Cooling in 2021: NatRef Equipment Costs Highly Variable

By Michael Garry, Dec 23, 2020, 10:52 3 minute reading

Demand is lowering costs, but other factors are keeping them up.

One topic about which there is considerable disagreement among stakeholders is the direction that natural refrigerant equipment costs will take in 2021.

The continuing HFC phase down in the EU required by the F-Gas Regulation will lead to “more and more [installations of] chillers based on natural refrigerants, said Thomas Bartman, Sales Director, German OEM Efficient Energy. “This will, in conse- quence, lead to decreasing production costs and sales prices.”

Armin Hafner, professor in refrigeration in the Department of Energy and Process Engineering at the Norwegian University of Science and Technology (NTNU), also expects equipment costs to come down as market shares and competition rise. He added that end users should also consider the advantageous operation and service costs of natural refrigerant systems.

Yet Olaf Schulze, Metro AG’s Director for Energy, Facility and Resource Management, expects equipment to be more expensive next year.

While Donatas Plauska, Freor’s Head of Sales Department, expects competition between different types of natural refrig- erant-based systems to intensify, “we see it more as an accel- erator to increase performance rather than reduce costs.” The rising costs of labor and quality components “tend to increase end product prices.”

Andreas Meier, Managing Director, German OEM Teko, expects a variety of costs, depending on the application. “In some appli- cations below 20 kW (5.7TR), the prices will further drop in 2021,” he said. “On the component side, 2021 will be a stable price year.”

Natural refrigerant-based technology costs in South Africa have “stayed neutral” over the last few years, noted Wynand Groenewald, Founder of Future Green Now, a South Africa consultancy. “However, I foresee that we are close to seeing a decrease in cost as the demand for these systems increases.”

Simplicity of design will also lower costs, Groenewald added. “The more OEMs and contractors get used to technologies using natural refrigerants, the easier it gets to not implement all the ‘bells and whistles’ within a system, which is only there as a precaution.”

System costs in the U.S. are declining, but slowly because production volumes continue to be low, “with incremental, but not order of magnitude increases,” said James Knudsen, Vice President of Sales, Kysor Warren Epta “The payback on these systems is there, but first-cost motivation continues to drive the industry.”

Still, given that current systems seem to gain 10% efficiency improvements with each cycle, “smart retailers will begin to update their estates to lower operational cost for competitive advantage,” said Knudsen.

On the other hand, Richard Wayne Gilles, Senior Product Leader – Distributed Solutions of U.S. OEM Hussmann sees a continuing drop in equipment prices “as manufacturers’ designs mature and there is greater availability of components produced in higher volumes.”

In Canada, Benoit Rodier, Director of Business Development, Cimco, sees a decrease in the cost of industrial CO2 rack systems by about 5% to 10% per year. “Manufacturers get more savvy and strongly focus on manufacturing efficiency,” he said, “and more suppliers are offering CO2 products.”

But for commercial equipment, costs in Canada remain 10%-20% higher than average, said Ady Vyas, Vice President of Energy and Digital Services for Neelands Group, who tries to explain to end users that total costs (labor, material, refrigerant, equipment) are “actually at par or even lower.”

In China, there is “no possibility of reducing the cost of building a natural refrigerant system due to the scarcity of trained tech- nicians as well as higher tariffs on products imported from the U.S., said David Zhang of Shanghai Fute Refrigeration & Electrical Engineering Co, Ltd.

This article is excerpted from one appearing in Cooling in 2021,” Accelerate Special Issue #112.


I foresee that we are close to seeing a decrease in cost as the demand for these systems increases." - Wynand Groenewald, Future Green Now



By Michael Garry

Dec 23, 2020, 10:52




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