Joakim Embring, Business Unit Manager Sweden and Export EMEA, at Sweden-headquartered Munters, says that Scandinavia has seen an increase in customer demand that has driven the need for proactive measures in the HVACR sector. “Climate change is the biggest challenge we all stand with and our possibilities to continue with the current way of living,” he says. “Energy efficiency and to be climate neutral are the two things that are most frequently on the table within our company and in the market.”

Morten Schmelzer, Head of Public Affairs at Sweden-headquartered Systemair, says that following the pandemic, geopolitical events have accelerated focus on sustainability and on air quality initiatives in Scandinavia, driven by EU regulations and regional policies. This dynamic regulatory landscape presents both opportunities and challenges, he adds.

Opportunities include stricter building codes, advancements in energy efficiency and Indoor Air Quality (IAQ) standards, and stringent environmental performance requirements for products, thereby increasing demand for high-quality ventilation solutions, Schmelzer says. “However, these same initiatives also pose challenges, primarily the financial burden on end-users who want to invest in new technologies,” he says. “To facilitate this transition, governments in the region have introduced subsidy and incentive schemes. For manufacturers, the sustainability initiatives, while beneficial, increase bureaucratic burdens, often imposing unrealistic demands and conflicting with national systems. The key to overcoming these challenges lies in harmonising standards, legislation and certification requirements across Europe, reducing trade barriers and ensuring that industrial realities are reflected in policies. Scandinavian governments typically collaborate very effectively, which aids in harmonisation, although this is less consistent at a broader European level.”

Ziad Al Bawaliz, Regional President (Turkey, Middle East, and Africa), of Denmark-headquartered Danfoss, says the main regulatory change is the revised F-gas Regulation, which imposes stricter quotas, specific application bans and other restrictions on services. Notably, monobloc heat pumps below 12 kW and split AC systems below 12 kW will not be allowed to use F-gases starting in 2032 and 2025, respectively, he says. He says that other systems will also face bans relating to F-gases with a Global Warming Potential (GWP) above 150. Consequently, he adds, many systems will need to transition to flammable refrigerants (A2L and A3), with natural refrigerants like CO2 and ammonia being used wherever possible.

Al Bawaliz notes that another shift is the one towards decarbonised heating systems, replacing boilers with heat pumps across all market segments, both domestic and industrial. Decarbonising District Energy, he says, will be a major trend. “For example, legislation requires specific heating and cooling plans for municipalities above 45,000 inhabitants – and that is a tremendous opportunity to capture all the benefits of utilizing excess heat through large heat pumps and District Heating grids,” he says.

Discussing commercial refrigeration, Al Bawaliz says that the industry is continuing its move towards CO2 systems. The next significant development will be the adoption of CO2-based condensing units, which are becoming increasingly popular. These trends present several challenges, he says, adding that there is a shortage of skilled workers.

Al Bawaliz says that technologically, the industry is investing in manufacturing facilities for heat pumps, and component manufacturers need to develop efficient key components for low- and ultra-low-GWP systems. PFAS (per- and polyfluoroalkyl substances), he says, are under scrutiny and may face regulatory measures in Europe and the United States. These substances, he adds, are widely used in various modern applications, but the outcome of potential legislative proposals remains uncertain.

Technological advancements

Schmelzer describes Systemair’s use of digital tools to enhance production efficiency and customer experience. He says the production processes incorporate digital tools for scanning, quality monitoring and digital instructions, which significantly enhance operational efficiency. Real-time production data, displayed on digital noticeboards in the factories, promotes employee engagement and facilitates immediate adjustments and follow-ups on development projects and deviations, he says. “On the customer side, our commitment extends to developing advanced selection software, intelligent control systems, and Building Information Modelling, leveraging platforms like the Microsoft Power Platform and AI,” he says. “These tools enhance product selection and improve the overall customer experience by providing more accurate and efficient solutions.”

Al Bawaliz says technological development in Scandinavia aligns with global megatrends, with challenges related to refrigerants and energy efficiency driving regional innovation. Advancements, he says, include heat-recovery systems, synchronised heating and cooling and new compressor programmes designed for ultra-low-GWP refrigerants.

Scandinavia benefits from a high proportion of renewable energy sources, Al Bawaliz notes. He says electricity prices typically fluctuate within a 30% range throughout the day, offering attractive incentives for those with thermal storage capacities. Large heat pumps, particularly those operating at variable speeds to adapt to changing demands, present an excellent solution in this context, he says.

Systemair’s modular Geniox air-handling unit, Schmelzer says, is a standardised and modular product, allowing customisation according to client needs. He says recent advancements include the development of Geniox models equipped with larger ECO heat exchanger units. These enhancements, he says, improve performance by boosting energy[1]recovery systems without increasing the unit’s overall size. This approach allows consultants to choose the optimal size for the heat-recovery section, which is essential for enhancing the unit’s efficiency while maintaining the same size for other components.

Schmelzer says that energy-recovery technology deserves much more attention, as it aims to enhance the overall energy efficiency of buildings by capturing and utilising the energy in the exhaust air. While heat pumps are commonly used for heating and cooling, he says, they are not always integrated into ventilation systems. This gap is addressed with integrated heat pump units, he says. Integrated heat pump systems have a lower carbon footprint than traditional systems, especially when powered by renewable electricity, he says. The benefits include reduced on-site installation time, due to their single-casing design, and elimination of extra piping, he says. And with intelligent control systems, he adds, these units can respond to real-time demand, providing only the needed heating or cooling, making them an effective solution for addressing climate change.

Retrofitting

Embring says that from Munters’ perspective, recent innovations focus heavily on reducing energy costs and transitioning from fossil fuels to renewable energy sources. “The biggest energy consumption lies in regenerating the sorptive rotor, so to find ways to reduce this and move from fossil sources to renewal sources have been our focus,” he says. “Other areas have been to improve fans and controls to run the systems only as much as needed, when it is needed.”

Al Bawaliz says retrofitting of gas boilers is a very big challenge – economically as well as capacity- and skill-wise. The market still needs to learn how to install heat pumps to ensure that the heating system performs according to expectations, he says. “Installers must learn how to ensure the lowest possible supply temperatures for a heat pump to achieve the highest efficiency,” he says. “This may imply necessary, marginal investments in the internal hydronic system.”

Expanding on retrofitting, Schmelzer says that the key lies in carefully assessing the specific needs of each project. For instance, selecting the appropriate fan is crucial for meeting energy demands in both retrofit and new construction projects, he says. This requires clear and comprehensive technical documentation, which is vital for ensuring the optimal performance and efficiency of ventilation systems and facilitating fair comparisons between products, he says. “Independent third-party organisations, like Eurovent and AMCA, are critical to providing rigorous certification processes and building trust between manufacturers and customers,” he says. “This is one of the pillars of our Green Ventilation mark, designed to guide our customers towards our most sustainable products.”

Schmelzer says fans should incorporate the latest EC or AC motor technologies. The Green Ventilation standards, he says, mandate that labelled fans feature EC motors with an IE5 efficiency class, or AC motors with an efficiency class of IE3, or higher. EC motors, he says, ensure energy savings, operational flexibility and reduced maintenance needs, thereby enhancing overall system performance and reliability.

Market trends and consumer preferences

Schmelzer says that similar to other global markets, the HVACR sector in Scandinavia is influenced by megatrends such as sustainability, digital transformation and geopolitical shifts, which are driving the demand for energy-efficient solutions and high-quality indoor air systems. The region’s strong focus on circular economy principles necessitates industry players to prioritise transparency and ensure complete traceability across their supply chains, he says.

Schmelzer notes that technological advancements, such as intelligent product solutions, and advanced automation and control systems are shaping the market. These innovations, he says, not only enhance energy efficiency but also simplify installation procedures and guarantee reliable performance. The ability to customise products regionally, backed by a global presence, allows HVACR companies to effectively meet diverse customer requirements throughout Scandinavia, he says.

Schmelzer says that consumer preferences in Scandinavia are influenced by industry trends such as sustainability and digitalisation. At Systemair, these trends guide the strategic decisions, he says. Production strategy emphasises standardisation and automation, encapsulated in the Systemair Production Model (SPM), he says. Built on methodology principles, SPM focuses on organisational structure, standardised tasks, daily monitoring and ongoing enhancement, enabling the company to efficiently meet consumer demands while maintaining production efficiency, he says.

Embring says that while the market is advancing in technology, primarily through digitalisation and data analytics, it is evolving slowly from a B2B perspective with minimal visible customer demand compared to the B2C sector, which has seen a higher demand. He adds that there is a higher demand for connected units and the ability to monitor and control systems online.

Economic and environmental impacts

Economic factors, including GDP growth, have a direct impact on the HVACR market, influencing investment levels and operational costs. Schmelzer says that despite facing challenges, such as increased delivery costs, component shortages and extended delivery times during 2022-2023, Systemair achieved production and delivery, supported by investments in new, energy-efficient machinery designed to minimise waste and prioritise operator safety and ergonomics. He says that Systemair optimised its logistics operations, enhancing the flow from suppliers to factories and onward to customers through meticulous planning and control. This optimisation strategy resulted in shorter and fewer transport journeys, contributing to reduced costs, improved safety standards and lower emissions, he says.

Embring says that economic factors, like GDP growth, primarily influence the HVACR market’s construction side from a commercial perspective. When inflation rises alongside interest rates, the market becomes volatile, leading to a decline in activity, he says, adding that the industrial side is generally less affected unless these conditions persist for an extended period.

Embring also highlights that during the pandemic, IAQ became a significant priority in many areas and has remained important in some sectors. However, with the rise in energy prices following Russia’s conflict with Ukraine, the emphasis has largely shifted back to energy efficiency, he adds.

Schmelzer says that IAQ and energy efficiency are not mutually exclusive but rather complementary aspects of optimising building performance. Scandinavian countries, known for their leadership in IAQ advancements, have prioritised promoting healthy IAQ for many years, he says. In the aftermath of the pandemic, there has been heightened global attention on IAQ, resulting in the issuance of new standards and guidelines by international bodies, he says.

Future opportunities and collaborations

Al Bawaliz says there are numerous opportunities based on Danfoss’ learnings in energy storage and heat recovery. Flexibility, closely linked to storage, presents another significant opportunity that can also be applied to cooling, he says. The development of energy-efficient components and solutions, such as variable speed compressors, will be crucial, he says.

Given the current global energy situation, there are significant growth opportunities for HVACR companies both domestically and internationally, particularly for those that develop energy-efficient products and solutions with a lower carbon footprint, Embring says.

Many Scandinavian companies are well-represented in the GCC region, but there is still a heavy reliance on fossil energy sources, leading the GCC market to focus on low-cost, fossil[1]based products, Embring says. It would be beneficial to see government policies promoting a shift away from this dependence, he says. “If this would happen, I believe there would be a higher potential of real collaboration between Scandinavian and GCC region HVACR companies, since there would be a real change in the market,” he says. “At the same time, there are many good initiatives coming from the region to support energy savings.”