2024 HVAC Regulations: The Impact on Field Service Efficiency

2024 is a big year for HVAC regulations, with the Department of Energy (DOE) bumping up energy efficiency standards and continuing to regulate and reduce the use of certain HFCs in the market. This has caused waves as many previous systems and products become non-compliant to these new standards, and field service businesses adapt to the changes.

Understanding HVAC regulations is necessary for the legal requirements of an HVAC field service business and ensures your business can stay on top of the competition.

Understanding the 2024 HVAC Regulations

As energy needs grow and climate systems become a part of daily comfort, HVAC regulations and standards have been reviewed, revised and changed.

Many changes were made to HVAC regulations in early 2024, notably regarding SEER ratings, the introduction of SEER2 ratings, and the reduction of certain hydrofluorocarbons (HFCs) and their use. These include many popular refrigerants identified to have a high global warming potential (GWP), with the US being party to the Montreal Protocol to reduce their consumption.

So, what does this mean for the sector and your HVAC business going forward? We’ll break down the changes, the requirements and what these standards mean for you.

Federal vs. State Regulations: Clarifying the Landscape

Federal regulations include the new SEER rating requirements, updates to the SEER system with the introduction of SEER2 standards, and following the American Innovation and Manufacturing (AIM) Act of 2020, which gives the EPA regulatory powers to phase down HFC use.

In addition to these federal regulations, some states have their regulations and efforts to introduce their energy standards and reduce the consumption of HFC.

For example, Colorado has prohibited using HFCs in many products, following a phase-out schedule from 2021 to 2024. Air conditioning systems are the exception, but there are still restrictions on the types of HFCs permitted.

North and South Split

For the nitty-gritty of certain federal regulations, states have been split into two broad groups: North and South. States classified as the North have fewer heating degree days (HDD), that is, high-temperature days, than states classified as the South. More HDD means more air conditioning use, and many regulations surround the use of refrigerants in air conditioning systems.

Simply put, hotter states use more air conditioning, so federal regulations reflect the need for greater energy efficiency. Newer regulations have a further split: South and Southwest.

States are classified as follows:

North: Alaska, Colorado, Connecticut, Idaho, Illinois, Indiana, Kansas, Massachusetts, Maine, Michigan, Minnesota, Missouri, Montana, North Dakota, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

South: Alabama, Arkansas, Delaware, Florida, Georgia, Hawaii, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas and Virginia.

Southwest: Arizona, California, Nevada and New Mexico.

Potential Alterations During the Regulatory Process

Regulations will continue to change as new standards are decided and the EPA continues to roll out the AIM Act regulations on restricted HFCs.

Different units and systems have been affected in various ways. Review which areas are most affected and the kind of testing requirements that meet compliance. The regulatory process takes time, giving your field service business time to adapt.

Minimum Efficiency Standards (SEER Ratings)

Seasonal Energy Efficiency Ratios, aka SEER ratings, are an efficiency standard used nationwide. As a salesperson, you may have explained these HVAC regulations to customers wanting new installations or information on their HVAC systems.

HVAC regulations on residential systems have minimum standards to meet, and these standards are split into different regions as listed above: North, South and Southwest. Most manufacturers will apply a SEER and SEER2 rating to products as the new standards roll out, but for regulatory and tax credit purposes, the lower efficiency will be the one counted.

SEER2 Ratings

SEER2 is the latest update in SEER ratings. While SEER has been an effective method for energy consumption regulation and has improved sustainability and energy efficiency, experts criticized the lack of other factors in determining a SEER rating. SEER2 ratings include ductwork and external static pressure in determining the approximate energy leakage.

From January 2024, all new HVAC systems will be given a SEER2 rating, and many will have a SEER and SEER2 rating provided to make the transition easier. HVAC regulations can be challenging for customers to understand, but what’s important to remember is that SEER2 is very similar to SEER, simply with more factors accounted for.

A SEER2 rating is 4.5% lower than a SEER rating to account for energy leakage. Federal tax credits are given to homeowners with HVAC systems with a SEER2 rating of at least 16.

Residential Split-system Air Conditioners

Split-system air conditioners are split into two categories for regulation: those with a certified cooling capacity below or greater than/equal to 45,000 BTU/h.

North:

Compliance deadline: Date of manufacture

Inventory: Noncompliant equipment manufactured before January 1st, 2023, can be sold and installed.

Split-System Air Conditioners with a Certified Cooling Capacity <45,000 Btu/h: 13.4 SEER2

Split-System AirConditioners with a Certified Cooling Capacity ≥45,000 Btu/h: 13.4 SEER2

South:

Compliance deadline: Date of installation

Inventory: Noncompliant equipment manufactured before January 1st, 2023, can be sold and installed; after this date distributors can sell these units to the North.

Split-System Air Conditioners with a Certified Cooling Capacity <45,000 Btu/h: 14.3 SEER2

Split-System Air Conditioners with a Certified Cooling Capacity ≥45,000 Btu/h: 13.8 SEER2

Southwest:

The Southwest region is separated from the South states due to the additional state requirements of meeting the Energy Efficiency Ratio (EER2) rating. The requirements are that a minimum of 10.2 EER are met, depending on the SEER2 rating.

Compliance deadline: Date of manufacture

Inventory: Non-compliant equipment manufactured before January 1st, 2023, can be sold and installed; after this date, it can be sold to the North.

Split-System Air Conditioners with a Certified Cooling Capacity <45,000 Btu/h: 14.3 SEER2 and 11.7 EER2 (9.8 EER2 if ≥ 15.2 SEER2)

Split-System Air Conditioners with a Certified Cooling Capacity ≥45,000 Btu/h: 13.8 SEER2 and 11.2 EER2 (9.8 EER2 if ≥ 15.2 SEER2)

Residential Single-Package Air Conditioners

Residential single-package air conditioners must be given SEER2 ratings to meet compliance; however, these ratings don’t reflect an increase in energy efficiency, as the previous SEER rating was already compliant.

These are split into the North + South regions and the Southwest regions for HVAC regulations.

North + South: 13.4 SEER2

Southwest: 13.4 SEER22 / 10. 6 EER2

Nationwide Standard for Split System and Packaged Heat Pump Systems

These are the HVAC regulations for all states nationwide. Systems must meet minimum standards for both the SEER2 rating and the heating seasonal performance factor (HSPF) rating.

Compliance deadline: Date of manufacture

Inventory: Noncompliant equipment manufactured before January 1st, 2023 can be sold and installed.

Split system heat pumps: 14.3 SEER2 and 7.5 HSPF2

Single packaged heat pump systems: 13.4 SEER2 and 6.7 HSPF2

Sell Through Requirements

Previous changes to SEER ratings allowed existing non-compliant equipment to be sold and installed. The cutoff date for these ratings was January 1st, 2023, in all areas.

In the South and Southwest regions, existing non-compliant equipment can no longer be installed in these areas but can still be sold to the North regions for installation.

The North region allows non-compliant equipment manufactured before the cutoff date to be sold and installed, but non-compliant equipment manufactured after this date cannot.

Implications for HVAC Manufacturers and Distributors

Due to the changing HVAC regulations and SEER ratings, meeting and exceeding minimum standards is necessary. Manufacturers are given leeway when their products need to meet new requirements, but manufacturers must be proactive to ensure product feasibility and profitability. These regulations aren’t constantly changing, but it is clear that higher SEER scores mean products that are feasible for a longer time.

On the distribution end, South and Southwest installation contractors are required to keep detailed records of central air conditioners installed and single-package air conditioners in the Southwest for a minimum of four years.

The sale and installation requirements, specifically for South and Southwest regions, have been challenging for distributors, as regulations required any non-compliant stock to be sold and not installed.

Testing Requirements for 2024

As the HVAC regulations change and standards are set higher, it’s no wonder that testing requirements have also changed.

Manufacturers are changing designs to meet minimum testing requirements and must have renovated all air conditioning and heat pump seasons by the deadline of January 1st, 2023. Depending on the region, additional install equipment such as Thermal Expansion Valves (TXVs) may also be required.

The External Static Pressure (ESP) testing requirement for SEER is 0.1, but the new requirement for SEER2 is 0.5 ESP. These requirements more effectively reflect real-world conditions.

Heat Pumps

Heat pumps must meet a minimum standard of 15 SEER, but recent updates to HVAC regulations have increased the standards for energy efficiency testing. These changes affect the external static pressure (ESP) testing requirements.

Air Conditioners, Single-packed Units (SPUs), and Mini-Splits

In addition to these testing requirements, air conditioners, SPUs and mini-splits are required to meet the regional minimum efficiencies.

Air conditioners have additional requirements in addition:

North: All air conditioners must meet the minimum SEER rating of 14.

South and Southwest: SEER requirements are based on the unit size.

Units rated <45,000 Btu/h must be rated at least 15 SEER.

Units rated ≥45,000 Btu/h require a minimum of 14.5 SEER.

Ensuring Compliance: Challenges and Solutions

These changes mean many previous systems will not meet current standards, affecting many systems and even current inventory. A major challenge is upgrading previously installed systems that no longer meet standards. For split-system units, this can require new units or upgrading for central air systems. This means money and time, which is challenging for everyone.

One solution is to ensure your field service team is aware of new regulations and higher standards and communicate with customers about the latest changes. We’ll cover more of these points later in the article.

Price Increases and Market Dynamics

The last thing businesses want to think about is yet another price hike. The knock-on effects of supply chain issues are still felt today, and many trade industry chains have not yet recovered. Updated HVAC regulations are expected, but the market can be fickle.

Factors Driving Price Increases

HVAC businesses, especially installation ones, rely on excellent skills and the right equipment. Your business brings the talent, but not much can be done if the supply simply isn’t there. As just mentioned, supply chain issues and the effects of previous supply chain interruptions have had knock-on effects still felt in the industry. Prices increase as supply is restricted, but demand stays the same (or higher).

In addition, the newest HVAC regulations have affected the current inventory of HVAC businesses/distributors. Much of the inventory can be classed as noncompliant, so its value has been reduced, and in certain regions, it can only be sold but not installed.

Restrictions in HFCs and phasing out of popular refrigerants mean more competition for a smaller range of chemicals, affecting supply and prices.

How Price Changes Affect HVAC Businesses

Naturally, price fluctuations especially increases, affect HVAC field service businesses and profit margins. Any change can gum up work processes, which costs time and money.

Price changes result in changes to budgets, higher costs of supplies and new inventory and the need to communicate these changes with customers.

HVAC Regulations’ Impact on Field Service Businesses

While updated HVAC regulations and standards are ultimately signs of improvement and progress in the sector, as well as benefitting sustainability targets, they can affect the bottom line of an HVAC business.

Products, requirements and standards represent change, and it takes time to adapt like all change. This growth and change can squeeze field service businesses, but it is a benefit in the long run. Energy efficiency and quality products ensure that current and future customers require skilled HVAC installers and technicians.

There are other impacts of HVAC regulations that field service businesses must consider to ease the changes and make the most of the benefits.

Compliance and Field Service Efficiency

Firstly, upgraded standards will result in previously installed systems and stock becoming non-compliant: this doesn’t mean they need to be replaced immediately, but eventually, they will.

Anticipating market fluctuations alongside compliance can improve your efficiency: when a business is prepared, it can take advantage of changes. In addition to staying ahead of compliance, software solutions can transform your HVAC field service business with a suite of features.

Training Skill Updates for Technicians

With new HVAC regulations, continued rollouts of long-term sustainability plans and changing technology and refrigerants, it’s essential that technicians remain up to date with standards and latest practices in the sector.

Ensure that your technicians are updated with the latest changes and regulations and how this will affect their work. Use HVAC resources and the latest information to keep your team sharp and their skills ready for change.

Workflow Adjustments for HVAC Service Companies

New standards mean many previous workflows and processes will change. Familiar systems will be phased out, and techs need to stay ahead of the latest HVAC regulations. This means more training and a transition period as your field service team adapts.

Another adjustment is regular maintenance and repairs. If they're not already, parts for non-compliant HVAC systems will become more scarce. Sourcing these parts can be a source of headaches for your business and customers and may become more expensive. Moving away from repairing these aging systems to replacing them can be a good source of job, if customers discover the benefits.

Customer Education and Communication

As mentioned earlier, customers aren’t privy to most of these ins and outs of HVAC regulations. It can be hard to understand why a perfectly good system that’s worked for them is suddenly ‘non-compliant.’ Or that prices have risen yet again for products that (to them) don’t seem to change much.

This is why it’s important to communicate to current and potential customers what these HVAC regulations mean, in lay terms, and why they’re essential. It’s good to focus on customer benefits while being honest about upfront costs or why it will be necessary to (eventually) upgrade non-compliant systems.

Leveraging Compliance for Marketing and Branding

As you might have seen, compliance with HVAC regulations and changing standards can be more than a legal requirement for your business. It’s an opportunity to reach out to customers, assess inventory and crew member skills and position your company with sustainable practices.

HVAC regulations can confuse the average consumer, but the benefits of efficient equipment don’t need to be! Better equipment and systems have a higher upfront cost but save households money in the long run through efficient energy use. Less power used = more savings for customers.

Ready to Stay Ahead of the Game?

HVAC regulations can be a source of headache for many field service businesses, but they present an opportunity to take a leap with your business.

Higher standards mean better systems, more installations/replacements, and a greater focus on businesses that are ready to go with those skills. It’s the time to assess what works for your business and what can be improved. Stay on top of the competition and maximize this opportunity with industry software like Simpro, which is designed to improve your workflows, efficiency, and customer satisfaction.