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The Quiet Revolution in Heating and Cooling Commercial Buildings

Executive Summary:

Variable Refrigerant Flow (VRF) systems are revolutionizing the way we heat and cool commercial buildings and homes. Their inherent and innovative design advantages have a profound impact on the way we design, construct, and operate buildings and homes. This results in lowered costs in all phases of a building’s life-cycle as well as exceptional and unprecedented comfort for a building’s occupants at a lower total cost of ownership (TCO) than comparable, conventional systems.

We will examine the design considerations and impact of VRF, its advantages over conventional systems, and areas of concern – both real and perceived – of this mature and proven technology.

This paper focuses on commercial applications of VRF although many of the concepts, efficiencies, and advantages, are applicable to residential applications.

Historical Background

This paper focuses on commercial applications of VRF although many of the concepts, efficiencies, and advantages, are applicable to residential applications.

Variable refrigerant flow (VRF) heating, ventilation, and air conditioning (HVAC) systems are the primary system deployed in the parts of the world where energy is more expensive relative to the United States – such as the far East and the European Union. However, in the U.S. where energy is less expensive, VRF is gaining market share at a rapid clip. Architects and engineers are increasingly specifying VRF systems not only in existing buildings that use excessive energy or require HVAC upgrades for other reasons, such as obsolescence or tenant fit-outs, but in new construction as well. The many advantages to deploying VRF technology will be discussed at length in this paper.

VRF HVAC systems are a mature technology. According to Daikin Global – a $17B manufacturer of HVAC equipment – they invented VRF technology in 1982. But the technological forefathers of VRF were available in the far East since the 1970s in the form of ductless mini-split systems which dealt with severe space constraints that conventional air conditioning systems could not. In the almost 40-year history of the technology, Daikin and its competitors have achieved steady progress in addressing and overcoming technical shortcomings that prevented wider-spread adoption. As a result, the growth today of VRF systems is four times that of conventional equipment. However, they are relatively new to the U.S. market where their price point and lack of some capabilities did not make it ideally suitable for most large building projects.

Applications of VRF technology are being deployed in:

  • New and typically medium to smaller commercial buildings
  • Sub-areas of larger facilities
  • Day- and extended-care facilities
  • Older homes used for commercial purposes that are undergoing renovation
  • Schools
  • Upscale residences
  • Hotels, restaurants, and other types of facilities.

But it is also encroaching on the territory typically occupied by conventional systems in larger projects and buildings. 

Like ductless mini-splits, VRF systems use refrigerant as the cooling and heating medium. The refrigerant is conditioned by a single outdoor condensing unit, and is circulated within the building to multiple indoor units. VRF systems, unlike conventional HVAC systems, primarily move refrigerant, not air. As will be seen later in this paper, the cost to move refrigerant around a building is an order of magnitude less than moving air. 

VRF systems allow one outdoor condensing unit to be connected to multiple indoor units; each zone can control its own temperature. So heating and cooling can occur simultaneously with a VRF system.

Factors in Evaluating and Choosing Heating and Cooling Systems

There are two major factors of concern when evaluating and choosing an HVAC system:

  • Costs – for both initial installation and ongoing maintenance
  • Comfort – temperature, sound, and healthy air

Historically, owners have chosen a system weighted more toward cost, and with good reason; any leased property has to have a competitive cost per ft2 and provide an adequate return on investment. With triple net leases, ongoing maintenance costs are borne by the tenant and aren’t always a factor in the design and construction of a building. For class A buildings, the cost of state-of-the-art equipment and maintenance is the responsibility of the landlord but the cost is passed along to tenants that demand a comfortable and controllable environment, devoid of hot and cold spots. 

Owners are concerned with comfort – but the technology heretofore available is inherently limiting; arcane mechanical systems require complex calculations and design to determine the tradeoffs between initial construction and ongoing costs. Also, the constant technical evolution of mechanical equipment makes it difficult for even the most diligent engineer to keep abreast of the innovations that are consistently and constantly introduced. 

These factors have made it difficult to justify paying a premium for the highest level of comfort. Yet the progress in HVAC technology – which places downward pressure on prices – is providing alternatives to owners and engineers that meet price/ft2 budgets while still raising the bar for comfort, flexibility, and ongoing cost. 

Conventional HVAC vs VRF – Fundamental Design Differences

A conventional commercial system may be designed with a packaged Roof Top Unit (RTU) or a split system (similar to that which you find in your home) which contain all the mechanical components needed to heat and cool air. That air is then blown into a duct system for distribution throughout the building. Areas of the building 

may be segmented into zones – at an additional cost. VAVs are used to control the volume of air to each zone, without impacting any other zone. These VAVs are choke points that limit or allow the conditioned air into any particular zone. 

With VAV systems, the ductwork is complex and labor-intensive to install: VAV boxes, dampers, heating coils, insulation, and sensors are just some of the components required to ensure the movement of the air around the building and into several zones. 

By contrast, a VRF system is comprised of a single outdoor unit and multiple indoor units, each of which is connected to the outdoor unit via a small-diameter copper pipe that carries refrigerant, not air. Usually there is little, if any, ductwork since there is no need to move air long distances.

Cost: VAV vs. VRF System

There are three types of cost associated with any HVAC system – the cost to purchase and install the equipment, the cost to operate and maintain it, and the cost to retrofit existing systems for new applications, for example, the requirements for new tenants during fit-outs. 

Installation Costs – Equipment, Labor, and Ancillary

VRF equipment is generally more expensive than comparable, conventional equipment. That is to be expected when state-of-the-art components and technologies are built into VRF systems, such as Building Management Systems (BMS) capabilities, variable speed compressors, and ECM motors, which make a tonnage to tonnage comparison difficult and unhelpful. But the equipment cost is just one portion of the cost of installation. 

JP Morgan commissioned a study of the total cost of installation of VRF systems vs. older technologies that have somewhat comparable capabilities. In addition to equipment costs, this report studied the costs of piping, ductwork, insulation, controls, project management, commissioning, and air balance across the four major disciplines: Architectural, Structural, Electrical, and HVAC.

As noted earlier, there are several pieces that comprise a conventional system that are necessary to move air. The ductwork has to be fabricated and lined or wrapped with insulation in most cases. VAV boxes have to be installed in-line with the ductwork, as do dampers, heating coils, and sensors. All of those, along with associated structural engineering and electrical wiring and equipment costs, contribute to raise the “All-In” cost to an amount greater than that for VRF systems. 

VRF system manufacturers offer easy-to-use and configure displays for controlling all their indoor units. These touchscreen displays have wireless capabilities, and communicate with legacy control systems via industry standard BACnet protocols, giving the facility manager complete control over the VRF system. Pre-configured controls and integration capabilities contribute to lower costs. 

Depending on location, there may be rebates and credits available to the owner of the facility which installs VRF systems. LEED points are also available. 

Finally, VRF system manufacturers also make energy modeling software available to engineers and contractors on a selective basis to aid in the evaluation of energy savings to be expected with the installation of the VRF system for specific applications and configurations. This software and data have vastly improved as additional data points have been collected. 

Ongoing Operational Costs – Energy Efficiency, Maintenance, and Equipment Life

VRF equipment – due to its inherent design and engineering – are more efficient and therefore have a longer useful life than traditional systems. Accounting for its percentage of use in a commercial facility, therefore, is pertinent not only to conservation and green initiatives but to the cost of operations for many firms. 

Energy Usage and Efficiency

According to United States Department of Energy, commercial buildings account for approximately 40% of the energy bills and 40% of the carbon dioxide emissions in the United States (US DOE 2012). 

Robert Leech, Managing Partner at New Jersey Green Energy Consulting www.njenergyconsulting.com has evaluated and decreased energy costs at hundreds of commercial properties in the Northeast. He has found that in an average commercial office building, 40 to 45% of its energy consumption is attributable to heating and cooling the facility. This tracks with a nationwide study – by the General Services Administration in 2012 – of energy usage in all types of commercial buildings that 33% of energy consumption is used for heating and cooling. Regardless of the type or size of a facility, energy costs are significant and ripe for savings from energy conservation efforts.

There are many ways that VRF systems provide energy efficiencies:

  • VRF systems can recycle free heat. There are several sources of heat in a facility that are not attributable to the heating system:
    • Body heat of the occupants
    • Heat generated by office equipment, lights, kitchen appliances, etc.
    • The heat from the sun that penetrates windows

These sources of heat are added to the heat generated by the VRF equipment. This is accomplished through technical advances in the heat pump technology. Using a Variable Frequency Drive Inverter, VFD systems match the building load to the equipment. This lessens the energy requirements for the VRF equipment and reduces the amount of fossil fuel that generates that power. 

  • With VRF systems, components such as the compressor and fan motors do not have to work as hard as in conventional systems to deliver the same Btus necessary to heat or cool a given space. The primary work savings come from their use of variable speed compressors. Compressors used in most conventional systems have two speeds – on and off. When needed, they run at full speed – drawing the maximum amount of amperage regardless of the degree of heat or cooling needed.  However, variable speed compressors consume only the amount of energy required to efficiently operate at the speed needed to deliver the right amount of refrigerant and heating and/or cooling capacity.
  • Other components that comprise VRF systems are Electronically Commutated Motors (ECM) that vary speed and torque to overcome high static conditions. They are more efficient than conventional fan motors. Some VRF systems also employ Electronic Pressure Independent Valves, providing savings by varying water flow as demand fluctuates. In some cases, VRF reduces the need for hydronic pumps, also producing energy savings. 
  • Some facilities use large amounts of domestic water. As noted earlier in this paper, VRF systems can re-cycle free heat, which precludes the use of large amounts of energy to heat water used in potable systems. 
  • Because VRF systems utilize no or very little ductwork, air leakage – a larger problem than most would think – is virtually eliminated, as is the heat gain in air ducts placed in unconditioned spaces.
  • Simultaneous heating/cooling – only the outdoor unit in a VRF system needs to be operational and consuming energy in order to heat and cool separate spaces at the same time within a facility. This is a common occurrence during the Spring and Fall shoulder seasons.

Underscoring the foregoing, studies commissioned by HVAC equipment manufacturers have shown that the cost to transfer energy using refrigerant (85 Btu/h per LB) is 99% more efficient than air (0.48 Btu/h per LB) and 89% more efficient than water. 

Cost Savings from Maintenance

Regular maintenance of VRF systems consists of changing filters and cleaning coils for the fan coil units. This level of maintenance is not much different than for other zoned systems, such as split systems or water source fan coils. 

However, less maintenance is required for other components of VRF systems than for conventional equipment. Maintenance of the compressor unit is minimal, and there will be significant maintenance savings for this part of the system compared to chilled water and hot water plant equipment. 

Other components found in conventional systems throughout a building include fan motors, pumps, and dampers, all of which consume energy and require maintenance. With their modularity and the ease of re-location, VRF indoor units are more accessible, aesthetic, and less expensive to replace than their conventional counterparts. 

[One criticism of VRF systems are the long refrigerant piping runs.] 

Repurposing – Equipment Re-Use and Life Expectancy

VRF equipment – due to its inherent design and engineering – is more granular and flexible and therefore ideally suited to the re-design of work areas within a commercial building. Often, tenant fit- outs require the demolition, replacement, and/or re-location of previously serviceable ductwork and components that don’t meet the needs of the new tenant. Instead of removing and replacing ductwork – which incurs re-design and significant labor costs, a VRF design would involve only extending and moving the refrigerant line of the indoor unit or units, perhaps the purchase of an additional indoor unit which – if the system was designed properly – requires no additional capacity to be added to the outdoor unit(s). And if additional capacity is required, the outdoor units are modular and can accommodate the integration of an additional unit. 

Additionally, an indoor unit can be replaced with one that has a higher capacity to handle a larger load (and hence area) than previously needed. 

So VRF systems provide a lot more flexibility in design – the capacity of the outdoor unit does not have to match the capacity of the sum of the indoor units. While building out a space, the final heating and cooling capacity of the facility does not need to be met – the tenant or owner can implement the indoor sections and equipment as needed, delaying the installation and energy costs of heating and cooling unoccupied spaces. This capability is generally not available with systems utilizing VAVs. 

Architects and engineers also have more flexibility with space when designing buildings and its mechanical systems – VRF equipment has a smaller footprint, increasing design choices and aesthetics. And if ductwork is not required, the room from floor-to-ceiling may be decreased, allowing more space to be utilized for the function of the building. 

VRF systems can be integrated with conventional systems as well, providing a further benefit by not requiring a complete re-design and installation of additional equipment. 

Finally, VRF systems are ideally suited for disaster recovery applications and planning. Critical heating and cooling systems – for example, those that cool telecommunications and computer gear – present a particularly difficult challenge if they fail without adequate parts or service personnel available to mitigate the problem. Complementary heating and cooling systems provide redundancy for your building’s critical mechanical systems and peace of mind for overburdened facilities managers. 

Comfort Advantages – VRF vs Conventional Systems

There are many aspects to providing a comfortable environment for the occupants of any building – temperature, sound, and air quality to name just a few – and even more factors that affect those characteristics. Business goals are not always compatible with design strategy. VRF is reconciling these conflicts to deliver on reduced costs and superior comfort. 


First and foremost, temperature is the primary concern of all stakeholders, from the owner to the occupant. Regardless of individual preferences and a company’s guidelines, the goal is to maintain an average temperature throughout a space throughout summer and winter, with no stratification of that temperature. 

Maintaining proper temperatures begins with proper design. Yet even with an excellent design, inter- division issues arise during construction that cannot always be reconciled without compromising the delivery of building performance. 

VRF provides heating and cooling at the same time using the same outdoor unit, an obvious advantage during shoulder seasons when the ambient temperature hovers roughly near the target temperature set points of the interior spaces. The need for heat (perhaps in the morning) or cooling (afternoon) may overlap and would be delivered by one system at the same time. 

One of the early problems with VRF systems was the ability to heat a building when the ambient temperature was very low. Supplemental heat was required, usually through the addition of an electric heat strip – a very inefficient and costly method of adding heat that defeated some of the cost-saving 

advantages of VRF. But VRF equipment has improved substantially in this area. The latest models of VRF equipment can handle temperatures as low as -22°F with 70% efficiency. 


While VRF systems are able to place indoor units closer to the area they’re heating or cooling, providing a strong advantage in eliminating temperature stratification, their proximity necessitates nimble engineering to attenuate the sound issues. Keep in mind that sound decibel levels are measured on a logarithmic scale. The Centers for Disease Control has published a list of everyday sounds and the associated decibel levels: 

VRF indoor units have been measured around 30-35 dB, while the outdoor units offered are around 60 dB. Clearly the engineers have been successful in designing VRF systems that are not intrusive with respect to sound level, and exceed the specifications of conventional systems in many cases. 

Air Quality

With little or no ductwork, contaminants such as air-borne pathogens are minimized if not eliminated altogether. These contaminants can enter ductwork via the return air duct or from leaks and fissures in the supply lines. Proper installation procedures mitigate against this issue but with higher installation costs. In a VRF system, each indoor unit has its own filter that is easily accessible and can be cleaned as circumstances dictate. 


Although VRF is still not suitable for some large industrial and commercial building projects – as well as other niche applications for heating and cooling – the constant improvements made to-date signals the increased growth and implementation of VRF systems in the United States. Dedicated Outside Air Systems (DOAS), along with other components required to meet building and environmental requirements have been developed by the manufacturers to further penetrate different vertical markets and continue to encroach in areas typically the province of only conventional systems. With this continuing investment in design improvements and production by VRF equipment manufacturers, it is not difficult to imagine that with modular building designs and methods VRF will continue to make inroads in larger and larger projects. 

Note also that control wiring is run between each indoor unit to the outdoor unit, comprising a network of communication. Note that there are several types of indoor units. They may be mounted on a wall, on the floor (like ventilators in school rooms), or inside ceilings. They may blow air directly into a space – which allows the management of the occupant’s environment on a microscale – or into ductwork for further distribution of the air, providing even more flexibility for design engineers. 

The communication network allows for control of all components from one location or multiple locations, wireless or not, adding to the flexibility and comfort of individual spaces. The system may get inputs from the occupants – the temperature they desire – as well as the surroundings (e.g. the outdoor air temperature). With all this data, the system executes its built-in algorithms to achieve optimal power consumption for desired comfort levels. Levels of efficiency are attained that are harder to duplicate, and more cost-prohibitive, than traditional, water-cooled systems that are based on chillers and fan coils. 

Further efficiencies are attained since the outdoor unit, which houses the compressor (the “heart” of the system) works in a variable “mode”: it only works as hard as the number of indoor units that require attention. Unlike many smaller traditional systems, a VRF system is not in “all or nothing” mode. You may have five indoor units but only one that requires conditioned air to be fed into the area it serves. The variable speed of the compressor means it only works at a fraction of its capacity. Since the compressor draws (uses) the most electricity in an HVAC system, this allows significant savings in the use of energy. 

VRF HVAC technology myths & facts 

  1. Fact: VRF systems provide simultaneous heating and cooling. 

A VRF HVAC system can heat and cool different zones or rooms within a building at the same time. If the appropriate VRF system is selected, building occupants have the ability to customize the temperature settings to their personal preferences. 

  1. Myth: VRF can only be used in commercial applications. 

VRF equipment can be used in conjunction with a wide range of heating and cooling products. This means that a VRF system can be scaled to meet the climate control needs of a small single-family residence all the way to a commercial high-rise building. 

  1. Fact: VRF systems run at a very low volume. 

Unlike some older HVAC technologies, VRF systems are extremely quiet. Installing a VRF system has the added benefit of reducing ambient noise both inside and outside of a building. 

  1. Myth: VRF HVAC units are bulky. 

VRF equipment is sleek and compact compared to other HVAC equipment. This makes VRF an excellent solution for installing HVAC equipment in areas with limited space, such as when renovating historical buildings. 

  1. Fact: VRF systems are easy to install. 

Because VRF equipment weighs much less than ducted equipment, installing a VRF system is easier and requires less physical effort than a traditional HVAC system. Pro tip: VRF installation should only be performed by professionals who are factory trained and certified based on the type of VRF system being implemented. 

VRF is particularly appropriate to existing buildings that use excessive energy or need HVAC repair and upgrade for other reasons. 

The best opportunities for VRF systems include buildings with these target characteristics: 

  • inefficient HVAC systems and high energy costs 
  • lack of cooling or inadequate cooling capacity, although adding cooling capability or capacity may increase total energy usage despite possible reductions in fan and heating energy usage 
  • older and historical (listed or eligible for listing in the National Register of Historic Places), with limited room to install or change systems 
  • new building projects that can take advantage of opportunities to reduce floor-to-floor height, or increase usable floor space by removing mechanical equipment from inside the main building areas. 
  • VAV systems with electric reheat or heat pumps with electric back-up heat. 

Up to a 70% reduction in HVAC energy is possible from a VRF system with exhaust air heat recovery when compared to a VAV system with electric reheat, according to an energy modeling study (Hart and Campbell 2011).