WEBVTT 00:00:06.459 --> 00:00:09.800 Welcome to Did You Know, the ESCO HVAC podcast, 00:00:10.199 --> 00:00:12.359 the show where we explore the cool, the hot, 00:00:12.359 --> 00:00:15.339 and the everything in between of the HVACR industry. 00:00:15.679 --> 00:00:19.199 Each week, we dig into the innovations, the insights, 00:00:19.379 --> 00:00:22.000 and the inspiring stories that power our trade 00:00:22.000 --> 00:00:24.640 from the classroom to the job site and beyond. 00:00:24.800 --> 00:00:27.140 This episode is brought to you by this week's 00:00:27.140 --> 00:00:30.000 amazing sponsors, Daikin Comfort Technology, 00:00:30.440 --> 00:00:34.219 perfecting the air since 1924. Lincoln Tech, 00:00:34.439 --> 00:00:37.979 put your potential to work. NAVAC, professional 00:00:37.979 --> 00:00:42.219 tools and equipment for HVACR technicians. Amatrol 00:00:42.219 --> 00:00:46.219 Trainers, globally impactful, personally empowering. 00:00:46.520 --> 00:00:51.399 As well as AGAS, together we can. Whether you're 00:00:51.399 --> 00:00:53.619 just getting started or you've been turning wrenches 00:00:53.619 --> 00:00:56.380 for decades like myself, there's always something 00:00:56.380 --> 00:00:59.539 new for us to learn. I'm Clifton Beck, and this 00:00:59.539 --> 00:01:04.379 is Did You Know? The ESCO HVAC Podcast. Let's 00:01:04.379 --> 00:01:06.340 dive in. Well, hello, everyone. Thank you so 00:01:06.340 --> 00:01:08.459 much for joining us on Did You Know? The ESCO 00:01:08.459 --> 00:01:11.760 HVAC Podcast. We spend a lot of time discussing 00:01:11.760 --> 00:01:14.319 heat pumps and technologies and refrigerants 00:01:14.319 --> 00:01:16.700 with our equipment manufacturers, with our trade 00:01:16.700 --> 00:01:19.969 organizations, with... technical educators with 00:01:19.969 --> 00:01:22.230 contractors. There's a lot of conversation to 00:01:22.230 --> 00:01:24.829 be had in the industry, and we're starting to 00:01:24.829 --> 00:01:28.090 see a lot of changes in equipment statistics, 00:01:28.370 --> 00:01:31.590 which I really enjoy. When we start looking at 00:01:31.590 --> 00:01:34.189 transitions, we can actually officially start 00:01:34.189 --> 00:01:36.370 to say that heat pumps are starting to outsell 00:01:36.370 --> 00:01:39.829 gas furnaces. There's a lot of shift to the industry. 00:01:39.950 --> 00:01:42.230 We try to do a lot of education on that, and 00:01:42.230 --> 00:01:44.250 we love spending time with our equipment manufacturers. 00:01:44.370 --> 00:01:46.530 So today, we're spending some time with Eswar 00:01:46.530 --> 00:01:49.000 Sengar. How are you doing? I'm good, Clifton. 00:01:49.040 --> 00:01:51.180 How are you? I'm doing fine. You are the Senior 00:01:51.180 --> 00:01:54.519 Product Marketing Manager for Allied? Yep, correct. 00:01:54.799 --> 00:01:56.260 Yeah, I'm the Senior Product Marketing Manager 00:01:56.260 --> 00:01:58.599 for Allied Air Enterprises here based in West 00:01:58.599 --> 00:02:01.500 Columbia, South Carolina. My primary responsibility 00:02:01.500 --> 00:02:03.319 is air conditioners, heat pumps, and package 00:02:03.319 --> 00:02:07.260 units. So that's the category I manage, but been 00:02:07.260 --> 00:02:09.360 in the industry for a long time. Been in the 00:02:09.360 --> 00:02:13.240 industry for about 13 to 14 years now. Spent 00:02:13.240 --> 00:02:15.879 the bulk of it down in Texas at a major OEM. 00:02:16.840 --> 00:02:19.599 Then took a little bit of a break and the break 00:02:19.599 --> 00:02:21.800 didn't last very long. Took a little bit of a 00:02:21.800 --> 00:02:23.419 break in the automotive industry for about six 00:02:23.419 --> 00:02:26.879 months and then came back to the HVAC industry 00:02:26.879 --> 00:02:30.960 with Lennox and then onto Allied Air. So once 00:02:30.960 --> 00:02:33.159 bitten, twice shy. I tell everybody I know that 00:02:33.159 --> 00:02:35.099 I'll never, never ever leave the industry again. 00:02:35.300 --> 00:02:38.099 It is. It's interesting. And many of us. find 00:02:38.099 --> 00:02:40.599 our way into the HVAC industry. And then when 00:02:40.599 --> 00:02:42.280 we're here, we realize that you have a lot of 00:02:42.280 --> 00:02:46.419 impact within an industry that seems massive, 00:02:46.460 --> 00:02:52.039 but it really is managed by a fairly small community 00:02:52.039 --> 00:02:55.840 of dedicated professionals like yourself that 00:02:55.840 --> 00:03:01.740 are really very forward -thinking, very... consumer 00:03:01.740 --> 00:03:03.740 conscious as well as contractor conscious even 00:03:03.740 --> 00:03:06.120 a manufacturer i mean you manufacture products 00:03:06.120 --> 00:03:09.460 but yet your heart is in making the connections 00:03:09.460 --> 00:03:12.159 with those that are on the front lines doing 00:03:12.159 --> 00:03:14.800 the installations working with the products and 00:03:14.800 --> 00:03:17.280 allied air does a lot of training i just you 00:03:17.280 --> 00:03:18.740 know spent some time with you all at the allied 00:03:18.740 --> 00:03:21.780 air training conference and got to you know meet 00:03:21.780 --> 00:03:24.120 hundreds of technical trainers from around the 00:03:24.120 --> 00:03:28.340 country And everyone had the same common theme. 00:03:28.580 --> 00:03:33.400 They were very passionate about communicating 00:03:33.400 --> 00:03:36.840 the changes in the industry to those that are 00:03:36.840 --> 00:03:39.080 working with the equipment. So I applaud our 00:03:39.080 --> 00:03:41.120 manufacturers that are really stepping up the 00:03:41.120 --> 00:03:45.039 game in education and understanding. And you've 00:03:45.039 --> 00:03:47.840 got the kind of background that I love conversing 00:03:47.840 --> 00:03:49.580 with. Because you're working with the products, 00:03:49.620 --> 00:03:51.460 you know the products and technologies, but yet 00:03:51.460 --> 00:03:53.560 you also have a master's degree in mechanical 00:03:53.560 --> 00:03:57.879 engineering. Correct. So I follow. I try to learn 00:03:57.879 --> 00:04:00.620 as much as I can about my friends in the industry 00:04:00.620 --> 00:04:02.879 because not everyone realizes the dedication 00:04:02.879 --> 00:04:05.719 and the passion and the commitment to education 00:04:05.719 --> 00:04:10.000 that happens in our industry. And so I really 00:04:10.000 --> 00:04:12.840 enjoy spending time talking to you about how 00:04:12.840 --> 00:04:15.180 our industry is changing. I think it's important 00:04:15.180 --> 00:04:18.879 for us to just have a conversation about heat 00:04:18.879 --> 00:04:20.959 pumps. I've actually had people come up to me. 00:04:20.959 --> 00:04:22.589 When are you going to stop beating that? that 00:04:22.589 --> 00:04:25.350 dead horse about heat pumps. I'm like, I'm not, 00:04:25.589 --> 00:04:29.269 it's going to continue. So let's look at this 00:04:29.269 --> 00:04:32.449 from a manufacturer's perspective. Yeah. From 00:04:32.449 --> 00:04:35.230 a manufacturer's perspective, like how does the 00:04:35.230 --> 00:04:38.389 market stand today in comparison to say five 00:04:38.389 --> 00:04:41.790 years ago? yeah so the mark the heat pump market 00:04:41.790 --> 00:04:43.850 in the us is expanding rapidly right i think 00:04:43.850 --> 00:04:46.050 over the last five years we've seen high single 00:04:46.050 --> 00:04:49.689 digit keggers um in both both including ductless 00:04:49.689 --> 00:04:53.529 and inducted um and and inducted uh heat pumps 00:04:53.529 --> 00:04:56.610 right like you mentioned um heat pumps have outsold 00:04:56.610 --> 00:04:59.110 furnaces over the last few years and i think 00:04:59.110 --> 00:05:01.550 they're getting very very close to you know meeting 00:05:01.550 --> 00:05:04.470 the meeting air conditioners as well um i think 00:05:04.470 --> 00:05:07.149 about 10 years ago we sold almost 2x as much 00:05:07.870 --> 00:05:10.629 ACs as we did heat pumps. But now I think that 00:05:10.629 --> 00:05:14.790 number is much more close to 30 % more air conditioners 00:05:14.790 --> 00:05:18.069 than heat pumps. So we're seeing growth predominantly 00:05:18.069 --> 00:05:21.439 over the last... 10, 15 years, we saw a lot of 00:05:21.439 --> 00:05:23.920 growth in sort of the Sunbelt region, very sort 00:05:23.920 --> 00:05:26.779 of milder climates. But then over the last few 00:05:26.779 --> 00:05:29.060 years, especially as heat pump technology continues 00:05:29.060 --> 00:05:31.600 to evolve, the heat pumps itself, they've been 00:05:31.600 --> 00:05:33.620 around for several years, right? It's not a new 00:05:33.620 --> 00:05:36.839 technology, but the technology has evolved to 00:05:36.839 --> 00:05:39.600 keep up with what the requirements in today's 00:05:39.600 --> 00:05:42.560 day and age is, right? So we're seeing a lot 00:05:42.560 --> 00:05:44.540 of growth, mainly in the Northeast, Midwest, 00:05:44.720 --> 00:05:47.600 and also in a lot of mixed fuel territories, 00:05:47.819 --> 00:05:50.720 right? where dual fuel is becoming sort of the 00:05:50.720 --> 00:05:55.120 safe choice. To me, I kind of equate dual fuel 00:05:55.120 --> 00:05:58.060 to sort of like the hybrid car analogy to the 00:05:58.060 --> 00:06:00.259 automotive world, if you know, to make it easier 00:06:00.259 --> 00:06:02.899 for people to understand. Perfect analogy. So 00:06:02.899 --> 00:06:05.800 we're seeing a large scale adoption in all of 00:06:05.800 --> 00:06:09.100 the United States and even in Canada, as far 00:06:09.100 --> 00:06:11.480 as heat pumps are concerned. You know, when we 00:06:11.480 --> 00:06:14.339 look at that growth in heat pumps, we really 00:06:14.339 --> 00:06:18.160 have two categories that we can discuss. I'm 00:06:18.160 --> 00:06:21.879 a big fan of our ductless heat pumps. A heat 00:06:21.879 --> 00:06:25.199 pump performs the best when it has adequate airflow. 00:06:25.759 --> 00:06:28.660 And we all know that in the United States, we 00:06:28.660 --> 00:06:31.680 are predominantly ducted systems and they are 00:06:31.680 --> 00:06:37.000 predominantly inadequate for proper airflow for 00:06:37.000 --> 00:06:40.019 high efficiency heat pump, only because of the 00:06:40.019 --> 00:06:42.699 transitions we made over time. Our original ducted 00:06:42.699 --> 00:06:47.319 systems were designed for lower efficiency heating 00:06:47.319 --> 00:06:51.899 systems with PSC motors, so they could handle 00:06:51.899 --> 00:06:53.939 lower airflow because we had higher temperature 00:06:53.939 --> 00:06:56.540 rises, not so much when we get into heat pumps. 00:06:56.779 --> 00:06:59.560 And so we're having to rethink ductwork and airflow 00:06:59.560 --> 00:07:02.910 when we get into ducted. heat pumps but are you 00:07:02.910 --> 00:07:06.209 seeing an increase in ducted heat pump systems 00:07:06.209 --> 00:07:08.790 as well yeah we're seeing we're seeing a large 00:07:08.790 --> 00:07:10.949 increase in ducted heat pumps right not so much 00:07:10.949 --> 00:07:13.529 so in buckless um you know i think i think ductless 00:07:13.529 --> 00:07:16.319 is probably one of the main you know, major growing 00:07:16.319 --> 00:07:18.740 categories in the U .S., but I don't think it's 00:07:18.740 --> 00:07:20.199 ever going to get to a point where it's going 00:07:20.199 --> 00:07:22.660 to replace ducted systems, right? I mean, before 00:07:22.660 --> 00:07:25.279 the recording, you and I were talking about how 00:07:25.279 --> 00:07:28.879 much the air conditioning industry in the U .S. 00:07:28.879 --> 00:07:31.019 is far different from what it is in the rest 00:07:31.019 --> 00:07:33.639 of the world, right? I mean, whole home heating 00:07:33.639 --> 00:07:36.319 and cooling here is very important, just because 00:07:36.319 --> 00:07:38.379 of the type of construction here, the homes that 00:07:38.379 --> 00:07:41.519 are built in the U .S., and also, given the weather 00:07:41.519 --> 00:07:43.439 here, I think whole home heating and cooling 00:07:43.439 --> 00:07:46.839 becomes very, very important um so and then and 00:07:46.839 --> 00:07:48.639 then you know people typically don't like to 00:07:48.639 --> 00:07:50.879 see you know some sort of a wall -mounted unit 00:07:50.879 --> 00:07:53.779 in in their um in their in their house either 00:07:53.779 --> 00:07:56.879 and americans love comfort right so i think ducted 00:07:56.879 --> 00:07:59.699 systems are are here to stay and and we're seeing 00:07:59.699 --> 00:08:01.819 a predominant growth in ducted systems as well 00:08:01.819 --> 00:08:03.759 uh that's kind of where the you know the whole 00:08:03.759 --> 00:08:05.740 dual fuel conversations comes into play all of 00:08:05.740 --> 00:08:07.959 that dual fuel growth is happening you know only 00:08:07.959 --> 00:08:10.769 in the ducted space Yeah, I've done installations 00:08:10.769 --> 00:08:13.050 of both. Just within this last year, I've done 00:08:13.050 --> 00:08:15.310 a couple equipment manufacturer installation 00:08:15.310 --> 00:08:19.649 videos. One of them for myself with an ultra 00:08:19.649 --> 00:08:22.529 low temperature ductless unit that had a 100 00:08:22.529 --> 00:08:24.509 % capacity at minus five degrees Fahrenheit. 00:08:24.910 --> 00:08:29.490 I did a two stage dual fuel application for my 00:08:29.490 --> 00:08:33.509 son. And that was really my concern looking at 00:08:33.509 --> 00:08:35.649 something that I wanted to have some redundancy, 00:08:35.789 --> 00:08:39.070 you know, young family. I like the idea of going 00:08:39.070 --> 00:08:40.950 straight heat pump, but I also have to be realistic 00:08:40.950 --> 00:08:44.590 about, you know, the American household that 00:08:44.590 --> 00:08:48.070 was built around fossil fuel fired ignition systems. 00:08:48.169 --> 00:08:52.149 And so I am a big fan of a dual fuel. If it's 00:08:52.149 --> 00:08:55.129 a ducted system, I truly believe it should be 00:08:55.129 --> 00:08:58.190 a dual fuel, at least in the Midwest. And it's 00:08:58.190 --> 00:09:00.549 changed the market. And a lot of that market 00:09:00.549 --> 00:09:03.710 is driven by incentives that we've seen. Now, 00:09:03.710 --> 00:09:08.230 some of those are. like that 25C federal tax 00:09:08.230 --> 00:09:12.370 credit right now. Where do we stand in the realms 00:09:12.370 --> 00:09:17.090 of heat pump incentives? Yeah. So, I mean, obviously 00:09:17.090 --> 00:09:19.370 you mentioned that the 25 -seat tax credit that 00:09:19.370 --> 00:09:21.929 provided up to $2 ,000 for a qualifying heat 00:09:21.929 --> 00:09:24.870 pump install was sunset at the end of last year. 00:09:24.970 --> 00:09:28.970 So in 12 -31 -2025, the big beautiful bill sunset 00:09:28.970 --> 00:09:31.649 the tax credits for heat pumps. That said, I 00:09:31.649 --> 00:09:33.490 mean, if you go back and look at the data, right, 00:09:33.570 --> 00:09:36.789 the IRS published data in 2023 for heat pump 00:09:36.789 --> 00:09:39.169 adoption. If you look at how many people utilize 00:09:39.169 --> 00:09:42.070 the 25 -seat tax credits, it's only about... 00:09:42.250 --> 00:09:45.710 less than 10 % of overall heat pump sales. I 00:09:45.710 --> 00:09:48.350 think the tax credits and in the way that they 00:09:48.350 --> 00:09:52.049 were structured were mainly for people that were 00:09:52.049 --> 00:09:54.450 probably putting in, benefited people that were 00:09:54.450 --> 00:09:56.830 probably putting in high efficiency equipment 00:09:56.830 --> 00:10:01.710 to begin with anyway. Just because the tax credits 00:10:01.710 --> 00:10:03.330 are gone, and like I mentioned before, I don't 00:10:03.330 --> 00:10:05.169 know that the penetration of tax credits and 00:10:05.169 --> 00:10:07.470 driving heat pumps was significant anyway. We 00:10:07.470 --> 00:10:09.389 don't expect this demand to disappear, right? 00:10:09.870 --> 00:10:12.169 I think there's going to be a mild shift towards 00:10:12.169 --> 00:10:15.769 regions that have strong state and or utility 00:10:15.769 --> 00:10:18.850 support. You know, incentives accelerate adoption, 00:10:19.129 --> 00:10:21.590 but they don't create it out of thin air. So 00:10:21.590 --> 00:10:24.690 once homeowners kind of experience the comfort 00:10:24.690 --> 00:10:27.090 and contractors gain confidence, I think adoption 00:10:27.090 --> 00:10:29.769 is going to continue to grow, even in the absence 00:10:29.769 --> 00:10:32.230 of initiatives. That said, I mean, we're seeing 00:10:32.230 --> 00:10:34.429 that there are several states that are starting 00:10:34.429 --> 00:10:36.929 to take action now that the 25 -seat tax credits 00:10:36.929 --> 00:10:39.409 are sunset. There are several utilities that 00:10:39.409 --> 00:10:42.529 are offering rebates that are upfront and are 00:10:42.529 --> 00:10:44.750 usually larger than tax credits, which makes 00:10:44.750 --> 00:10:48.549 the decision very easy for the homeowner. Tax 00:10:48.549 --> 00:10:51.289 credits is a post -payment that they have to 00:10:51.289 --> 00:10:56.289 bear that $2 ,000 charge up until they get it, 00:10:56.370 --> 00:10:57.950 depending on when they install the equipment 00:10:57.950 --> 00:11:00.809 and when they file taxes. That could very well 00:11:00.809 --> 00:11:05.409 be a 15-, 16 -month gap, right? So I think there's 00:11:05.409 --> 00:11:08.090 many utilities and several other states that 00:11:08.090 --> 00:11:12.299 are sort of stepping up. to offer more rebates. 00:11:12.500 --> 00:11:15.080 Now, when a lot of this activity starts going 00:11:15.080 --> 00:11:17.500 towards state and utility level, the market becomes 00:11:17.500 --> 00:11:21.000 very fragmented, right? And from an OEM standpoint 00:11:21.000 --> 00:11:23.659 and the contractor standpoint, I think it becomes 00:11:23.659 --> 00:11:26.220 very important that contractors who understand 00:11:26.220 --> 00:11:28.559 selling and stacking these incentives and that 00:11:28.559 --> 00:11:30.600 are familiar with incentives that are offered 00:11:30.600 --> 00:11:33.639 in that area, I think they have the opportunity 00:11:33.639 --> 00:11:36.700 to close much more sales than folks that are 00:11:36.700 --> 00:11:40.190 not keeping up with this. Yeah, completely. You'd 00:11:40.190 --> 00:11:42.789 mentioned the automotive analogy earlier. I use 00:11:42.789 --> 00:11:45.730 that a lot on educating on inverter technology, 00:11:45.970 --> 00:11:49.929 how transitions that we've made in internal combustion 00:11:49.929 --> 00:11:52.710 engines are very similar to controls that we 00:11:52.710 --> 00:11:55.649 use for managing a lot of our inverters. So there's 00:11:55.649 --> 00:11:58.629 a lot of analogies we can use. I really like 00:11:58.629 --> 00:12:02.529 the way that you brought that up with the 25C. 00:12:02.889 --> 00:12:06.940 Think about from the automotive. Are the federal 00:12:06.940 --> 00:12:10.899 tax incentives enough to drive someone from going 00:12:10.899 --> 00:12:15.179 from a fossil fuel vehicle into a total electric 00:12:15.179 --> 00:12:19.580 vehicle? Probably marginally. I think overall, 00:12:19.779 --> 00:12:23.279 it's the consumer looking at the change in life 00:12:23.279 --> 00:12:28.580 and looking at their own carbon footprint and 00:12:28.580 --> 00:12:32.600 making that decision. typically just looking 00:12:32.600 --> 00:12:34.240 at a product going, oh, I think I'll take the 00:12:34.240 --> 00:12:36.259 incentives and I'll go a different route because 00:12:36.259 --> 00:12:38.539 of them. It's typically they've made that internal 00:12:38.539 --> 00:12:40.220 decision that I'm looking for high efficiency. 00:12:40.299 --> 00:12:45.139 I'm looking for less utility cost. I'm looking 00:12:45.139 --> 00:12:48.279 for ways to improve my impact upon the world. 00:12:48.700 --> 00:12:52.759 So in doing that, do you see consumers looking 00:12:52.759 --> 00:12:55.799 at heat pumps and dual fuel systems kind of like 00:12:55.799 --> 00:12:58.789 a risk management scenario? Yeah. I mean, at 00:12:58.789 --> 00:13:01.090 the end of the day, the economics have to make 00:13:01.090 --> 00:13:03.450 sense, right? Incentives accelerate adoption. 00:13:03.789 --> 00:13:05.590 But again, like I mentioned, they don't create 00:13:05.590 --> 00:13:08.470 it, right? They only accelerate it. But to your 00:13:08.470 --> 00:13:12.370 point, dual fuels are definitely a risk management, 00:13:12.649 --> 00:13:16.309 you know, a way to manage risk, in my opinion, 00:13:16.370 --> 00:13:19.549 because it becomes a, you know, dual fuel system 00:13:19.549 --> 00:13:22.490 becomes a hedge against long term. volatility 00:13:22.490 --> 00:13:25.009 of, you know, we see in several areas. I mean, 00:13:25.029 --> 00:13:27.149 if you look across the country in South Carolina, 00:13:27.230 --> 00:13:29.649 I pay 14 cents a kilowatt hour. Right. If you 00:13:29.649 --> 00:13:31.649 go to California, that price could all go all 00:13:31.649 --> 00:13:34.909 the way up to 57 or 60 cents. And on the flip 00:13:34.909 --> 00:13:37.990 side, we're also seeing gas rates go up, too. 00:13:38.610 --> 00:13:40.850 I mean, if I look at my gas bill today and I 00:13:40.850 --> 00:13:43.049 compare it against what my gas bill looked like, 00:13:43.129 --> 00:13:46.100 maybe five, you know, five, six. several years 00:13:46.100 --> 00:13:48.940 ago, I see that my gas bill has grown significantly. 00:13:49.120 --> 00:13:51.460 And a lot of that goes towards paying for infrastructure 00:13:51.460 --> 00:13:55.960 costs. And as cities and states start looking 00:13:55.960 --> 00:14:00.200 at gas bans, now you're thinking about paying 00:14:00.200 --> 00:14:03.740 for that same infrastructure with a smaller number 00:14:03.740 --> 00:14:06.200 of users. So that's only going to increase the 00:14:06.200 --> 00:14:10.259 amount of surcharges or fees that are applied 00:14:10.259 --> 00:14:15.539 to your bill. So I think that It's not really 00:14:15.539 --> 00:14:18.000 about electric versus gas, but I think it's more 00:14:18.000 --> 00:14:21.840 about a risk management. And dual fuel is a very 00:14:21.840 --> 00:14:25.100 rational bridge. And the term that we use mainly 00:14:25.100 --> 00:14:29.460 at Allied Air is that dual fuel gives the homeowner 00:14:29.460 --> 00:14:33.399 utility insurance. It is. So regardless of... 00:14:34.529 --> 00:14:36.950 So, you know, regardless of which way you go, 00:14:37.049 --> 00:14:39.870 you can kind of play, especially if you pair 00:14:39.870 --> 00:14:44.110 a furnace with a cold climate or a, you know, 00:14:44.110 --> 00:14:46.610 high efficiency heat pump, you have the option 00:14:46.610 --> 00:14:50.090 to throttle that balance point. And, you know, 00:14:50.190 --> 00:14:52.629 there's depending on what that economical balance 00:14:52.629 --> 00:14:55.470 point is for you. I think there's two lens of 00:14:55.470 --> 00:14:56.990 looking at it, right? There's a thermal lens 00:14:56.990 --> 00:15:00.070 and there's also the economical lens. Thermal 00:15:00.070 --> 00:15:02.669 balance is based on equipment. Economic balance 00:15:02.669 --> 00:15:05.240 point is based on... what you're paying for utilities 00:15:05.240 --> 00:15:08.500 and what makes sense for you. In most cases, 00:15:08.519 --> 00:15:10.379 especially with a cold climate heat pump and 00:15:10.379 --> 00:15:15.039 a furnace, you could set it to where that heat 00:15:15.039 --> 00:15:19.860 pump runs 90 to 95 % of the time. And that one 00:15:19.860 --> 00:15:22.440 day in Indiana, when it gets down to negative 00:15:22.440 --> 00:15:25.639 five degrees, that furnace maybe comes on every 00:15:25.639 --> 00:15:28.679 once in a while, right? I think there's a lot 00:15:28.679 --> 00:15:32.320 of operating costs really depends on the market. 00:15:33.120 --> 00:15:36.299 What's really changing is predictability. So 00:15:36.299 --> 00:15:39.659 as electricity pricing and gas pricing vary, 00:15:39.919 --> 00:15:43.120 I think homeowners want to have more control. 00:15:43.519 --> 00:15:47.299 So I really see dual fuel as sort of that bridge 00:15:47.299 --> 00:15:52.909 between now and a fully electrified future. Yeah, 00:15:52.990 --> 00:15:55.169 completely agree. And I'm glad you brought up 00:15:55.169 --> 00:15:57.730 the term cold climate heat pump. It's one of 00:15:57.730 --> 00:16:00.149 those terms that I've struggled with for a long 00:16:00.149 --> 00:16:04.370 time. I put together a curriculum for ultra low 00:16:04.370 --> 00:16:08.470 temperature heat pumps. And in that, I had to 00:16:08.470 --> 00:16:10.570 struggle with, well, it's really just a high 00:16:10.570 --> 00:16:13.769 performance heat pump. It's a heat pump that 00:16:13.769 --> 00:16:17.490 could operate in cold climates, but there's nothing 00:16:17.490 --> 00:16:19.830 saying that it can't operate in a warm climate. 00:16:19.970 --> 00:16:23.250 It's another It's another product that we need 00:16:23.250 --> 00:16:28.529 to understand, not just its capability, but how 00:16:28.529 --> 00:16:31.450 it's doing it. Because even if we look at heat 00:16:31.450 --> 00:16:34.009 pumps and we look at some of the highest performing. 00:16:34.620 --> 00:16:37.039 heat pumps, cold climate heat pumps that operate 00:16:37.039 --> 00:16:41.440 down into the minus teens and minus 20s. Well, 00:16:41.500 --> 00:16:44.039 how do they do that? And many of them are using 00:16:44.039 --> 00:16:47.360 technologies like vapor injection. We're using 00:16:47.360 --> 00:16:50.960 a lot of modulation. Sometimes we're designing 00:16:50.960 --> 00:16:53.659 compressors that can run at very high RPMs to 00:16:53.659 --> 00:16:57.200 be able to manage higher compression with the 00:16:57.200 --> 00:16:59.659 vapor injection and higher speed so we can move 00:16:59.659 --> 00:17:04.880 more volume. Any addition of technology, we're 00:17:04.880 --> 00:17:08.559 going to add additional cost. And so I think 00:17:08.559 --> 00:17:12.700 it's very important for consumers and contractors 00:17:12.700 --> 00:17:15.279 to understand it's exactly like you said, it's 00:17:15.279 --> 00:17:18.640 finding that balance point of economics and efficiency. 00:17:19.059 --> 00:17:22.680 Because I can see both routes. I could see, well, 00:17:22.819 --> 00:17:25.420 if I'm going straight heat pump and I'm using 00:17:25.420 --> 00:17:28.650 no auxiliary. it might be worth me looking at 00:17:28.650 --> 00:17:32.390 investing in a heat pump that can go extremely 00:17:32.390 --> 00:17:35.250 low because there's going to be a higher upfront 00:17:35.250 --> 00:17:38.119 cost. Or I could look at a dual fuel application. 00:17:38.700 --> 00:17:41.220 Maybe I don't need to invest as much into that 00:17:41.220 --> 00:17:44.140 heat pump and get a nice mid -tier heat pump, 00:17:44.259 --> 00:17:47.880 like a two stage or even an entry line inverter. 00:17:48.119 --> 00:17:52.099 And then my balance point becomes very realistic 00:17:52.099 --> 00:17:55.920 for both efficiency and for comfort. And I've 00:17:55.920 --> 00:17:58.559 got a nice combination. So like in the instance 00:17:58.559 --> 00:18:01.819 that I put the system together for my son, I 00:18:01.819 --> 00:18:05.069 did a two stage gas furnace. and a two -stage 00:18:05.069 --> 00:18:08.690 heat pump now that heat pump was not it was uh 00:18:08.690 --> 00:18:11.690 it had the cop rating you know which would classify 00:18:11.690 --> 00:18:13.829 it as a cold climate heat pump i mean we're really 00:18:13.829 --> 00:18:17.430 talking about 1 .75 cop at five degrees talking 00:18:17.430 --> 00:18:19.109 about seventy percent of its you know heating 00:18:19.109 --> 00:18:22.109 capacity that it had at a hundred so five degrees 00:18:22.109 --> 00:18:24.490 is really kind of that dividing factor and i 00:18:24.490 --> 00:18:27.009 look here in the midwest there's not a lot of 00:18:27.009 --> 00:18:29.210 days that i'm going to be going below five degrees 00:18:29.900 --> 00:18:33.259 So that two -stage heat pump works great here 00:18:33.259 --> 00:18:35.400 in the Midwest. And then, like I said, on those 00:18:35.400 --> 00:18:37.599 days where it gets below that, I'm just going 00:18:37.599 --> 00:18:41.660 to bring on that additional gas furnace. And 00:18:41.660 --> 00:18:43.960 I've even seen, like in that particular matchup, 00:18:44.000 --> 00:18:45.980 it was actually kind of an unusual one. I hadn't 00:18:45.980 --> 00:18:48.400 realized until I was doing the installation that 00:18:48.400 --> 00:18:51.039 we're now even looking at dual fuel systems that 00:18:51.039 --> 00:18:53.660 can run simultaneously. That particular heat 00:18:53.660 --> 00:18:56.180 pump could actually run low stage heat pump and 00:18:56.180 --> 00:18:58.019 low stage gas furnace at the same time. And I 00:18:58.019 --> 00:19:01.619 go, wow, that's how creativity and that's how 00:19:01.619 --> 00:19:05.380 technology is allowing us to rethink that whole 00:19:05.380 --> 00:19:08.700 balance point. And it's not just about the structural 00:19:08.700 --> 00:19:11.680 load balance point anymore. The economic balance 00:19:11.680 --> 00:19:15.079 point is just as important. Absolutely. And one 00:19:15.079 --> 00:19:16.859 of the things that, you know, to go along with 00:19:16.859 --> 00:19:19.579 what you said, right, internally here at Allied, 00:19:19.740 --> 00:19:21.619 we actually call it an all climate heat pump. 00:19:21.700 --> 00:19:23.460 We call all of our cold climates all climate 00:19:23.460 --> 00:19:25.660 heat pump. Because if you live in a somewhat 00:19:25.660 --> 00:19:27.579 of a moderate climate, take South Carolina or 00:19:27.579 --> 00:19:29.980 North Carolina, for example, right? If you live 00:19:29.980 --> 00:19:32.039 in a climate like that, you could technically 00:19:32.039 --> 00:19:34.079 put in this cold climate heat pump that operates 00:19:34.079 --> 00:19:36.740 at. you know, down to 70 % capacity, like you 00:19:36.740 --> 00:19:38.819 mentioned that five degrees outdoor ambient, 00:19:39.039 --> 00:19:41.740 you could put this in and never have to rely 00:19:41.740 --> 00:19:44.500 on auxiliary heat to ever come on. I think the 00:19:44.500 --> 00:19:46.400 real strategy there is how do you limit that 00:19:46.400 --> 00:19:48.279 auxiliary heat from ever coming on? Because a 00:19:48.279 --> 00:19:49.880 heat pump is always going to be several fold 00:19:49.880 --> 00:19:52.720 more efficient than using electric resistance 00:19:52.720 --> 00:19:54.700 heat, which all, you know, you know, it runs 00:19:54.700 --> 00:19:58.869 at a COP of one. So I think that's, you know, 00:19:58.910 --> 00:20:01.309 I don't know that the cold climate heat pumps 00:20:01.309 --> 00:20:03.509 don't just mean it's for the north, right? That's 00:20:03.509 --> 00:20:05.309 kind of why we use the term all climate heat 00:20:05.309 --> 00:20:09.670 pumps. I think it belongs everywhere. I mean, 00:20:09.690 --> 00:20:13.109 funny story to add along to that. point. Before 00:20:13.109 --> 00:20:14.869 I moved to South Carolina, I used to live in 00:20:14.869 --> 00:20:17.789 Macon, Georgia, which was a small city in middle 00:20:17.789 --> 00:20:22.009 Georgia. I had two single stage heat pumps and 00:20:22.009 --> 00:20:25.269 fairly older heat pumps that didn't have very 00:20:25.269 --> 00:20:31.170 good low ambient performance. The last two out 00:20:31.170 --> 00:20:32.910 of three years that I lived there, my heating 00:20:32.910 --> 00:20:35.509 bill in the winter was actually more expensive 00:20:35.509 --> 00:20:38.819 than my cooling bill in the summer. which to 00:20:38.819 --> 00:20:41.660 think about in in middle georgia all the way 00:20:41.660 --> 00:20:45.180 south to i -16 is is like unheard of right you'd 00:20:45.180 --> 00:20:47.339 never i never thought that i would see something 00:20:47.339 --> 00:20:50.740 like that but it's it's more of a combination 00:20:50.740 --> 00:20:53.480 of you know trying to pick the right balance 00:20:53.480 --> 00:20:56.019 point and you know and running electric heat 00:20:56.019 --> 00:20:59.440 is simply very very expensive yeah you know a 00:20:59.440 --> 00:21:02.470 um Another example that I like to use regularly 00:21:02.470 --> 00:21:05.970 on these cold climate heat pump or all weather 00:21:05.970 --> 00:21:10.609 heat pump is take like Florida. Most of the heating 00:21:10.609 --> 00:21:12.450 and cooling systems in Florida traditionally 00:21:12.450 --> 00:21:16.130 have been a straight air conditioner with an 00:21:16.130 --> 00:21:20.069 electric resistive heat. That's all. Well, we 00:21:20.069 --> 00:21:23.049 could take one of these. All weather, cold climate, 00:21:23.089 --> 00:21:26.029 these higher performing heat pumps, we can completely 00:21:26.029 --> 00:21:28.970 remove the electric resistive and we can just 00:21:28.970 --> 00:21:31.450 use a heat pump that has 100 percent capacity 00:21:31.450 --> 00:21:33.609 at whatever temperature it gets, because it's 00:21:33.609 --> 00:21:35.890 always going to have 100 percent capacity in 00:21:35.890 --> 00:21:39.650 Florida. And now we have a single heat pump that 00:21:39.650 --> 00:21:41.549 has replaced that air conditioner and electric 00:21:41.549 --> 00:21:46.269 furnace. And it's not in the north. It's in the 00:21:46.269 --> 00:21:49.730 south. Exactly. In that application, the unit. 00:21:50.059 --> 00:21:53.019 because of its performance, provides all the 00:21:53.019 --> 00:21:55.000 heat that you would ever need. Just very similar 00:21:55.000 --> 00:21:57.660 like you're talking about. Now, we are going 00:21:57.660 --> 00:22:00.259 to see some transitions that many people are 00:22:00.259 --> 00:22:03.440 unfamiliar with, or if they've heard it, they 00:22:03.440 --> 00:22:05.859 think that it's a decade out. But let's talk 00:22:05.859 --> 00:22:08.700 a little bit about some of the... One of the 00:22:08.700 --> 00:22:11.319 reasons that we're pushing into higher performing 00:22:11.319 --> 00:22:14.819 heat pumps is you mentioned gas bans. But also, 00:22:14.880 --> 00:22:18.299 let's talk a little bit about the 95 % AFUE rule 00:22:18.299 --> 00:22:22.180 that is out there for gas appliances. Yeah. So, 00:22:22.200 --> 00:22:25.039 you know, you're obviously familiar with it, 00:22:25.059 --> 00:22:26.980 Clifton. So there is a ruling that's going to 00:22:26.980 --> 00:22:29.940 happen here in the next two years and a few months, 00:22:30.099 --> 00:22:34.480 a little less than three years, that right now 00:22:34.480 --> 00:22:40.619 is set to go into law. make 95 percent afue the 00:22:40.619 --> 00:22:42.799 floor right so that's basically the minimum efficiency 00:22:42.799 --> 00:22:46.079 today we produce two different types of furnaces 00:22:46.079 --> 00:22:49.900 um and most most manufacturers do as well we 00:22:49.900 --> 00:22:53.200 make 80 efficient furnaces or non -condensing 00:22:53.200 --> 00:22:56.890 furnaces and then we make 90 plus afue furnaces 00:22:56.890 --> 00:22:58.930 and they vary in efficiency levels from all the 00:22:58.930 --> 00:23:03.269 way from 92 to 99 in some cases right so those 00:23:03.269 --> 00:23:06.710 are condensing furnaces um just if you think 00:23:06.710 --> 00:23:09.509 about it just broadly uh non -condensing furnaces 00:23:09.509 --> 00:23:11.170 are more common in the south where heating days 00:23:11.170 --> 00:23:14.230 are much more much less and then condensing furnaces 00:23:14.230 --> 00:23:16.529 are more common up north where heating days are 00:23:16.529 --> 00:23:20.230 a lot more than than than in the south condensing 00:23:20.230 --> 00:23:23.630 furnaces are as the name suggests uh they're 00:23:23.690 --> 00:23:25.470 some infrastructure that you have to put in place 00:23:25.470 --> 00:23:28.210 because of the fact that the furnace itself condenses 00:23:28.210 --> 00:23:32.390 so it raises you know it adds some venting complexity 00:23:32.390 --> 00:23:35.509 because now you have to introduce plastic venting 00:23:35.509 --> 00:23:39.049 instead of using a steel vent and you also have 00:23:39.049 --> 00:23:41.710 to have to factor in condensate management right 00:23:41.710 --> 00:23:44.809 um so when all of this happened across the country 00:23:44.809 --> 00:23:48.710 where especially in the south where uh non -condensing 00:23:48.710 --> 00:23:51.210 furnaces were the norm now you have to think 00:23:51.210 --> 00:23:53.490 about adding this infrastructure in order to 00:23:53.490 --> 00:23:58.069 replace a 80 furnace with a 95 or above furnace 00:23:58.069 --> 00:24:01.789 so when when that happens it reduces the installed 00:24:01.789 --> 00:24:04.589 cost gap between a furnace and a heat pump so 00:24:04.589 --> 00:24:07.970 that that get cost gap shrinks dramatically um 00:24:07.970 --> 00:24:11.289 so um i think that that in and of itself the 00:24:11.289 --> 00:24:13.250 higher furnace minimums is indirectly going to 00:24:13.250 --> 00:24:17.549 favor heat pumps and it's going to become you 00:24:17.549 --> 00:24:19.029 know replacement options are going to become 00:24:19.029 --> 00:24:21.250 more open -ended and i think there's a lot of 00:24:21.250 --> 00:24:23.970 opportunity for the contractor to sort of reframe 00:24:23.970 --> 00:24:27.069 reframe the conversation there right so um it 00:24:27.069 --> 00:24:28.869 not just it just doesn't become hey i'm going 00:24:28.869 --> 00:24:30.250 to take a furnace out and i'm going to put a 00:24:30.250 --> 00:24:33.329 furnace back in i think there's a lot of opportunity 00:24:33.329 --> 00:24:35.950 there to actually you know save money by going 00:24:35.950 --> 00:24:39.069 to a heat pump Yeah, I do, too. I see a lot of 00:24:39.069 --> 00:24:42.150 contractors relooking at their business model 00:24:42.150 --> 00:24:45.789 currently, even here in the Midwest. You know, 00:24:45.789 --> 00:24:48.190 I've got contractors that I work with that five 00:24:48.190 --> 00:24:50.950 years ago, you know, they were a traditional 00:24:50.950 --> 00:24:53.390 blended contractor. They worked on heat pumps 00:24:53.390 --> 00:24:55.289 and they worked on gas furnaces and they sold 00:24:55.289 --> 00:24:59.779 both. And today they only. sell heat pumps. Now 00:24:59.779 --> 00:25:02.640 they will sell a dual fuel application, but they 00:25:02.640 --> 00:25:05.539 will not sell an air conditioner. And so they 00:25:05.539 --> 00:25:08.740 work with mid -tier heat pumps and up. And because 00:25:08.740 --> 00:25:10.740 of that, they became an even more successful 00:25:10.740 --> 00:25:13.619 contractor than they were five years ago. We 00:25:13.619 --> 00:25:16.420 just have to be open to thinking about that change 00:25:16.420 --> 00:25:19.359 and understanding how it can affect our business 00:25:19.359 --> 00:25:21.599 model and the way that we market the products 00:25:21.599 --> 00:25:25.220 that we're looking at. Yeah. I mean, the other 00:25:25.220 --> 00:25:27.119 thing that we see a large scale adoption across 00:25:27.119 --> 00:25:29.059 the U .S. and I think it's going to happen more 00:25:29.059 --> 00:25:32.680 and more as lot sizes sort of shrink and home 00:25:32.680 --> 00:25:35.720 sizes tend to grow is side discharge products. 00:25:35.920 --> 00:25:37.880 Right. Oh, absolutely. If you look at predominantly 00:25:37.880 --> 00:25:40.940 across the entire industry, side discharge products 00:25:40.940 --> 00:25:43.869 are mainly offered only in heat pumps. um and 00:25:43.869 --> 00:25:46.009 one of the main reasons why contract a lot of 00:25:46.009 --> 00:25:47.430 the a lot of the manufacturers are investing 00:25:47.430 --> 00:25:49.769 only in heat pumps is because i think everybody 00:25:49.769 --> 00:25:52.170 understands that that's the future and that's 00:25:52.170 --> 00:25:55.329 where uh that's where they go right so um you 00:25:55.329 --> 00:25:57.410 know we're seeing we're seeing a lot of adoptions 00:25:57.410 --> 00:26:00.369 um a lot of adoption even in that that sort of 00:26:00.369 --> 00:26:03.230 form factor as well i mean if you look at overall 00:26:03.230 --> 00:26:06.019 i mean heat pump adoption is just not driven 00:26:06.019 --> 00:26:08.519 by a single force right it's sort of an intersection 00:26:08.519 --> 00:26:12.099 of technology economics policy and of course 00:26:12.099 --> 00:26:14.599 installer confidence which i think is a big is 00:26:14.599 --> 00:26:16.579 a big deal right and i think we're at a point 00:26:16.579 --> 00:26:19.339 where all of those are sort of aligning um and 00:26:19.339 --> 00:26:22.359 the future is simply just upward from here yeah 00:26:22.359 --> 00:26:25.769 i agree You know, before this podcast, we'd mentioned 00:26:25.769 --> 00:26:28.349 a product that not everyone is familiar with. 00:26:28.470 --> 00:26:30.529 I am very familiar because I've worked on a lot 00:26:30.529 --> 00:26:32.970 of them in the past. You know, one of them with 00:26:32.970 --> 00:26:36.009 a brand name of Magic Pack or a group name of 00:26:36.009 --> 00:26:39.490 Magic Pack. You know, a smaller self -contained 00:26:39.490 --> 00:26:41.990 unit that is installed on the side of the building. 00:26:42.029 --> 00:26:44.690 A lot of mobile offices here in the Midwest use 00:26:44.690 --> 00:26:47.250 those. Now back in, oh my gosh, here I'm going 00:26:47.250 --> 00:26:50.549 to start dating myself. Back in my days, a lot 00:26:50.549 --> 00:26:54.349 of our Magic Pack was a straight. AC with like 00:26:54.349 --> 00:26:58.529 a two or three KW electric resistor backup. Now, 00:26:58.549 --> 00:27:00.769 do we see even products like MagicPak starting 00:27:00.769 --> 00:27:03.910 to move into heat pump designs? Yeah. So we're 00:27:03.910 --> 00:27:07.690 seeing, we have a MagicPak product today that 00:27:07.690 --> 00:27:11.390 has a heat pump in it, right? So it's a slightly 00:27:11.390 --> 00:27:13.930 larger form factor in what we call the M -series 00:27:13.930 --> 00:27:18.359 MagicPak. So we make everything. We make like 00:27:18.359 --> 00:27:21.839 a straight cool unit. We make a heat pump and 00:27:21.839 --> 00:27:25.640 we also make an 80 and a 95 FU furnace version 00:27:25.640 --> 00:27:29.920 as well. So as I talked about before, as we see 00:27:29.920 --> 00:27:32.420 more penetration of that product in sort of the 00:27:32.420 --> 00:27:34.880 sunbelt area, we really expect that heat pump 00:27:34.880 --> 00:27:40.230 to really take off. I love it. We're prepping 00:27:40.230 --> 00:27:43.769 for that across the board in every single product, 00:27:43.849 --> 00:27:47.670 be it packaged or split, and or even commercial 00:27:47.670 --> 00:27:49.869 applications for that matter. I think we're seeing 00:27:49.869 --> 00:27:54.230 adoption across the board. I'm sure you've seen 00:27:54.230 --> 00:27:57.869 the cold climate heat pump challenge that was 00:27:57.869 --> 00:28:00.109 organized by the DOE, both in residential and 00:28:00.109 --> 00:28:03.309 the commercial categories. Lenox International 00:28:03.309 --> 00:28:07.140 was the first manufacturer that to win both sides 00:28:07.140 --> 00:28:10.000 of that challenge. So we're very, very invested 00:28:10.000 --> 00:28:12.799 in this technology and we feel that there's plenty 00:28:12.799 --> 00:28:16.720 of potential for us here. I do too. Iswar Sankar, 00:28:16.900 --> 00:28:20.039 where can we learn more about allied products 00:28:20.039 --> 00:28:22.079 and the heat pumps that we've been discussing? 00:28:22.559 --> 00:28:27.099 Yeah, so alliedair .com is our company website. 00:28:27.200 --> 00:28:29.299 Obviously, we sell under several different brands. 00:28:29.579 --> 00:28:32.700 We sell under Armstrong Air, Concord, Duquesne, 00:28:32.759 --> 00:28:36.200 Airese, and Magic Pack, and also Allied Commercial. 00:28:36.539 --> 00:28:38.680 So all of these brands are also available, usually 00:28:38.680 --> 00:28:42.640 followed by the name and then .com. So you can 00:28:42.640 --> 00:28:47.779 find our information there. We sell direct to 00:28:47.779 --> 00:28:50.259 distributors. That's sort of the business model 00:28:50.259 --> 00:28:52.519 that Allied Air follows. Of course, you're familiar 00:28:52.519 --> 00:28:55.140 with that with our distributor service representative 00:28:55.140 --> 00:28:58.599 meeting that you were part of. So that's kind 00:28:58.599 --> 00:29:00.539 of where you can learn all about Allied Air. 00:29:00.880 --> 00:29:04.500 We sell a variety of everything from a single 00:29:04.500 --> 00:29:08.880 stage AC to a large rooftop commercial unit. 00:29:09.539 --> 00:29:11.900 All right. Thank you so much. Changing world. 00:29:11.980 --> 00:29:13.759 And we're grateful that our manufacturers like 00:29:13.759 --> 00:29:16.559 Allied Air are helping us understand this transition 00:29:16.559 --> 00:29:18.339 that we're going through. Have a wonderful day. 00:29:18.599 --> 00:29:22.349 You too. Always be compressing. Aha. Ooh, I love 00:29:22.349 --> 00:29:24.930 that. You know, you know, Glenn. You know, you 00:29:24.930 --> 00:29:25.089 know.