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‘Energy efficiency of VRF coupled with the CAPEX requirement driving its growth in India’

Vir S Advani, Executive Director of Blue Star, reveals the factors contributing to VRF growth in India…

| | Jul 20, 2016 | 8:53 pm
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India: According to a news report published in The Economic Times on July 3, 2015, a senior executive of Blue Star was quoted as saying that the VRF market in India is expected to grow at a compounded annual growth rate (CAGR) of about 15% over the next few years.

Explaining the factors that are fuelling the growth of VRF, Vir S Advani, Executive Director of Blue Star, says that in addition to India being a price-sensitive market, power is also expensive in India, and these two aspects are critical to making choices. He elaborates: “In India, the cost of capital for a developer process is 20%. That’s interest cost. Imagine being a developer building at 20% interest; you’ll have an idea of what your business model has to be – modular. You need to spend your CAPEX in that manner. The chilled-water system is 100% upfront. That’s also why District Cooling doesn’t even come into the picture, because with District Cooling, you need to have a negative interest cost. You cannot set up District Cooling at 20%.”

Secondly, VRF has the advantage of fast installation, he says, adding that as India has multi-tenanted developments, unlike single-tenant buildings in the UAE, VRF is an easy solution.

To sum up, he says that nature of real-estate market in India, along with the technological advantages, has favoured VRF over chilled-water system to becoming a more cost-effective solution in the country. “It is energy efficiency coupled with the CAPEX requirement – the modularity of it – that is driving its growth,” he adds.

 


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