Chillers Market in India primed for growth reveals Frost & Sullivan Market Insight

Mumbai, India - March 04, 2013 - With substantial growth in construction activities and industrial expansion, ensuring energy efficiency and sustainable economic growth is the need of the hour. Comfort cooling and Precision cooling are evolving in commercial segments in India. Keeping this in mind, it is particularly important to analyze the demand for chillers and how this segment is going to unfold in the Indian environment. Among the various types of available air-conditioning products, chillers have proved to be the most effective way of cooling and efficient in saving electric power, compared to other air-conditioning products. Chillers are meant for wider application areas and have larger cooling capacity, typically ranging from 15-1,000 tons of refrigeration (TR). Though they vary in terms of technology, scalability of operation, and energy efficiency, all of them have eco-friendly characteristics. Apart from traditional functions, chillers have multiple applications, which include process cooling (for industries using absorption technologies), special/critical area cooling (for data centers), marine cooling (for ships and submarines) district cooling, and turbine inlet cooling (especially for gas turbines) Potential Growth Opportunities Commercial Sector A major thrust for the chillers market is expected to come from the commercial sector covering offices, hospitals, hotels, etc. The Indian real estate construction market touched $100 billion in 2010. Going by the growth rate of 10 percent, as was observed during the pre-recession days of 2008, it is likely to touch $265 billion by 2020. Data Centers Data centers require massive cooling facilities and this is a major market for the chillers segment. In India, increasing IT business process outsourcing from across the globe has resulted in phenomenal growth of data center facilities. According to Frost & Sullivan, the total third party data center capacity in India was 3.15 million square feet in 2012 and is expected to touch 9.14 million square feet by 2018. Total number of third party data centers in India was estimated to be 98 units in 2012, with majority being located in Mumbai and the National Capital Region (NCR), followed by Chennai and Bangalore. Turbine Inlet Air Cooling India is yet to realize the full potential for turbine-inlet cooling in gas-based thermal power plants. Considering the limitations on use of coal for power generation due to its environmental impact, quality, and supply constraints; gas will play an increasingly important role in India's power sector. Gas-based power generation capacity, along with other renewable sources of energy generation is expected to see more thrust in the 12th Five Year Plan as a part of the low-carbon pathway articulated under the aegis of National Action Plan for Climate Change (NAPCC). Turbine inlet air cooling (TIAC) is an important element in gas-based power plants. Here, instead of adding more gas-turbine generators, the efficiency or output capacity of existing generators can be enhanced by using chillers. The investment (US$/kilowatt) on chillers for TIAC is much less than the cost of adding additional turbines. Gas-based power plants in the US, Europe, and countries in the GCC are witnessing more and more installations of TIAC using modular chiller plants (MCP) to produce rated or higher-thanrated capacity of power (MW). Shipbuilding Shipbuilding is another niche sector where chillers have a potential market in India. A Frost & Sullivan study on the Indian shipbuilding and repair market indicates that the aging fleet of shipping companies in India is a factor that is energizing prospects for the shipbuilding and repair market in the country. The study also suggests that Indian shipbuilders are poised to capture a decent share of global projects, as the order books

of Japanese, South Korean, and Chinese shipyards are already full till 2015 with container vessels, super tankers, and Panamax vessels. Building sustainable cities through eco-efficiency and green planning, district cooling a concept that is prevalent in the Middle East and other developed nations in Europe may soon find takers in India as well. One of the seven proposed smart cities to be developed along the 1,500 kilometer-long Delhi-Mumbai Corridor could be a start to test the concept of district cooling. If it succeeds in the Indian context, it can be expanded to include other cities or special investment regions. The chillers market presents lucrative business opportunities and has attracted many international companies to India, which may pose a serious threat to growth of domestic companies. International companies are investing heavily in India to set up manufacturing units or opting for technological alliances with domestic manufacturers to utilize their distribution network. This Market Insight on the Chillers Market in India is a part of the Building Management Technologies Growth Partnership Service Program. Frost & Sullivan's related research services include: Select HVAC Products Market in India, Integrated Building Management Systems Market in India, Indian Fire and Safety Products Market and, Indian Facility Management Services (FMS) Market. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. Our "Growth Partnership" supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.

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Absorption chillers market driven by the growing focus on energy conservation

The absorption chillers market has been forecast to hit an industry value of $921.8 million by 2018, driven by the growing focus on energy conservation, environmental protection, and robust demand from developing countries. An absorption chiller is an environmentally friendly air conditioning system that uses water as a refrigerant and gas or oil as fuel. One of the most prominent technologies gaining impetus globally is the absorption cooling technology that uses absorption chillers to provide cooling using natural solar and thermal sources of energy.

Although usage of these chillers is comparatively a recent phenomenon, the technology in fact, has been in existence since the early 19th century. Since then the market for these chillers has expanded, as greater number of end-users opt for absorption chillers to reduce their dependency on electric power and save energy, thereby reducing overall costs. Over the years, the demand for cooling systems has witnessed an incremental rise in many parts of the world, not only for comfort cooling purposes but also for process cooling in industrial applications. With rising consumer demand, the electrically driven compressor cooling equipment market has witnessed exponential growth over the last few years. In contrast to the European and US markets where centrifugal and positive displacement chillers occupy a dominant position, absorption chillers drive demand in the Asian chillers market, particularly in Japan, China and Korea, which account for a significant 75% of the global market. Although absorption chillers are emerging as a lucrative segment in the chillers industry in many countries, they are still in the initial phases of market adoption in many developing countries. Despite being environment friendly and powered by rejected heat, making them more appealing compared to vapour compression chillers, the segment still encounters impediments in the form of high cost, relatively low efficiency and poor consumer awareness. Nevertheless, growth in the global construction industry, government initiatives, rising consumer awareness, phasing out of harmful refrigerants and the widening footprint of companies in various regional markets among other factors, are likely to augment demand for these chillers in the long run.

Asia-Pacific largest and fastest growing market for absorption chillers

Absorption chillers have been gaining considerable adoption in the commercial HVAC and industrial cooling sectors, according to new report Absorption Chillers: A Global Strategic Business Report. Key factors driving growth of absorption chillers include rising energy prices and strict environmental mandates that place a premium on ecofriendly benefits.

The latest research report announced by Global Industry Analysts Inc., provides a comprehensive review of market trends, company profiles, mergers, acquisitions and other strategic industry activities that point to growth in the absorption chiller market. Global market for Absorption Chillers is projected to reach US$921.8 million (705 million) by 2018 The new Global Industry Analysts (GIA) report provides market estimates that the global market for Absorption Chillers is projected to reach US$921.8 million (705 million) by 2018. The report includes projections in US$ for all major geographic markets such as the US, Canada, Japan, Europe (France, Germany, Italy, UK, Spain, Russia, and Rest of Europe), Asia-Pacific, Latin America, and Rest of World. According to the report Asia-Pacific represents the largest and the fastest growing market worldwide, with sales projected to grow at a CAGR of about 4.1% over the analysis period. In the coming years Chinese investment in efficient technologies is predicted to grow at over 18% per annum, which in turn will likely turbo-charge demand for energy efficient absorption chillers.

Of note is the fact that waste heat powered absorption chillers are growing in prominence. These units that draw heat energy from a waste heat stream from other process that would normally be discharged into the environment. Key drivers of investment in absorption cooling It is expected that the growing demand for absorption chillers will be driven largely by the following factors:

Growing focus on solar power as a cost effective renewable energy source is benefiting demand for solar absorption chillers Phase-out of fluorocarbon based refrigerants by governments worldwide, with penalties imposed for the violation of safe use and disposal guidelines Implementation of the Kyoto Protocol to tackle climate change Rising energy prices and greater interest in energy conservation Robust demand from developing countries

Absorption technology developments Also expected to bring new opportunities for growth are technology developments such as:

The integration of embedded microprocessors: these impart smarter and more intelligent control features that provide more accurate control of absorber processes. Triple-Effect Absorption Chillers: these represent an upcoming technology with promising market potential, which is driven by the rising focus on high-efficiency.

Leading market players The GIA report lists the following leading market players: Broad Air Conditioning Co., Ltd., Carrier Corporation, Century Corporation, EAW Energieanlagenbau GmbH, Hitachi Appliances Inc., Johnson Controls, LG Air Conditioning (Shandong) Co., Ltd., Robur Corporation, Thermax Inc., Trane Inc., and Yazaki Energy Systems Inc., among others.