Data centres and the rise of AI is driving change in the global cooling industry, says a new report, with the technology proving symbolic of a “complex and diverging” market.
Overall demand for air conditioning has risen 245% since 2010, according to the latest analysis published by BSRIA, but the market now has two distinct tracks: a high value commercial sector driven by specialist applications, and a high-volume residential sector where intense competition is suppressing prices.
Its two reports present news studies covering 18 key air conditioning (AC) markets and 15 heat pump markets. They are said to identify the key forces shaping the industry. This includes enhanced technology, tighter regulation, and the “rapid proliferation” of data centre cooling systems.
Aline Breslauer, research manager for BSRIA AC, Refrigeration and Ventilation, called 2025 “a year of uncertainty”.
“[I]n the AC market we saw rising competition with increased M&A activity driving consolidation,” she added. “However, globally the need for cooling technologies remains high, with demand jumping 245% over the past 15 years. We predict that growth will continue, though it will remain uneven amid ongoing economic and geopolitical volatility.”
The reports show a clear divergence in pricing. In the commercial sector, average selling prices for products like chillers and air handling units rose by 3.6% and 4.5% respectively in 2025. This contrasts with the residential segment, where the average price for ductless split systems has declined.
BSRIA’s analysis attributes this to competition, with the top 10 suppliers now accounting for over 85% of global sales in this category.
A major growth has been the data centre industry, where AI’s expansion is creating demand for more advanced liquid cooling solutions. This is accelerating the sales of chillers, with some systems, namely oil-free centrifugal chillers, driving more than half of the market in countries like Indonesia, Mexico, Turkey, the UAE or the USA.
From an HVAC and cooling supplier perspective, growth is being driven not only by the increase in data centre numbers, but the increase in higher heat density per facility. AI workloads are pushing racks beyond what traditional air systems can handle, accelerating the adoption of liquid cooling technologies.
Lifetime costs
Building owners and investors are increasingly focused on lifetime energy performance and the carbon impact of their cooling systems, rather than just the initial capital cost.
That is leading to evolution around how AC systems look, how they’re procured, financed and operated. This has resulted in a premium for low-carbon, high-efficiency cooling solutions.
The research confirms a rapid shift towards inverter-based systems, particularly in emerging economies. India’s market for inverter split systems is projected to reach 100% by 2029, with Brazil and Saudi Arabia also showing strong growth.
This is happening alongside a legislative push to phase down low-energy-efficiency AC systems and HFCs, making low-GWP and natural refrigerants mainstream choices for new cooling systems and retrofits.
BSRIA’s research also confirms that 2025 marked the beginning of a recovery for the global heat pump market. While often associated with cooling, air conditioning systems are playing an increasingly important role in heating installations, with reversible single-splits growing 3.3% by volume on a global scale.
Breslauer added: “HVAC’s next phase will not be won by technology alone. It will be won by organisations that are built to operate in this new environment. Advantage will come from adaptability, not optimisation.”
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