The Internet of Things is transforming the way contractors manage HVAC systems in both residential and commercial settings. According to Zion Market Research, the global smart HVAC control market will reach $28.3 billion by 2025—evidence that connecting HVAC systems drives efficiency and profitability.

Using the IoT to link HVAC systems helps manufacturers, contractors, and end users monitor their performance and detect issues before they become major outages. IoT sensors send back alerts when they detect a problem, allowing contractors to prioritize service calls, reduce unnecessary truck rolls, prevent equipment failures, meet energy efficiency compliance requirements, and unlock new revenue streams and value-add services.

Let’s take a closer look at some of the benefits and applications of IoT-enabled HVAC solutions.

The top 5 IoT HVAC applications

IoT gives companies opportunities to intelligently monitor and control the performance and condition of HVAC systems. Here are the five primary ways companies use IoT to improve these operations:

1. Preventative maintenance

Traditionally, HVAC contractors respond to problems in the field in two ways. One is after they emerge—when a customer calls to report an outage and request service. This is known as “reactive maintenance.” The company must then deploy technicians to the site to diagnose the problem while the customer endures either excessive heat or cold in the building.

The other is through preventative maintenance on a specific schedule or usage rate. For example, some contractors send out technicians to do yearly tune-ups on a specific day every year. Others may do routine maintenance when a system has reached a certain level of usage.

Either way, traditional maintenance methods often leave managers and techs without a clear picture of the problem. With reactive maintenance, they often go to a job site with only the information the system owner gives them.

With time- or schedule-based maintenance, contractors run the risk of sending someone to do preventative maintenance on a system that is running well or is on the verge of breaking down. The lack of condition-based insight into a system causes major inefficiencies and can be a key driver of high maintenance costs.

Without real-time condition data, service trips often lead to wasted time and money, as HVAC contractors might send out a junior technician to diagnose and fix problems, only to realize they need help from a senior tech to fix it. Likewise, they may send a senior tech to work on a problem that could be solved by a junior one, thus reducing the profitability of the truck roll. The process can become time-consuming and expensive.

With the addition of IoT sensors, HVAC contractors can take a more condition-based approach to preventative maintenance. The sensors gather real-time data from HVAC systems and send it to a cloud-based platform, where contractors can access and assess it. When a problem is detected, such as a drop in efficiency, excessive power consumption, or excess vibration, technicians can look at the readings and often diagnose the problem remotely.

Then they can call the customer—sometimes even before they’ve noticed an issue—and send out the right technician, parts, and tools to service the system in a single visit. The ability to take a preventative approach to maintenance and send the right person for the job on the first truck roll can save time, effort, and costs for contractors—and keep customers happier with uninterrupted service.

2. Energy efficiency

With legacy HVAC systems, energy efficiency can be difficult to monitor and improve. Typically, energy usage data is only discoverable after it’s been consumed, making it difficult to adjust or compensate for. And if there’s an emerging problem with a system, it might struggle along for days or weeks before giving out completely, resulting in more energy waste.

By providing access to real-time data, IoT sensors installed on HVAC equipment can improve energy efficiency by monitoring usage trends and even factoring in weather predictions. The result is better-regulated indoor climate control that keeps power consumption to a minimum. Connectivity also enables HVAC systems to be a key part of IoT-enabled smart grids.

3. Remote system monitoring and control

Legacy HVAC systems simply work until they don’t. Diagnosing problems requires a blend of expertise, tools, time, and effort.

With the addition of IoT technology, remote system monitoring becomes a matter of consulting a smartphone app or website portal, giving homeowners, property managers, and HVAC contractors the insights to diagnose problems from afar.

For example, some sensors provide instant leak detection, while others track key pieces of data such as pressure, vibration, flow, temperature, humidity, on-off cycles, and fault tolerance. Access to this information—at a fine level of detail—allows technicians the insights they need to accurately assess the system’s status. It’s important to understand how the IoT protocols and standards you use can impact the types of data you can collect and how that data will be transmitted to you.

4. Regulatory compliance

Regulatory compliance is a built-in requirement for most HVAC businesses, often requiring a field agent to inspect equipment periodically. And with increasing concerns and requirements around sustainability and air quality, many building and homeowners are looking for ways to demonstrate compliance with government or corporate environmental regulations as well.

Disconnected HVAC systems make it difficult to achieve and document such compliance, often requiring lots of paperwork and manual system checks.

The advent of IoT smart HVAC makes this process much simpler. Real-time system data can be recorded and saved, and some software tools can even automatically generate that data into reports to prove compliance.

5. Recurring service plans

Traditionally, warranties and recurring service plans are a major portion of the average HVAC contractor’s business. A warranty may include built-in service calls or other periodic check-ups, meaning seasonal or on-demand service calls for contractors and technicians.

With IoT-enabled HVAC solutions, contractors can provide the same guaranteed service without needing to travel to the site every spring and fall. Instead, they can proactively monitor and manage the HVAC system and only make service calls when they are truly necessary, providing a true hardware-as-a-service model.

IoT also enables HVAC contractors to provide real-time data to customers via dashboards that show energy consumption and provide energy-saving tips, usage patterns, and even provide remote control capabilities. These products can be bundled with service contracts for additional recurring revenue.

Another new HVAC business model that IoT unlocks is a usage-based pricing model. Similar to how smartphones are sold today—where the cost of the phone is bundled into a monthly contract with little/no money down at the time of purchase—HVAC contractors can install connected air conditioning or heating systems with little upfront investment from the customer and bill them monthly based on usage.