Heating ventilation and air conditioning (HVAC) systems account for up to 50% of a commercial building’s energy use and dominate peak electricity demand.  Capital and maintenance costs for these systems also comprise a high portion of overall building costs.

Improving HVAC efficiency can therefore have a big impact on your bottom line by reducing energy use, maintenance costs and peak demand charges. It also brings reputational benefits through higher energy efficiency ratings, such as the National Australian Built Environment Ratings System (NABERS).

A holistic HVAC strategy relies on an integrated approach to:

  • reduce demand
  • optimise existing systems
  • upgrade to more efficient systems.

Reduce demand

Methods to reduce demand for HVAC services include:

  • improved building insulation
  • high performance window glazing
  • natural ventilation
  • external window shading
  • colour and reflectivity of external materials
  • green roofs
  • cool roofs.

Painting roofs white or with special reflective coatings to create ‘cool roofs’ can significantly reduce air-conditioning loads. This is especially so in hotter inland climates and for large, flat buildings like factories and warehouses.

For an overview of demand reduction options, see the Low Carbon Living CRC’s Guide to Low Carbon Commercial Buildings - Retrofit.

For estimates of upfront costs and payback periods for HVAC investments in commercial buildings, see the Clean Energy Finance Corporation’s Energy in Buildings: 50 Best Practice Initiatives.


While significant energy and capital savings can be made through investing in new, high-efficiency HVAC systems, existing systems can also be optimised.

Many factors that influence the comfort of building occupants can be measured and optimised. Such factors include humidity, air movement and surface temperatures of nearby objects, like windows.

Consider practices like:

  • altering control algorithms and schedule
  • adjusting thermostat set points
  • good maintenance
  • minor mechanical repairs.

Optimisation can also involve a ‘night purge’ that reduces mechanical cooling by automatically flushing a building with cool night air using natural ventilation. This reduces HVAC operating hours and plant load.

For more HVAC optimisation and maintenance strategies, see the NSW Government’s HVAC optimisation guide.


Upgrading to a more efficient HVAC system can deliver significant energy savings over its 20-25 year lifespan. Due to technological advances, there are many more efficient options available.

At the point of upgrade, assess opportunities to improve performance across the entire HVAC system. This includes the plant equipment, delivery and emission system. Overall performance is determined by the features of all 3 sub-systems and their integration.

A range of more efficient HVAC systems, some of which use passive heat transfer or low airflow rates, can halve mechanical HVAC energy use.  An upgrade can also yield substantial water and trade-waste savings. HVAC systems are responsible for up to 30% of water use in commercial buildings. In more extreme climates, accurate sizing of the heating and cooling units can greatly improve efficiency. The best available reverse cycle air conditioners are 30-40% more efficient than ‘minimum standard’ models.

Some business models can address upfront cost barriers to investing in HVAC upgrades. These include energy performance contracts delivered by energy service companies (ESCOs) and ‘HVAC as a service’ business models. To read more, see the factsheet on overcoming split incentives.


Electrification of HVAC systems

Advances in electrically powered HVAC systems, such as heat pumps, can result in significant energy savings and emission reductions.

For some buildings, 100% electrification may not be viable. However, a majority of the heating load being met with electricity, paired with a small amount of fuel backup, can still result in big savings.

The savings generated from HVAC electrification can be even greater when combined with onsite renewable energy generation. To demonstrate how renewable energy technology can be integrated with HVAC equipment, the Australian Government is co-funding an Innovation Hub for Affordable Heating and Cooling (i-Hub).

To read more on opportunities and challenges for electrification of space heating, see the American Council for an Energy Efficient Economy’s research report.

Indoor air quality and ventilation

In addition to potential energy savings, there is growing recognition of the health and productivity benefits of indoor air quality management. This includes mitigating the spread of airborne contaminants and disease through ventilation systems.

The market for indoor air purification devices is expanding and, by reducing outside fresh air requirements, could contribute to lower overall HVAC energy use.

Advanced rooftop packaged air conditioners

Rooftop-packaged air conditioners are becoming more common, although many operate at part load where they are less efficient than at full load.

Rooftop-packaged air conditioners can incorporate advanced features that improve part load efficiency, reliability, and reduce energy consumption by about 17%. These features include:

  • variable speed fans with greater control
  • inverter controls to vary output
  • economisers such as ventilation lockout during start-up
  • demand controlled ventilation
  • evaporative pre-cooling of the condenser unit
  • superior monitoring and diagnostics using advanced sensors.

Active solar thermal

Active solar thermal systems capture solar radiation by heating and storing fluid in a collector. In space heating and cooling applications, the heat is transferred indirectly via a heat exchanger. In other applications, the hot fluid may be used directly.

Active solar thermal systems do not require energy infrastructure and generate low or no carbon emissions. Since periods of incident solar radiation and cooling loads coincide, solar cooling reduces peak demand.

Computerised control

Computer technologies continue to enhance HVAC system efficiency, reliability and intelligence. They also assist integration with other building services.

Accurate and reliable measurements enable efficient HVAC tuning and operation. Intelligent controls allow post-failure assessment and can provide predictive diagnostics and maintenance advice.

Many advances in commercial building automation and HVAC control also improve indoor air quality control. The importance of fresh, clean air is understood in modern workplaces, with more emphasis on controlling dust, bacteria, odours and toxic gases.

To read more, see the Building management systems guide.

UV treatment

UV treatment of return air can deliver a high standard of air quality while reducing the dependence on outdoor supply. It also reduces fouling of fans and heat exchangers.


Chlorofluorocarbon (CFC) and hydrochlorofluorocarbon (HCFC) refrigerants have a high global warming potential (GWP) and have largely been phased out in Australia. A regulated phase down of hydrofluorocarbons (HFCs) is underway worldwide as these refrigerants have high GWP. Many new refrigerants will be based on ammonia or CO2. Ask your service provider about the best products for efficiency and environmental performance.

 To read more on key developments in the refrigeration industry, see the Australian Government’s Cold Hard Facts 2020 report.

The Innovation Hub for Affordable Heating and Cooling (i-Hub)

i-Hub is an initiative to facilitate the HVAC industry’s transition to a low emissions future. It aims to stimulate jobs growth and support the industry with knowledge dissemination, skills-development and capacity-building. i-Hub participants include universities, researchers, consultants, building owners and equipment manufacturers.

The Trajectory for Low Energy Buildings - HVAC projects

Under the Trajectory for Low Energy Buildings agreed to by Energy Ministers in 2019, the Australian Government is investigating maintenance practices and performance of HVAC equipment. This will inform future work including the development of energy efficiency information resources for existing commercial buildings and retrofits.

Better Ways to Work

In 2020, the University of Wollongong was contracted by the Australian Government to undertake a national survey of facilities managers and contractors responsible for the management, repair and maintenance of commercial office buildings. The survey aimed to better understand how these buildings are managed and maintained.

Key findings and results of this work are available on the Better Ways to Work website.

Energy Efficiency Training and Information Project: Commercial Buildings

In 2021, the University of NSW began developing energy-efficiency resources to inform decisions about commercial building upgrades. The Energy Efficiency Training and Information (EETI) project considered the top 5 opportunities for energy efficiency in buildings and comparison studies on HVAC upgrades versus replacement.

Key findings and case study reports from the EETI project are available on the UNSW website.

Best available HVAC&R retrofit technologies guide

The EETI project developed a guide to provide functioning mechanisms and general performance indicators for HVAC&R technologies available on the market. The guide supports early decision making by building owners and facility managers before engaging a consultant.

See the Best available retrofit technologies guide (PDF 3.51 MB).

Case studies

Energy Efficiency Training and Information Project: Commercial Buildings case studies Australian Government and UNSW

NCC 2019 HVAC Case Study series  Australian Institute of Refrigeration, Air Conditioning and Heating (AIRAH)

Building tuning using simulation - A practical case study AIRAH

A Calibrated Simulation Case Study for an Office Building in Canberra AIRAH

1200 Buildings Case Studies: Alto Hotel, 636 Bourke Street (PDF 929 KB) City of Melbourne

Read more

Best available HVAC&R retrofit technologies guide (PDF 3.51 MB) Australian Government and UNSW

Energy in Buildings: 50 Best Practice Initiatives (Clean Energy Finance Corporation) Australian Government

Energy efficient HVAC for business NSW Government

i am your optimisation guide: hvac systems (PDF 4.66 MB) NSW Government

Technical HVAC&R courses AIRAH

The Future of HVAC, September 2022 conference AIRAH

Guide to Low Carbon Commercial Buildings – Retrofit (PDF 15.6 MB) Low Carbon Living CRC

Window Energy Rating Scheme Australian Glass and Window Association