HVAC Sector Poised to be Disrupted

As developers of core HVAC struggle, new companies offer novel sensors and controls to improve efficiencies in heating and cooling, which use 38% of energy in commercial buildings, says Lux Research

November 9, 2015

Sensing and control start-ups are threatening incumbents in the heating, ventilation, and air conditioning (HVAC) world, as core equipment developers struggle with innovation and finances, according to Lux Research. Just as in the building energy management systems (BEMS) software space, start-ups are innovating faster and challenging large building controls companies’ turf by installing their own connected devices and offering services.

“Large building companies are coming under siege by nimble startups,” said Alex Herceg, Lux Research Analyst and lead author of the report titled, “Identifying Disruption in Advanced HVAC Technologies for Commercial Buildings.”

“In the emerging landscape, large building equipment controls companies must proactively partner with or acquire HVAC tech developers, while utilities and telecom companies can leverage sensors and controls companies to cross-sell services,” he added.

Lux Research analysts evaluated emerging HVAC technologies and start-ups, rating them on the Lux Innovation Grid. Among their findings:

  • Ventilation technologies set for strong growth.  Companies with enhanced ventilation technologies will see robust growth in the near term. Regulatory pushes are helping generate market pull – third-party certifications are growing at a 13% compound annual growth rate (CAGR) globally.
  • Hardware-heavy offerings are becoming “servitized.” Many start-ups have begun to bundle hardware into a service, ending outdated energy performance contracting. Companies like Daintree Networks and Entic are driving growth rates as high as 300% year-over-year using this "servitized" approach.
  • Comprehensive offerings have an edge. Cyclon Controls, Distech Controls, Enlighted, and Entic are among the “Dominant” HVAC sensors and controls companies on the Lux Innovation Grid. All four offer a full suite of sensing and controls products to help appeal to customers looking for a complete solution.

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