition. However, BSRIA says that while the markets for products such as portables and small splits below 5 kW are very fragmented, the markets for evaporative coolers, dehumidifiers and window units are less so. A handful of companies account for over 80% of the market.

For moveables and small splits, the market leaders change place each year, with DeLonghi, Haier, Olympia Splendid and Building and Argo (also sold as Creda to the residential sector), currently leading the market for portables. For small fixed splits Fujitsu, Mitsubishi Electric, Daikin and Toshiba Carrier are the main brands.

Not surprisingly, offices and retail premises account for the bulk of air conditioning sales, with the highest penetration in London and the south east. The younger and larger the building, the more likely it is to have air conditioning. Yet DETR figures suggest there is still plenty of room for expansion. At the small end of retail and office premises, air conditioning penetration remains very low. Only 10% of offices less than 1000 m² have air conditioning, compared with 70% of offices larger than 10 000 m². For very small retailers (less than 100 m²) just 1% are air conditioned, compared with the 50-60% of high street stores which have now been air conditioned.

Views on the future growth of equipment for the home vary. Some supplier estimates predict 20 000 residential split units by 2000, but BSRIA believes that last year's poor summer also took the heat out of the market. Despite an industry view that the maximum penetration of fixed residential air conditioning is 15-20% of UK households, BSRIA points out that this would require sales of 240 000 units annually for the next 20 years. Its own view is that the total number of all residential systems will not break the half million mark until 2018 (see figure 2).

The cold truth

So, with small scale air conditioning offering a potential new field for electrical contractors and reinforcing a traditional market for mechanicals, how best to turn prospects into projects? Unfortunately, the picture is clouded by a constant influx of low cost brands and the regular ousting of disenchanted companies. Brand awareness is low and installer and distributor recommendations are the normal routes to selection.

More encouragingly for installers considering offering residential systems, the public do not seem very enamoured with what they are being served at the moment. Indeed, the UK's unpredictable weather is the only factor perceived as of more importance than the quality of commercial air conditioning installers.

The industry is already facing problems with an insufficient number of trained installers and the majority of commercial installers are currently showing little interest in residential markets.

They perceive customers as inflexible and demanding with little interest in service contracts which is where more money is to be made, says BSRIA. It says that as opposed to commercial users, consumers want to know exactly when an installer is coming, will call them out for petty problems and represent very low margins. Therefore, most manufacturers asked did not expect many installers would welcome domestic work – an opportunity for smaller contractors? The possible shortfall in available installers should a couple of hot summers boost sales is worrying for the air conditioning manufacturers, BSRIA discovered. It says that they are concerned that this could potentially leave the way open for cowboy contractors unless policing is introduced (see Air force). Some of the well established brands are only working with certified installers and the CETEC scheme has also been set up in order to train contractors in new refrigerant techniques, pipework and brazing and the safe handling of fluorocarbon refrigerants. Currently, Daikin, Mitsubishi Electric and Toshiba Carrier UK are involved in the scheme.

Environmental concerns remain low on the agenda for many domestic customers who, BSRIA says, expect the products they buy to be environmentally friendly but at the same time low cost.

Who wants what where?

Overall, BSRIA found sales of air conditioning to be about 60/40 in favour of the south, with a stronger division when it comes to the residential market. For light commercial users small retail outlets have shown some growth, as have sectors such as doctors and dentists, who now have more control over their budgets. They are trying to differentiate themselves and see air conditioning as one way of doing this, typically opting for 2 kW high wall split units.

Around 70% of evaporative coolers are directed to the residential market (see figure 3), with a certain proportion heading for small office use. These units tend to attract the price conscious consumer and, to a certain extent, the informed environmentalist. However, small commercial and residential end users find it inconvenient to keep filling up the systems with water.

When it comes to dehumidifiers, BSRIA is unswervingly specific. It says the typical owner is middle aged (40+) and affluent, and as such is more likely to invest in air conditioning products.

Window units are beginning to create certain niche markets, such as conservatories and Portacabins. This option is moving towards domestic end users as opposed to commercial applications, though many are used in warehouses, factories and storage rooms, where noise is not an issue. Shops also remain a market for this type of unit, because of their ease of installation.

Just the job

While BSRIA's report paints a somewhat confusing picture of the small scale air conditioning market, it does highlight that it is a far from mature sector, with significant potential for growth.

A lack of enthusiasm from many installers over getting involved, might not seem the most reassuring of indicators. However, concern over cowboy operators does seem to leave the way open for contractors committed to training and technical expertise.

At a time when margins in many traditional areas remain under pressure, the potential growth of the air conditioning sector could offer a welcome breath of fresh air for m&e specialists.