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CH670520413AC

ABSORPTION CHILLERS MCP-6705

Outlook
The global market for absorption chillers is estimated at US$763.27 million for 2013. Growing at a
compounded annual rate of 3.21% over the analysis period 2010-2018, the market is likely to reach
US$921.80 million by 2018.

Asia-Pacific Continues to Lend Traction to the Market


Asia-Pacific continues to represent the largest and the fastest growing regional market for absorption
chillers. Rapid economic development, growth in manufacturing and processing activity, particularly in
emerging countries such as China and India and other industrialized nations such as Korea, Taiwan,
Singapore, and Indonesia, increased construction of commercial business facilities, and subsequent
growth in demand for comfort and process cooling equipment are particularly driving demand for
absorption chillers in the region. Inadequate power supply in many of the countries, and growing
consumer awareness on energy efficiency are also driving increased adoption of absorption chillers
for cooling systems in a range of industry segments in the region. Government mandates to control
noxious gas emissions, and improve energy efficiency in industrial and commercial facilities is also
helping drive increased adoption of absorption chillers in the region. Supply of gas in certain countries
such as Pakistan is also expected to fuel demand for gas-fired absorption chillers. Commissioning and
installation of new chemical facilities outside North America and Europe additionally resulted in shifting
of demand for absorption chillers from the developed to the emerging markets. Although a major
market already, Asia-Pacific still offers huge untapped market potential for absorption chillers,
particularly in Tier-II and Tier III industrial areas. Given the lucrative opportunities in store, global
players have already started focusing on Asia-Pacific market. Leading companies such as Carrier
Corporation, York International, Trane, Daikin McQuay, Dunham-Bush, and Kawasaki Thermal
Engineering, among others, already have established their presence in many countries in the region.
The expertise and knowledge of these manufacturers in other chiller segments is likely to provide a
robust platform for greater and easier penetration in the absorption chiller category in the region.

TABLE 3: Absorption Chillers as Percentage of Total Chillers Market (2011): Breakdown


by Region - Asia & Oceania, North & South America, Europe, and Rest of World

Region % Share % Share

Asia & Oceania 8.76 Asia & Oceania


North & South America
North & South America 2.83
Europe
Europe 1.23 Rest of world

Rest of world 3.14 0 1.9 3.8 5.7 7.6 9.5

Absorption Chillers Face Stiff Competition from Other Popular Chiller Categories
Despite the huge opportunities for growth, the absorption chillers continue to battle it out with other
competing chiller technologies such as screw, reciprocating, scroll and centrifugal chiller systems for

ABSORPTION CHILLERS - A GLOBAL STRATEGIC BUSINESS REPORT 04/13


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ABSORPTION CHILLERS MCP-6705

market share. As conventional chiller technologies have already gained considerable penetration in
commercial and industrial markets and enjoy significant success in implementations, they are not
likely to be replaced with new absorption chillers very soon, thus posing major hindrance to the
expansion of the absorption chillers market. Although absorption chillers make strong sense for
energy conservation and environmental reasons, they however are yet to achieve mass market
adoption in industrial and commercial applications. Absorption chillers suffer from perceived
drawbacks such as lower efficiency rates, high ownership costs, and large space requirements.
Absorption chillers are perceived to be less efficient than compressor driven chillers given that they
use water as a refrigerant, which is less efficient as a refrigerant than fluorocarbon based
refrigerants. This lower efficiency mandates larger components, making absorption chillers larger
and more space consuming than electric chillers of same capacity. Also, absorption chillers need
dedicated space for installation and maintenance (volume of steam absorption chillers is 0.2 m3 per
KW). Therefore, any space constrains or structural limitations (especially in small buildings) can
become an impediment for use of absorption chillers. Although absorption chillers bring
considerable savings on electricity costs in the long run, they are highly expensive upfront, which
make most of the commercial and industrial consumers prefer less expensive products. Absorption
chillers also could not overshadow other chiller technologies over the years, given that most of
these models that came into the market were designed for use in large scale industrial and
commercial applications, thus limiting their adoption in light commercial and residential structures.
Additionally, given that water is the most important component for functioning of absorption chiller,
water supply shortages in certain areas is a major hindrance to its widespread adoption.

Robust Increase in Sales of Centrifugal Chillers - A Cause for Concern


Absorption chillers are facing stiff completion from the centrifugal chiller category. Growing popularity
of centrifugal chillers in industrial and commercial segments, and a flourishing multi-split air conditioners
market is biting into the share of absorption chillers. Subsequently, a large number of companies
are also launching newer and more efficient centrifugal chiller products in order to increase their
respective market shares. In case of the scroll/reciprocating chillers category, primarily air-cooled
modular scroll chillers rule the demand scene. Of late, sales of modular chillers has been witnessing
rapid growth and increase in market share, mainly due to their capability of addressing general
requirements, low-costs compared to screw chillers and easy maintenance and installation benefits.

Lack of Awareness - Major Concern


Lack of awareness among consumers about the availability of absorption chiller technology in the
market and its environmental and economical benefits is a major factor pulling back market growth.
Even in markets where chillers have a certain share, poor consumer perceptions regarding reliability
of the product restricts penetrations rates. Lack of technical skills and practical experience among
professionals, particularly in emerging markets is a setback to the absorption chiller market in these
regions, as the viability and usage benefits are not clearly propagated to end-users.

Technology Developments to Bring New Opportunities


Manufacturers currently are concentrating on research and development activities focused on
designing cost-effective absorption chiller units with high efficiency rates. Companies are also

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integrating certain add on features such as microprocessors and sophisticated lamps for enhancing
the convenience benefits of these chiller machines. Most of the absorption chiller units sold today
use automatic purge systems that eliminate the need for manual purging. Not only has the
integration of automatic purging systems reduced risk of corrosion, integration of microprocessor
solid state controls and concentration sensing has significantly enhanced control system response
times and lowered chances of crystallization. Producers are also integrating absorption chillers with
mass spectrometers and LEP lamp to indicate the status of mechanic operation/shutdown along
with ensuring stringent quality control that would improve efficiency and convenience benefits
associated with absorption chillers.
Technological advancements that would enhance system technology, basic materials and
components would provide growth opportunities by lowering costs and ramping up performance.
Increasing developments in the absorption chillers market is likely to lower costs of the absorption
chiller unit leading to its widespread adoption and rapid upgradations.

Triple-Effect Absorption Chillers: An Upcoming Technology


In response to the ever-growing need for high-efficiency absorption chillers, a large number of
companies have introduced triple-effect systems and these are likely to emerge as one of the
fastest growing categories of absorption chillers. These chillers are expected to have a higher COP
than double-effect chillers and would be available with two different cycles. One variant includes
three condensers systems where the third condenser functions as a sub-cooler, while the second
variant uses two absorbers and two condensers. One of the most significant advantages associated
with advanced triple-effect chillers is the likelihood of achieving thermal efficiencies at par with
efficiency rates of mechanical/electrical chillers. Such superior performance would most likely
facilitate absorption chillers segment to gain a greater share in the chiller market.

Rising Demand for Compact Absorption Chillers from Residential Sectors


Commercially sold absorption chillers with capacities ranging from medium level (50-300kW) to high
(300kW and up) level have been successfully implemented in a host of solar cooling applications
and CHPs for industrial and large commercial applications. Growing need for development of
solutions that can bring down electricity costs, especially to fulfill air conditioning requirements in
residential and small commercial facilities has prompted introduction of smaller capacity absorption
cooling systems with capacity less than 50kW. Initiatives taken by the International Energy Agency
(IEA) under Task 25 and Task 38 have led to the introduction of small capacity absorption units into
the market. The 16 KW and 23 KW capacity absorption chillers, which are suitable for such small-
scale applications are especially witnessing high demand and are accounting for higher percentage
of sales than large capacity chillers. Compact absorption chillers effectively make use of waste
process low-intensity heat generated as a waste product or by-product in various industrial
processes. Further, natural heat from the sun can also be channelized to solar thermal systems and
heating networks and converted efficiently to meet cooling and air conditioning requirements in
residential buildings, and commercial and industrial establishments. Consequently, the need for
compact and high capacity absorption chilling units is rising at a rapid pace. Modular and compactly
designed twin container absorption chillers that can be easily disassembled and reassembled on
the site are increasing being installed across various facilities and establishments. During the winter
months, absorption chillers can be also be used as a heat pump in district heating units.

ABSORPTION CHILLERS - A GLOBAL STRATEGIC BUSINESS REPORT 04/13


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ABSORPTION CHILLERS MCP-6705

Despite potential in store, compact and small capacity absorption chillers market continues to face
pressing challenges. The typically high investment cost, limited number of manufacturers focusing
on these products, and need for additional equipment for its functioning are especially proving to be
a key bottleneck for its mass adoption. Additionally, lack of adequate evaluation standards, test
procedures and best practice guides for the evaluation of these chilling systems are likely to restrict
growth of absorption chillers market.

Government Initiatives & Regulatory Measures Assure Market Expansion


Initiatives taken by various governments and other market entities can help the absorption chiller
market reach a critical level in terms of volume sales, thereby providing a strong platform for growth
to become self-sustaining. To achieve desired growth, some measures that need to be taken by
governments include:
 Banning use of refrigerants that are not environmentally safe
 Providing financial incentives to customers in the form of discounted gas rates, financing
purchase of the equipment, tax credits and tax concessions, among others
 Making provisions in building regulations that discourage extensive consumption of electricity for
cooling purposes
 Providing support to manufacturers for engaging in technological developments, improving
efficiencies of the products, and attaining standardization of chiller equipment, thereby helping
them reach mass market levels
 Government measures to induce organizations and other end-users to improve energy
efficiencies and eliminate green house emissions.

Industry Promotional & Marketing Efforts to Help Drive Increased Adoption


Demonstration Projects: A Launch Pad for Absorption Chillers
Demonstration projects set up particularly in regions that have low acceptance and presence of the
product would bring about standardization in system technology and would showcase results that
would provide a platform for gaining new customers and increasing equipment installations. This
would also encourage new facilities to install absorption chillers.

Training and Marketing Initiatives to Foster Awareness Levels


Providing technology-based training for professionals and conducting product related marketing
campaigns targeted at various consumers such as installers, architects, organizations, industries
and also government bodies would most likely result in enhancing awareness among suppliers and
relevant stakeholders.

Other initiatives
Other manufacturer initiatives that would enhance the demand for absorption chillers include:
 Quantifying and promoting economic and environmental benefits of absorption cooling
implementations through seminars, workshops, conferences and publications.
 Promoting various marketing strategies to augment share of the absorption chiller market.

ABSORPTION CHILLERS - A GLOBAL STRATEGIC BUSINESS REPORT 04/13


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 Conveying environmental and energy saving benefits of absorption chillers to government


authorities in order to gain subsidies and implementation financing.
 Lowering costs by engaging in mass production of chillers
 Providing efficient after sales services and technical assistance to existing customers, not only
maintain the existing customer base but to appeal to new ones
 Establishing committees and associations (Such as The Green Chiller Association in Europe
formed to promote solar and thermal cooling systems) that encourage and support use of energy
efficient technologies, especially the absorption technology.

Need based Products Likely to Prove Advantageous


To obtain high penetration rates in a particular regional market segments, manufacturers need to
focus on promoting products taking into consideration availability of resources or the market needs
in that region. For instance, gas-fired absorption chillers should be targeted in countries where gas
is available at inexpensive rates and where its supply is stable.

District Cooling and Trigeneration Systems Offer the Needed Push


Trigeneration and district cooling systems are expected to provide the needed push to the
absorption chiller market as many countries around the world are now widely implementing
these systems.

Trigeneration
The major use of absorption chillers worldwide can be seen across various energy cascading
systems such as trigeneration plants. Trigeneration refers to the simultaneous production of cooling,
heat and electricity. This system combines various technologies such as IC engines, chillers, gas
turbines and fuel cells among others that together fulfill the requirements for cooling, heat and
power by achieving optimal utilization of energy. Trigeneration may also be referred to as CHCP
(Combine heat, cooling and power) or BCHP (Building cooling, heat and power).

Boom in Construction Industry Translates to Strong Absorption Market Development


The absorption chiller market is no exception to the impact that general economic conditions of a
country have on various businesses and markets. Recession, rise in prices of raw materials, oil/gas
crisis are some of the economic factors that had an impact on the demand in the absorption chiller
market in the past. As seen in most regional markets, the demand for these chillers is driven by
growth in large building constructions. With globalization and improving economic scenarios in
many regions (including developing economies), the construction industry is likely to reach new
heights, that would in turn open up growth avenues for absorption chillers.

Existing Chillers Segments: A Threat to the Absorption Chiller Market


Despite the huge opportunities for growth, the absorption chiller segment being a part of the chiller
market faces tough competition from other chiller groups such as screw, reciprocating, scroll and

ABSORPTION CHILLERS - A GLOBAL STRATEGIC BUSINESS REPORT 04/13


This Report Is Protected With Digital Watermarks. Copyrights per US & ICC protocols.
This Document May Not Be Printed, Copied or Distributed Outside Your Organization in Any Form Without Our Express Written Permission
© Global Industry Analysts, Inc., Phone: 408-528-9966, Fax: 408-528-9977, 6150 Hellyer Avenue, San Jose, CA 95138, USA
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