Despite an intensifying climate crisis and global uncertainty, Germany remained on the top for nations putting efforts into energy efficiency and achieved the third spot, overall, in reducing energy waste and planet-warming emissions, according to the 2022 International Energy Efficiency Scorecard. The report was published recently by the non-profit American Council for an Energy- Efficient Economy (ACEEE).
Already acknowledged as a mature market for energy efficiency and a green economy, Germany is doubling its efforts in energy diversification and bringing in regulations and technologies to tackle climate challenges in HVACR and other sectors. In addition, the slowly fading pandemic has created considerable opportunities for air filtration and ventilation solutions. As Felipe Ruiz Guerrero, International Sales Manager, Engie Refrigeration, puts it, the restrictions brought in by the pandemic have increased demand for data centres and industrial chillers manifold, making last year a record year for Engie in terms of chiller sales. “This is by the hand of several key drivers that apply particularly to the German market and, to a considerable extent, to southern Europe,” he says. “With the pandemic stimulating digitalisation and cloud technology in almost every sector, data centres are mushrooming across European tech cities, such as London, Madrid, Flanders, Luxembourg, etc. Data centres are driving the industrial segment as they are huge energy consumers.” Further narrowing down to Engie’s chiller business scenario, Guerrero says that diversification of the energy sources has been the major driver within the chiller plants business.
He also notes that COVID-19 is pushing forward investment into the airside business, driving demand for ventilation, Indoor Air Quality-related controls and so on. Providing a more commercial and consumer trend, Dipen Patel, Managing Director, ZIEHL-ABEGG MIDDLE EAST, says: “Energy efficiency is still a key topic in Germany and around Europe, so the focus is on modern products, which consume less energy. On the other hand, commercial demand is coming from the retrofit market to exchange old products with low efficiency for new products with high efficiency.” These projects include public buildings, schools, and offices exploring automatic controls and sensors to optimise use, as well as IAQ solutions to improve the indoor environment, he adds.
Demand for smart building control has also increased owing to the reported multitude of benefits they offer. Mohammad Shereef Ibrahim, General Manager, DEOS Middle East, a building automation company, feels that the pandemic has hugely changed the approach to building management and solutions, “We have seen a quick acceptance towards new ways of doing things,” he says. “Trends, such as intelligent monitoring systems, building automation systems and central intelligence for buildings; the focus on efficiency and on Indoor Air Quality; and maintenance are becoming the norm for obvious reasons, like rising inflation and shortage of skills or increasing labour cost.” He confirms that there has been increasing demand for smart and sustainable products in the country, with the biggest trend for DEOS being heat smart and wireless heat and solar energy.
In terms of HVACR innovation, Ibrahim says that the focus has shifted to IAQ and carbon neutrality. “We have seen a huge demand for air quality management systems, especially in schools,” he says. The urgency to achieve faster decarbonisation and energy diversification also comes from the fact that Europe, as a region, has been experiencing constant energy price jumps for the past few years. Guerrero explains: “If you take a look at the energy price trends – even before the Russian invasion of Ukraine and related effects of this conflict, which was a reduction of gas supply to Europe – the energy prices were rising without a stall. We are paying more for energy each year, hence energy efficiency in HVAC or any other segment is not just driven by EU regulation, it is a matter of competitiveness. If you are not delivering high-efficiency equipment, you don’t have a place in the European market.”
Further enhancing the existing regulations around energy efficiency and emission control, Guerrero says, the recently introduced Eco Design Framework constitutes a set of requirements that will affect the design of HVAC equipment and other products. “This means the manufacturer will be given certain parameters to meet in terms of energy efficiency ratio, emissions and materials to commercialise products in Europe, regardless of where they are manufactured,” he says. “For us, this would mean that fans, air- handling units, fans and pumps in a chiller will need to be designed to meet the requirements of the framework.” The operational efficiency criteria in Germany are based on the seasonal energy efficiency ratio in the integrated and partial- load efficiency and energy classifications. Guerrero says: “However, this is not a new trend; today, products need to be aligned and
compete based on that better energy, seasonal energy efficiency ratio. You have to possess a better seasonal coefficient heat pump or chillers to carve better positioning in the market.”
Germany’s energy and HVACR sector focuses on a two-pronged approach to fight climate change and meet the target of 50% net-zero buildings by 2030. The local market has been intensely focusing on bringing in smart IoT-based building management and monitoring solutions while working toward implementing Green Deal and F Gas regulations. Ibrahim explains that most new constructions are smart residential and commercial buildings, but the retrofit or repurposing market is also in full swing. “We are talking about connecting buildings to the Internet with data-driven analysis to make the building more and more sustainable,” he says. “This will need HVACR manufacturers to develop products as smart and safe, as fast as possible, and consider the opportunities in terms of closing the gap with the existing legacy system.” He believes that the HVACR sector has a greater role to play as Germany makes efforts to transition from gas and coal to renewables, like solar, wind energy and hydrogen to power buildings.
Meanwhile, Patel underlines the role of IoT and predictive maintenance in better and more efficient planning of cleaning and maintenance, filter exchange or just simply monitoring of HVAC systems in ensuring efficiency throughout the building lifetime. Explaining how HVACR efficiency can only be achieved in tandem with energy diversification, in the case of Germany, Guerrero says that in Europe, energy is so expensive that for an industrial end-user making any product – for example, a plastic bottle for food and beverage industry or medicine from the pharmaceutical laboratory – the cost of energy on a finished product is more than 40%. “From our experience of providing chillers to data centres, we have learnt that paying reasonable energy bills indeed improves the competitiveness of the technology brands,” he says. “Hence, the energy efficiency of chillers and HVAC systems that keep the server rooms safe, becomes paramount, in addition to renewables and emission control.”
Another most important area for meeting Europe’s Green Deal Goals and emission targets, has been bringing in regulations to adopt low-GWP and natural refrigerants in HVAC systems. Ibrahim claims that Germany is significantly adopting natural refrigerants in air conditioning and heat pump systems compared to the other regions. Similarly, in February 2022, the European heating market agreed to phase out fossil gas, a joint decision undertaken by NGOs and industry. “A legislative commitment to green heat would provide certainty for manufacturers, and it would ensure that all German consumers can access the benefits of switching from fossil to renewable heating,” he says.
As a result of the European F Gas regulation (EU517), HVAC manufacturers must use a refrigerant with a low-GWP value. So smaller units, like heat pumps or display showcase units, go more to the propane solution, while bigger chillers or cooling systems go more in the direction of CO2 or ammonia. “Europe, and Germany, already have safety regulations on how to handle these natural and flammable refrigerants and there is much more awareness,” Ibrahim says. “The regulations have influenced the components market, as well, such as fans, where we have to conform the usage in combination with these flammable refrigerants. In addition, the cooling capacity needs to be around eight per cent of global energy consumption.”
The consensus about Germany is that the country’s climate action is not on paper anymore, as it was a few years ago. However, the country’s energy policies are to change dramatically, Guerrero says, and energy sources diversification will be a key driver. “Germany is heavily dependent on Russian gas for energy, and regardless of what happens with the conflict in Ukraine, the situation will not go back to what it was,” he says. “There will be immense pressure from the industrial sector to restore the supply by reopening the Nord Stream pipeline, as it remains the fastest way to stay at full operational capacity and competitiveness. Nevertheless, I think Europe is already a very diversified region with more focus on renewables.”
In addition to building renewable infrastructure and improving the energy efficiency of HVAC systems, Germany is bringing in regulatory frameworks for various equipment categories. Guerrero notes that one such regulation is the recently introduced European Union Plan that has set ambitious targets for heat pump installation, aiming for 50 million heat pumps to be installed by 2030, with an annual growth of 16%. “That will be about one-third of the 150 million boiler installations in the bloc,” he says. Another topic, he says, is the growing energy economy, where businesses are rationalising the use of energy. “The equation is simple,” he says. “If you want to be competitive, you need to make your product competitive in terms of energy performance. Energy economy means understanding and bringing in a proper balancing of energy mix while manufacturing a product to keep the energy cost of the completed product competitive.”
Germany and Europe, in general, are bending toward renewables, hoping to face the unexpected energy challenges, which Guerrero confirms, as ENGIE is going faster on acquiring renewable energy companies, particularly in solar generation and solid energy generation, with the last one in Spain. “Germany is already progressing quickly in adopting renewables,” he says. “A few small countries – for example, Portugal — have achieved a key milestone by satisfying the entire national energy for one week only through renewables.”
Even as renewables are advancing, Germany is still dependent on nuclear power for a considerable amount of its national energy mix. Ibrahim says: “Due to the current uncertainties, there are several discussions regarding energy security in Germany and Europe. By law, the remaining three nuclear power plants in Germany should stop operating by the end of this year; however, speculation is rising if this will be extended into 2023.”
He says that a warmer summer this year resulted in solar power generation hitting a new high, especially in the individual homeowners investing in them. Nonetheless, the coming winter 2022-2023 will be challenging for Germany and Europe due to the geopolitical conditions. “By 2023, we foresee massive investments into LNG terminals in the North Sea, as well as fiscal incentives for renewable energy, such as wind, solar and hydrogen,” Ibrahim says. Concurring with this opinion, Guerrero says: “There is no short-term solution other than nuclear to meet the energy demand with upcoming winter to see demand for heating. We do use biogas for heating homes in the countryside, but in cities, the scenario is different. They use District Cooling, District Heating or centralised HVAC systems backed by smart monitoring and control systems for efficiency.”
Meanwhile, in Germany, it is widely believed that integration of efficiency and renewables is the smartest way to achieving net- zero buildings. “With current trends and action plans, we expect 50% of building to go net-zero by 2030,” Ibrahim says. Growing focus on building efficiency in the Middle East region to meet climate goals has increased interest in the latest German products. Countries like UAE, Saudi Arabia and Egypt have been at the forefront, with others joining the force in introducing governmental level strategies from the top to ensure the region at the root level brings about necessary solutions to ensure the carbon footprint is reduced in sustainable and innovative ways. Patel says: “New technologies are being implemented in the HVACR industry, which provide better performance using products with new materials, such as composite with low VOC. Moving away from the traditional on/off controls, there are also requirements being introduced for demand-based controls using IoT tools.”
In terms of demand for German HVACR innovations, Ibrahim says that the Middle East region continues to be a key export market for German manufacturers. “There has been a lot of initiation by the government in terms of energy efficiency and carbon neutrality,” he says. “We are also expecting this to be accelerated further, as this market is able to make quick decisions and accept innovations, with many ongoing active projects.”