The Heating, Ventilation, and Air Conditioning (HVAC) industry is facing a transformative challenge due to a surge in private equity consolidation. This trend has significant implications for HVAC business owners, workforce dynamics, and the affordability of key technologies like heat pumps. In this article, we’ll delve into the impact of private equity in HVAC and the potential consequences for the industry.

Private Equity’s Stronghold

Over the past two decades, the HVAC industry has witnessed a wave of corporate consolidations driven by private equity firms. HVAC professionals like Jeff Howard have experienced this firsthand, with companies being acquired by larger entities. These acquisitions often lead to changes in company culture, increased workloads, and a shift in priorities, focusing more on profits than customer satisfaction and employee well-being.

Private equity investors have identified HVAC as a growth sector, given the increasing demand for energy-efficient solutions and clean technologies. This demand surge is partially fueled by government incentives, such as the Inflation Reduction Act (IRA), which offers substantial tax credits for heat pumps.

Market analysts anticipate significant growth in energy services, with clients seeking energy-efficient solutions to reduce consumption and adapt to extreme weather conditions. However, private equity-driven acquisitions and market consolidation have introduced new challenges to the HVAC landscape.

The Heat Pump Conundrum

Heat pumps have emerged as a star technology in the push towards greener and more efficient heating and cooling systems. The IRA provides tax credits and incentives for heat pump installations, further driving demand. However, the heat pump market is facing hurdles due to private equity involvement and industry consolidation.

Manufacturers of heat pumps have been acquiring regional distributors at a rapid pace, causing prices to soar. The production, distribution, and installation of heat pumps have become a litmus test for the American political economy. Labor force constraints and industry consolidation are creating bottlenecks in the market, potentially hindering the broader adoption of heat pumps.

The American Economic Liberties Project (AELP) warns that this consolidation, rising prices, and increased investor compensation could undermine the effectiveness of federal spending on clean-energy initiatives. The HVAC industry’s struggles with private equity are a microcosm of broader challenges in industrial policy, where demand-side incentives are deployed without sufficient attention to market structure.

The Price Predicament

Heat pump sales in the United States have surpassed those of gas furnaces, making them a key technology in reducing energy consumption and carbon emissions. However, AELP’s analysis reveals that heat pumps are becoming considerably more expensive than conventional HVAC systems, both in manufacturing and installation costs.

Rising demand, constrained supply, and complex installation requirements contribute to escalating prices. Some customers are already experiencing price hikes that exceed the $2,000 tax credit offered by the IRA, potentially undermining the affordability of heat pumps.

Private Equity’s Role in Escalating Costs

Four major HVAC and heat pump manufacturers, including Carrier, Daikin, Emerson, and Lennox, have seen increased revenues, profits, and shareholder compensation. AELP’s report suggests that unless policymakers promote investments in production and labor training while encouraging competitive pricing, the HVAC industry may struggle to meet growing demand cost-effectively.

The Threat of Workforce Constraints

Workforce limitations are another challenge facing the HVAC industry. The Bureau of Labor Statistics projects only 6 percent growth in HVAC installers by 2032, with a projected 10 percent decline in HVAC manufacturing jobs by 2031. This workforce bottleneck may be exacerbated by private equity-driven rollups, which often result in cost-cutting measures that can negatively impact the workforce.


The HVAC industry is at a crossroads, with private equity consolidation and workforce constraints posing significant challenges. The affordability and widespread adoption of heat pumps, a critical clean-energy technology, hang in the balance. To ensure the industry’s resilience and growth, stakeholders, including HVAC business owners, must closely monitor these developments and advocate for policies that promote fair competition, workforce development, and affordable clean-energy solutions.

TL;DR: Private equity consolidation in the HVAC industry is impacting HVAC businesses and heat pump affordability. The trend has led to increased prices, workforce constraints, and potential hindrances to clean-energy initiatives. HVAC business owners must navigate these challenges to ensure the industry’s growth and the affordability of energy-efficient technologies like heat pumps.