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FEATURE SERIES
Energy efficiency project
As higher-paying customers leave the grid, municipal utilities lose revenue, leading to higher tariffs for those who remain – often less affluent users who cannot afford to invest in their own systems.
For the HVAC & R sector, this dynamic introduces both risk and opportunity. On one hand, it may accelerate demand for fully off-grid or hybrid HVAC solutions, particularly in remote or high-cost areas. On the other, it underscores the importance of designing systems that can operate flexibly within a gridconnected but increasingly volatile energy environment – responding to tariffs, participating in demand management and integrating with storage.
Policy developments are attempting to keep pace with these changes. Municipal representatives pointed to significant reforms that have opened the market: businesses can now generate and consume their own electricity, municipalities can procure power from independent producers, and public – private partnerships are increasingly encouraged. The Integrated Resource Plan 2025 projects approximately 23GW of additional solar capacity by 2030, with a similar volume envisaged in the following decade. Crucially, it also anticipates substantial growth in energy storage, recognising its role in stabilising an increasingly variable generation mix.
HVAC & R ENTERS THE ENERGY EQUATION For HVAC & R, this policy direction reinforces a key trend: the shift from static to dynamic system design. As storage becomes more prevalent, concepts such as energy arbitrage – storing energy when it is cheap and using it during peak periods – will become central to building operations. HVAC systems, with their inherent thermal inertia and potential for load shifting, are uniquely positioned to participate in this paradigm. Technologies such as chilled water storage, ice storage and advanced building management systems could move from niche applications to mainstream design considerations.
Equally important is the emergence of new market mechanisms aimed at overcoming structural barriers. The discussion around tokenised energy settlement – developed in collaboration with Meridian Economics – illustrates how financial and digital innovation may complement or even bypass traditional regulatory frameworks. By enabling the effective transfer of value from privately generated power to end users without formal wheeling, such models could unlock renewable energy access in municipalities that lack the capacity to implement conventional solutions.
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RACA Journal I June 2026