Air conditioners in the US are not very efficient. Why?

It’s no secret that Americans love air conditioning. But although AC is far more ubiquitous in U.S. homes than in most other regions of the globe, the typical American air-conditioning unit is nowhere close to the forefront of the technology curve when it comes to the latest in cooling. 

That’s a big problem for a sector that accounts for 12 percent of energy use in a typical U.S. home and which experts have pinpointed as a technology that must be addressed to curb climate change. There are many options for far more efficient residential AC units, and they all have one aspect in common: inverters. It is not a novel solution; in fact, it’s common in many other parts of the world. But in the U.S., policy action to address this gap has been slow to materialize. 

Why inverters matter

Think of a typical home heating and cooling system — and what it sounds like. In the U.S., most window and central ACs create a constant level of noise when they are on because they use simple single-speed motors that are either on or off. This inevitably wastes energy as we dial the thermostat up and down while seesawing between temperatures. 

In contrast, HVAC systems with inverters built into their design have the intelligence to gather real-time data on temperature and motor speed, which allows compressors and fans to adjust continuously and maintain a constant temperature. As a result, energy efficiency can be boosted by 25 percent or more, according to semiconductor manufacturer Infineon. 

Improved efficiency is just one benefit of AC units with built-in inverters. Inverter ACs use microprocessors that allow for variable-speed operation, which generates dramatically less noise, reduces maintenance needs and extends the unit’s lifespan. The on-chip intelligence of inverterized platforms also enables a host of other applications, such as grid support through smart thermostats and healthy-building functions, such as air quality monitoring. 

The international gap in AC efficiency

AC units with inverters have long been commercially available, and their efficiency advantages have driven their market dominance in other parts of the world in recent years. But this has not yet happened in the U.S., where AC units with inverters, including heat pumps, account for less than 10 percent of sales of central AC systems, according to Infineon’s research. 

In Europe, China, India and many other countries, tighter efficiency regulations have rapidly increased sales of variable-speed residential AC units. In China, which leads the fast-growing Asia-Pacific market for AC adoption, variable-speed inverter technology in residential AC units increased from less than 9 percent in 2006 to more than 65 percent a decade later, and it continues to rise, according to the International Energy Agency.

In India, variable-speed AC units went from 12 percent of the market in 2016 to more than 85 percent in 2022, driven by attractive pricing and effective messaging about their superior efficiency, according to LG Electronics India. In light of the energy crisis resulting from the war in Ukraine, the European Union has set an aggressive goal to double its deployment of heat pumps, which have variable-speed motors and provide heating and cooling, in the next five years. Mini-splits, which are ductless room AC units that attach to an outdoor compressor, already dominate the market in most of Europe. Mini-splits are more efficient than central AC. 

Regulation has been an essential driver of this growth. In Europe, stringent efficiency rules have long been motivated by concerns about climate change and high electricity costs. The ongoing impact of Russia’s war in Ukraine has further crystalized the focus on efficiency. In many Asian countries, stronger regulations have been imposed due to urban air quality and public health issues as well as the need to preserve power quality on less-developed grids. 

The problem with U.S. efficiency standards

Why hasn’t policy been a driver of inverterized AC adoption in the U.S. as it has been elsewhere in the world? The problem lies in the different metrics used to compare cooling products. In the U.S., the efficiency of indoor cooling systems is measured using seasonal energy efficiency ratio (SEER) units. Current regulations require a SEER rating of at least 13 in the northern part of the country and at least 14 in the southern part. In 2023, these standards will increase to 14 in the north and 15 in the south. However, AC units with built-in inverters typically score a SEER rating of 18 or more. The relative laxness of the SEER efficiency standard means that even the tightened 2023 rules will likely be insufficient to move the U.S. toward matching the efficiency of the AC units that are already prevalent in the rest of the world. 

U.S. SEER ratings also do not account for the ability of a system to provide dehumidification, a significant part of effective cooling in humid regions. This is clearly demonstrated when ACs are evaluated in real-world conditions. For example, the Global Cooling Prize, which was launched in 2018 by think tank RMI and an international coalition seeking to spur the development of a super-efficient, climate-friendly and affordable cooling solution, had this to say about the technology: ​“Air conditioners with fully variable-speed compressors deliver higher savings than recognized by current test standards due to operating at much lower levels of rated capacity.” 

Iain Campbell, senior fellow at RMI, expounded on this assessment: ​“SEER is not a particularly accurate [measure of] real-world cooling efficiency where both temperature and humidity need to be addressed.” According to Campbell, SEER ​“understates the full benefit of variable speed [inverter-based] AC technology and overstates the efficiency of fixed-speed compressors.” 

The challenge and opportunity in the U.S.

Without a regulatory push to spur adoption of inverterized AC units, U.S. HVAC manufacturers have lagged on inverter-based platform development. ​“When you start talking about inverterization, you need new skill sets in the company, specifically power electronics engineers,” said Michael Williams, director of product marketing at Infineon. ​“It’s an investment in system electrification, and without specific regulations driving higher rates of inverterization, there’s not much incentive to do it.” 

Beyond efficiency standards, the U.S. market is also different than many other global markets. U.S. homes are larger on average, and the majority have ducted central AC systems, in contrast to the more efficient mini-split or single-split room-sized units that are more common in Asia and Europe. Some central ACs have inverters, but this usually only applies to high-end models with other advanced features that drive up the price. Asian and European manufacturers leading the way on inverterization have focused on developing products for their domestic markets, where central AC is much less common. 

Because U.S. contractors are mostly tied to U.S. HVAC brands, they’ve similarly had little incentive to sell high-efficiency systems, which require special training to service. This combined dynamic drives higher costs for variable-speed systems, with few contractors promoting them unless they are specifically requested by an energy-conscious customer willing to pay thousands of dollars more than they would pay for less efficient systems without a built-in inverter, according to Williams. 

But there is change afoot. U.S. sales of heat pumps are growing, and Williams notes that domestic brands have partnered with leading Asian manufacturers to bring inverterized ductless mini-split systems to the market through their distributor and installer networks. 

And while federal efficiency rules have been slow to be updated, the recently passed Inflation Reduction Act provides millions of dollars in tax incentives to encourage heat pump adoption. RMI forecasts that the tax credits available through the IRA may spur more than 7 million heat pump installations across the country. 

Additionally, a recently introduced federal bill called the HEATR Act could dramatically accelerate adoption of variable-speed AC technology by offering tax credits to reduce the higher upfront costs of these devices. And the U.S. Department of Energy has proposed a new energy-efficiency standard that would require all gas furnaces sold in the U.S. to be ​“condensing” models. These furnaces have a secondary heat exchanger that absorbs the remaining heat from exhaust gases with at least 95 percent fuel utilization efficiency. 

Along with the IRA, the inclusion of these or similar proposals in future standards and legislation could help the U.S. close the efficiency gap for HVAC systems and heat pumps in years, not decades — an advancement that would serve not just climate goals but also enhance energy security and home comfort.