SRS Blog

Building energy efficiency insights from the innovators behind EPIC
April 23, 2021

Devil is in the Details: The VRF Opportunity

Variable Refrigerant Flow (VRF) technology offers significant energy savings and superior occupant comfort by relying on advanced inverter-driven compressor design and the capability of providing simultaneous heating and cooling to better meet occupant needs.

The Technology

Variable Refrigerant Flow (VRF), also referred to as Variable Refrigerant Volume (VRV), technology was introduced to the commercial building market in the early 1980s in Japan. Since then, the VRF market has expanded its global presence to Europe in the early 1990s and to the United States in the early 2000s. Today, it is regarded as a rapidly growing, cutting-edge technology offering considerable opportunity in the HVAC industry.

VRF systems are enhanced direct-expansion (DX) ductless multi-split heat pump systems. However, while traditional multi-split systems turn OFF or ON in response to a master controller, VRF systems continually modulate refrigerant flow to each indoor fan coil unit (FCU) to meet individual zone conditioning requirements. Refrigerant flow is modulated in response to outdoor air temperature and indoor conditions relying on variable-speed compressors which are rated at significantly higher part-load efficiency compared to constant-speed systems. Multiple (as many as fifty) indoor FCUs capable of operating with variable-speed control in or close to the conditioned space can be piped to a single outdoor condensing unit. With little or no ductwork in the FCUs, the fan static pressure and therefore energy consumption is considerably less than that of a central air system. VRF systems can be set up to operate in cooling-only mode, heat pump mode (cooling-only/heating-only), or in heat recovery mode (simultaneous heating and cooling capability). Operation in the heat recovery mode enables “free cooling” and “free heating” which can result in enhanced energy savings, particularly in the spring and fall shoulder months. What this means is that one zone can be in cooling mode while another is in heating mode. This is accomplished with the addition of a branch selector box (different manufacturers have different names for this box), which acts as the traffic cop for the refrigerant. Depending on the call from the thermostat and fan coil, the branch selector box will send either hot gas (heating mode) or low-pressure liquid (cooling mode) to the indoor fan coil.

The Sweet Spot

VRF technology has been found to be especially attractive in buildings with the following characteristics:

  • No existing air conditioning and the building is in need of upgrading, e.g., such as many historic buildings;
  • Many different zones, each with different occupancy schedules, activities, uses and temperature preferences;
  • Large footprints, where the perimeter might require heat, while the interior requires cooling;
  • Occupant comfort and controllability are top priorities;
  • Where building owners, investors, managers are seeking to demonstrate ESG and decarbonization as part of a sustainability mission.

The following property types are ideal candidates:

  • Office buildings with a large number of enclosed offices, conference rooms, and other separated spaces;
  • Educational facilities such as schools and colleges;
  • Lodging such as hotels and motels;
  • Multifamily apartment complexes;
  • Hospitals;
  • Nursing homes and assisted living;
  • Medical offices;
  • Strip malls;
  • New construction (which can take advantage of lower installation cost).

The cost effectiveness of VRF in retrofit applications appears to be particularly attractive with buildings in approximately the 10,000 – 100,000 SF range. Below and above this size range, VRF may be less attractive to building owners than other potentially more cost-effective alternatives. Notwithstanding, each project should be evaluated on its own merits with building owner requirements and site-specific factors taken into consideration.

Energy Savings

VRF systems have very attractive energy efficiency metrics:

  • Energy Efficiency Ratio (EER) typically in the 14 – 18 range;
  • Integrated Energy Efficiency Ratio (IEER) typically in the 18 – 25 range; and
  • Coefficient of Performance (COP) typically in the 3.5 – 5 range.

It is not uncommon for a VRF system to save 25-40% energy over a baseline VAV DX system or a central chilled water-boiler system.

As climates with more extreme weather often offer a better opportunity for VRF with heat recovery (simultaneous heating and cooling), buildings located in such climates typically generate the most energy savings.

VRF systems can retain better heating capacity at lower temperatures. Traditional heat pumps begin de-rating, i.e., COP reduction, at approximately 30-40oF and eventually around approximately 10oF typically rely on 100% electric resistance heating (COP=1). VRF systems with inverter-based vapor injection compressors have the capability to deliver up to 100% heating capacity down to outdoor temperatures of 0oF, up to 85% down to -13oF and up to 60% down to -22oF. The result is more heating energy savings compared to conventional HVAC systems.

Special Considerations

While VRF presents an exciting energy savings opportunity, it is not a panacea. There are important considerations that also need to be evaluated before selecting a VRF system.  These include:

1. The cost of electricity and natural gas or fuel oil.

When converting to VRF from natural gas-fired (or fuel oil-fired) boilers or furnaces, a relatively inexpensive heating source, e.g., natural gas (or fuel oil), is being replaced by a heating source that relies on relatively expensive electricity, albeit a very efficient heating source (VRF COPs in the 3-5 range versus boiler COPs in the 0.8 range).

In addition, converting from natural gas-fired (or fuel oil-fired) heating system to a VRF system will increase electricity demand (kW), which can often add additional expense. As such, the cost impact of fuel switching needs to be carefully considered, along with all the energy savings associated with VRF systems.

2. Competitive systems.

Prior to selecting a VRF system, it always makes good sense to evaluate all options. For example, water-source heat pumps (WSHPs) can also service buildings needing simultaneous heating and cooling. For example, during the winter the exterior portions of a large building may need heat while the core of the building, which may have numerous internal loads and little heat loss, may only need cooling. With a WSHP system, heat pumps located throughout the building can draw off a single water loop that employs heat pumps capable of operating in either a heating or cooling mode. Thus, the core can cool the space and reject waste heat to the loop, while exterior portions of the building can heat the space, drawing heat from the loop.

Chiller-boiler systems utilizing air handling units (AHUs) may offer advantages to certain facility types, particularly larger buildings. Initial equipment cost for the system may be somewhat lower than for a VRF system. Moreover, chillers offer high COPs that ultimately may be more cost-effective. An additional advantage may exist if the chiller system includes an ice-storage system that can take advantage of non-peak electricity costs.

3. Ventilation requirements and associated ductwork.

Typically, VRF systems provide space cooling and heating by recirculating air within a zone; outdoor air (ventilation air) which is required to comply with local building codes (and ASHRAE 62.1 requirements related to indoor air quality) must be provided separately.

Conventional HVAC systems supply both ventilation airflow and the required airflow to deliver properly conditioned air throughout the building. Ventilation airflow typically makes up less than 20% of this total airflow. Ventilation airflow associated with a VRF system, such as may be provided by a Dedicated Outside Air System (DOAS), is significantly less than in a conventional system which can result in substantial fan energy savings.

Since VRF systems are not designed to extract large amounts of moisture from the air, the DOAS is often equipped with energy recovery ventilation (ERV). Energy recovery allows sensible and latent heat to be exchanged between the entering outside air and the exhaust air.

In some cases, VRF systems can provide ventilation, such as with indoor FCUs configured with some outside air ducted to the unit. However, the amount of outside air will be limited since VRF FCUs are not typically designed to remove humidity from raw outside air; therefore, a separate ventilation system is usually required. From a cost viewpoint, in some retrofit installations replacing an existing HVAC unit (such as a packaged RTU) with a DOAS sized to meet ventilation air requirement can still allow use of existing ductwork, albeit with some modification.

4. Lack of an Economizer.

Because there is no ductwork to deliver heating and cooling, VRF systems do not have an air-side economizer. However, if a DOAS is included in the installation, a limited air-side economizer may be an option. In some climate settings, economizer energy savings not captured with the VRF system (but which can be captured in most conventional systems) can partially or completely negate the cooling energy savings associated with the VRF system.

Notwithstanding, careful evaluation of all VRF savings, i.e., cooling savings, ventilation savings and heating savings, can often offset the lack of an economizer and still result in significant net savings.

VRF System Cost

Installed costs of VRF systems are highly dependent on the application, construction and layout of the building and whether the installation is new or retrofit. While specifying VRF for new construction has shown to provide a potential cost advantage, retrofitting existing buildings presents more of a challenge as retrofit VRF systems typically are more expensive to purchase and install. It is not unusual in retrofit applications to find the total cost of VRF systems with DOAS 20-50% more expensive than conventional systems.

Unfortunately, building owners with tenants under triple net leases (where tenants pay utility costs), all too often replace equipment giving priority to the upfront cost. This is a major reason why conventional DX systems continue to remain popular.  

On the other hand, VRF systems include sophisticated controls that may make a separate and costly energy management system (EMS) unnecessary. This is not unusual particularly for smaller buildings.

The Ongoing Challenge

Energy management can be an ongoing challenge. At the heart of this challenge are two potentially opposing forces for building owners: controlling costs and keeping occupants comfortable.

VRF technology can offer a compelling solution. VRF systems are already recognized as being able to provide superior occupant comfort. While initial equipment cost may be higher, installation and operational costs often are lower. This results in an attractive lifecycle cost. The key is to be able to provide these advantages in a language that a building owner understands, and that is the language of cash flow.

This presents a challenge to HVAC contractors and project developers seeking to retrofit existing buildings. Providing building owners with an estimate of the energy savings and cash flow impact of a VRF system replacement compared to more conventional system replacement can be a daunting task. Such a task often requires use of complicated spreadsheets or dynamic building simulation energy modeling. Most contractors are not experienced with such tools and project developers rarely have the time or the budget to undertake such studies. Moreover, these approaches require considerable data input and require substantial upfront resources, all of which can be especially problematic for preparation of a proposal that may or may not be accepted by a building owner.

SRS’s EPICTM Solution

In response to this dilemma, SRS collaborated with a leading VRF manufacturer to develop appropriate energy savings assumptions to incorporate VRF into SRS’s Energy Performance Improvement Calculator (EPIC™) algorithms. The objective was to provide HVAC contractors and project developers a cost-effective approach to estimate the energy savings and financial impacts of VRF systems in real time with minimal data inputs. At the same time, EPIC would also enable a user to compare VRF system replacement with conventional systems.

A Final Note

To learn more about how EPIC™ can enhance VRF proposals to replace conventional HVAC systems by providing an estimate of energy savings and cash flow impacts associated with heating, cooling, and ventilation, visit

About the Author

Anthony J. Buonicore is Director of Engineering at Sustainable Real Estate Solutions. Mr. Buonicore is a licensed professional engineer with almost 50 years' experience in the commercial real estate energy and environmental industry. He may be contacted through our Contact page.