The Great Migration of North American HVAC industry to hydronic heating and cooling
Across Canada and the United States, the HVAC industry is undergoing a shift toward hydronic heating and cooling systems. While adoption is aggressive in new construction projects, retrofits of existing buildings are moving more slowly. This trend signals not just a change in technology, but also a rethinking of efficiency, sustainability, and comfort in modern buildings.
This blog will explain why the market is pushed toward this direction and will outline recommendations in order to do things the right way.
1.Introduction
Back in March 2020, our blog “The Return of Hydronic Heating and Cooling to Small and Medium Size Buildings” signaled the early stages of a shift away from traditional forced-air systems (such as VRV and VRF) toward hydronic heating and cooling systems. At that time, the trend was emerging but gradual, particularly in small and medium-sized buildings.
Fast forward to 2025, the migration has accelerated significantly. The phase-out of refrigerants such as R410a, scheduled for early 2025, has acted as a powerful catalyst—pushing the industry to reimagine HVAC design. Since May–June 2025, we have witnessed an unprecedented uptake of hydronic systems in both new constructions and retrofits.
This acceleration, however, is not solely driven by refrigerant regulations. A mix of external pressures (policy, environmental, and market trends) and internal industry dynamics (technology innovation, cost structures, and workforce readiness) are reinforcing this shift. In this blog, we will explore the key drivers behind this migration and provide a few rules of thumb for a successful transition that benefits both the HVAC industry and the environment.
2- What’s Fueling the Accelerated Shift?
The HVAC industry in Canada and the United States is one of the most tightly regulated sectors in the construction ecosystem. Installers must be licensed and certified for the products they install, while designers are required to be members of recognized professional associations to stamp HVAC drawings. These requirements ensure quality, safety, and compliance—but also mean that the industry is highly sensitive to regulatory changes and technological advancements.
Like any regulated industry, HVAC is in constant evolution, shaped by both internal dynamics (technology, workforce readiness, product innovation) and external factors (climate change, energy policy, economic pressures). Over the past few years, this interplay has been driving a significant shift: a migration away from Direct Expansion (DX) forced-air systems toward hydronic heating and cooling systems.
2.1- National Building Codes in Canada and the US
Canada: The federal government is using the National Building Code (NBC) and the National Energy Code for Buildings (NECB) to push step-by-step increases in performance. By 2025, all new homes must be Net Zero Ready, meaning they are built to a standard where, with the addition of renewables, they could achieve net zero. By 2030, the mandate shifts to Net Zero itself.
U.S.: Progress varies by state, but many jurisdictions are aligning with ASHRAE 90.1 and the International Energy Conservation Code (IECC), which are also trending toward net zero by 2030.
2.2- Rising Energy Prices and Cost of Living
The COVID-19 pandemic disrupted supply chains, caused labor shortages, and created global inflationary pressures.Core commodities like lumber, steel, copper, and concrete saw major price hikes — all essential inputs for construction and retrofits.
Energy prices (natural gas, oil, and electricity) have also surged since 2020, partly due to: Global supply chain shocks, Geopolitical tensions (e.g., war in Ukraine affecting oil & gas markets) and Rising demand from electrification and digitalization. For building owners, this means higher utility bills, and in some markets, prices are projected to remain volatile through 2030.
2.3- Phasing out A1 (R410a) Refrigerant
- R410A phase-out: Driven by its high Global Warming Potential (GWP ~2,088), regulators are mandating its gradual phase-out under programs like the Kigali Amendment to the Montreal Protocol and local regulations in Canada and the U.S.
- A2L refrigerants (like R32, R454B, etc...): These alternatives have significantly lower global warming potentials (GWP), but are classified as mildly flammable (A2L under ASHRAE 34).
- The industry is thus balancing climate impact reduction with safety considerations.
- R410A (A1 – non-flammable): Has a higher allowable concentration limit (safety threshold) before it poses a risk to occupants.
- R32 and other A2Ls: The safety limit is roughly half that of R410A. This means more restrictive system design requirements: Reduced allowable refrigerant charge in occupied spaces, Stricter leak detection and ventilation requirements, Placement and piping design limitations.
- Direct expansion (DX) systems with A2Ls: If refrigerant is circulated directly to indoor fan coils, a leak could release A2L refrigerant into occupied spaces, raising safety concerns.
- Hydronic approach: Instead of using refrigerant directly for air-side heating/cooling: A2L refrigerant heats/cools water or water-glycol in a heat exchanger, The water circuit is then circulated to fan coils, radiators, or chilled beams for air conditioning.
- Safety advantage: Any refrigerant leak remains confined to the sealed refrigerant loop, isolated from occupied spaces. The “working fluid” reaching occupants is only water (or water/glycol), which poses no inhalation or flammability risk. This allows occupants to have no direct exposure to flammabel or explosive A2L refrigerant.
2.4- Increasing Demand for Energy Storage
Modern interiors prioritize daylight and open plans, which typically means larger glazed fenestration. Unless carefully controlled, this raises both heating and cooling loads—especially peak loads. At the grid level, those peaks coincide with coldest winter hours and hottest summer afternoons, exactly when utilities face the most stress. With climate warming and more frequent extremes, utilities across Canada and the U.S. are expanding time‑of‑use tariffs and demand‑response programs to nudge customers to shift or reduce consumption during peaks.
One practical pathway is Thermal Energy Storage (TES): make heat or cold off‑peak, store it, and use it when the grid is strained. In Canada, space heating, space cooling, and domestic hot water together account for roughly three‑quarters (or more) of household energy, so targeting these thermal end‑uses yields the biggest impact. Because hot and chilled water are far easier to store and move than air, demand for hydronic heating and cooling systems, often paired with TES, will continue to rise as buildings decarbonize and grids tighten.
- Natural light and open spaces: Modern architectural design emphasizes larger windows, skylights, and open layouts.
- Impact of glazing: Higher heat loss through windows increases heating demand in winter. Greater solar heat gain boosts cooling demand in the summer.
- Even with improved glazing technology (triple-pane, low-E coatings), the surface-to-volume ratio of glass vs. insulated wall drives up thermal loads.
- Peak demand challenge for utility compagnies: Utilities face the highest stress during coldest winter nights (heating) and hottest summer days (cooling).
- Climate change factor: Rising global temperatures mean longer and more extreme cooling seasons.
- Utility response: Incentivizing demand-side management (DSM), Offering rebates for load-shifting technologies and Introducing time-of-use pricing to discourage peak-hour consumption
- Principle of Thermal Energy Storage: Instead of meeting all demand instantly from the grid, thermal energy is stored off-peak and released during peak hours.
- Applications: Chilled water storage: Water tanks cooled at night, used for daytime air conditioning. Hot water storage: Thermal tanks heated off-peak for space heating or domestic hot water (DHW).
- Why water instead of air? Higher heat capacity → much more energy stored per unit volume, Easier to transport through piping systems and Compatible with hydronic distribution systems already used in many high-performance buildings
- In Canada, ~75% of annual household energy demand is for:Space heating, Space cooling and Domestic hot water. These are all thermal loads, making them ideal candidates for TES integration.
2.5- Integration with Renewable and Semi-renewable Energies
Hydronic heating and cooling systems are uniquely easy to integrate with renewable (e.g., solar thermal) and ambient-source technologies (e.g., geothermal and air‑to‑water heat pumps). Because each source ultimately heats or cools water (or water with antifreeze), the technologies can be combined behind a common hydronic header (Usually a Buffer Tank), delivering both efficiency and reliability.
A practical challenge with renewables is time‑mismatch: solar output peaks when space‑heating demand is low (summer) and is scarce when heating is highest (winter). By contrast, heat pumps—drawing on air or ground—can run whenever needed and use only a fraction of the energy of conventional boilers or electric resistance (thanks to COPs >1). In hybrid hydronic plants, solar covers what it can, and heat pumps automatically shoulder the rest, often with thermal storage to shift production out of utility peak periods. Since space heating, cooling, and domestic hot water dominate Canadian household energy use, targeting these thermal end uses with hydronics unlocks the biggest savings and peak‑load relief.
2.6- Increasing demand for simultaneous heating and cooling
Today’s code‑compliant envelopes are far more airtight and moisture‑tight than in the past. Combined with larger glazed fenestration and high internal gains (people, lighting, plug loads), this often produces cooling demand even in winter, while perimeter zones near windows still require heating. In other words, many buildings now experience cooling and heating at the same time.
This condition is ideal for heat recovery. Cooling is fundamentally heat extraction—so rather than running a chiller to reject that heat outdoors and a boiler to add heat elsewhere, a hydronic heating‑and‑cooling system with heat‑recovery capability can capture the heat removed by cooling zones and deliver it instantaneously to zones that need heating. The result is higher efficiency, lower operating cost, and tighter peak‑load control.
In simultaneous heating and cooling demand, Liquid to Water heat pump (HP-02) transfers heat from the chilled water tank (heated by the cooling demand on the chilled water loop) to the hot water tank (cooled by the heating demand on the hot water loop). In cases where only one demand is present, the air to water heat pump will provide the necessary heating or cooling demand.
The advantage of the above design is that in the summer, cooling demand can be recycled to the production of Domestic Hot Water heating as well (which is almost impossible to do with conventional forced air system).
3- Conclusion
North America’s HVAC market is converging on a clear destination: water-based (hydronic) systems paired with heat pumps, heat-recovery, and thermal storage. The phase-out of high-GWP refrigerants like R410A has accelerated this shift, pushing designers toward architectures that confine refrigerant to the plant and circulate only water or water-glycol to occupied spaces—safer, simpler, and future-proof as codes evolve.
The playbook is straightforward: design for low water temperatures, integrate thermal storage, prioritize heat-recovery, and connect renewables (solar thermal, geothermal) or air-to-water heat pumps behind a common hydronic header. Do this, and you get higher efficiency, lower operating cost, easier code compliance, and a system that’s resilient to future refrigerant and policy changes. The migration isn’t just underway—it’s the new baseline for high-performance buildings.
Further readings:
- The Return of Hydronic Heating and Cooling to Small and Medium Size Buildings
- Seasonal Underground Thermal Energy Storage
- Designers New Challenge for Cooling Buildings with Highly Insulated Air Tight Envelope
How to save money with Hydronic Radiant Cooling? - How to Prevent Condensation in Radiant Cooling Applications?