Australia Energy-Efficient HVAC Systems Market: Share, Growth Drivers, Cooling Smarter

Market Overview

• The market size for energy-efficient HVAC systems in Australia reached approximately USD 1,563.64 million in 2024.
• Forecasts project it will grow to USD 2,716.68 million by 2033, with a Compound Annual Growth Rate (CAGR) of around 6.33% between 2025-2033.
• The report breaks the market into product types such as heat pumps; water heating & cooling systems in buildings; efficient air conditioning systems; and others.
• Applications span residential, commercial, office buildings, and more. Key regions include New South Wales & ACT; Victoria & Tasmania; Queensland; Northern Territory & Southern Australia; Western Australia.

Key Trends & Market Drivers

1. Green Building Standards & Efficiency Certifications

Green Star, NABERS, NatHERS, and other standards are pushing the adoption of high-efficiency HVAC systems. HVAC systems are responsible for a large share of energy (and water) use in commercial buildings—making efficiency in HVAC a strategic lever for certification. Developers and facility managers are prioritizing rooftop units, efficient air conditioners and heat pumps that can deliver thermal performance and lowered energy consumption.

2. Electrification & Heat Pump Adoption

As state and federal policies increasingly favor all-electric builds and away from gas, heat pumps are growing in popularity. Residential and small commercial sectors are seeing increasing installation of efficient heat pumps, as they cooling/heating dual-purpose, with low global warming potential (GWP) refrigerants.

3. Renewables Integration & Rising Energy Costs

With electricity tariffs rising and more rooftop solar, battery storage, and renewable energy being used in building operations, HVAC demand is aligning with cleaner energy sources. Buildings and HVAC vendors are adapting designs to optimize seasonal efficiency ratios to meet incentive programs and rebate eligibility.

4. Climate Variability & Regional Differences

Australia's varied climate (tropical north, temperate south, inland heat) means HVAC systems need to do more than just cool—they must manage dehumidification, heating, dual-mode reversible operations, zoning and advanced controls. Systems that perform well across both hot summers and cooler winters are in rising demand.

5. Commercial & Industrial Demand Fueled by ESG and Net-Zero Goals

Corporations, universities, and commercial building owners are increasingly seeking HVAC retrofits (new chillers, energy recovery ventilators (ERV), better air-handling units (AHU)) to meet ESG targets, reduce operating costs, and appeal to tenants. These upgrades are being factored into building management strategies.

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Opportunities in the Australia Energy Efficient HVAC Systems Market

Smart Buildings & Digital Controls

There’s strong scope for integration of HVAC systems with building automation platforms, IoT, predictive maintenance, smart thermostats, and zoning control. Real-time data, remote diagnostics, and adaptive climate control can increase both comfort and energy savings.

Residential Retrofits & Sustainable Housing

Much of Australia’s housing was built before strict energy codes. Upgrading existing homes (split-system heat pumps, ductless mini-splits, insulation, efficient cooling/heating) presents a large market. Programs supporting net-zero homes, or policies phasing out gas heating, amplify this opportunity.

Regional, Remote & Off-Grid Applications

Outback towns, remote mining facilities, and regions with high energy costs can benefit from efficient HVAC systems paired with renewable input (solar, battery). Modular, low‐maintenance units capable of operating in harsh climates or with limited infrastructure are especially valuable.

Supply Chain & Local Manufacturing Potential

As regulations tighten and demand grows, local supply, installation capacity, and service networks will matter. Opportunities exist for companies offering low-GWP refrigerants, inverter technologies, efficient components, and retrofitting services.

Policy & Incentive Programs as Catalysts

States like Victoria are already tightening standards (7-star home energy ratings), mandating electric heating and cooling in new builds, phasing out gas heating, and improving efficiency requirements in rental and commercial buildings. These are levers that HVAC providers should track closely.

Recent News & Developments in the Australia Energy-Efficient HVAC Systems Market

Victoria's Gas Plan Reform and Electric-Only Mandates (June 2025)

Victoria announced that from January 2027, all new homes and most new commercial buildings will be required to be all-electric. Gas heating and hot water systems that reach end-of-life must be replaced with electric versions. Reverse-cycle air conditioners will become standard. News.com.au

New Energy Efficiency Standards in Victoria (May 2024)

Beginning May 2024, Victoria enforced new 7-star home energy efficiency standards. This includes requirements for fixed appliances—heating, cooling, etc.—plus provisions for solar power offsets. These standards directly impact HVAC system choices for new homes. Herald Sun

Landlord Opposition & Rental Property Efficiency Rules

Proposed rules require rental properties to meet minimum cooling system standards, ceiling insulation, weather sealing and upgrade of inefficient heating or cooling devices. In Victoria, landlords spoke out about costs being passed on to renters, but these reforms reflect political and social pressure to raise energy performance in existing housing stock.

Market Forecast Confirmation

Multiple reports (IMARC, briefing bodies) confirm the projected growth (CAGR ~6.33%) for energy efficient HVAC systems, with increasing demand from retrofits, regulatory mandates, and rising consumer awareness.

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For homeowners and tenants, newer HVAC systems and standards may mean higher upfront costs, but also significantly lower energy bills, improved comfort, and healthier indoor environments. As electricity prices rise, savings from efficiency become more meaningful.

For builders, developers, and manufacturers, the regulatory landscape is shifting: building codes, rental property standards, net-zero goals, and local mandates (e.g. electrification) mean that energy-efficient HVAC systems are no longer optional extras—they’re part of baseline compliance. Companies that adapt early will gain competitive advantage.

For policymakers, balancing the cost burden (especially on lower income households, renters, and older/vulnerable housing) with climate goals and energy reliability is crucial. Incentives, rebates, and support for retrofits are leverage points that can encourage uptake without undue cost imposition.

For environment and public health, efficient HVAC systems reduce greenhouse gas emissions, lower reliance on fossil fuels for heating/cooling, reduce urban heat impacts, and can improve air quality indoors. In regions with extreme heat or humidity, better thermal control can also reduce heat-related health risks.

For investors & service providers, there's opportunity in retrofitting services, component manufacture, remote monitoring, smart control systems, and regional / off-grid system delivery. Businesses that offer lifecycle maintenance, performance guarantees, or integrated systems will likely be in demand.