Singapore’s founder, Lee Kuan Yew, called air conditioning “a most important invention for us, perhaps one of the signal inventions of history” — and with rising global temperatures, the rest of the world is learning what Kuan Yew foresaw — you can’t run an economic powerhouse, much less a country, without cooling down. That’s why demand for this precious luxury has been heating up.

Feel it in the air: Analysts may be predicting that data centers will steal all of our electricity, but the real culprit might be even more chilling — in the sense that it keeps you cool all summer. According to a new IEA report, air conditioning will need 697 terawatt-hours (TWh) of electricity by 2030 — triple the amount data centers will use. This makes it one of the largest and most unpredictable sources of electricity demand.

• As the world gets richer and more affluent, less-industrialized economies are installing air conditioning for the first time — driving a large portion of this increase.
• Industrializing economies like Nigeria, Indonesia, and India have AC in just 5%, 15%, and 20% of households today, but that’s expected to climb dramatically in the coming years.

HVAC is Back

AC is also becoming more common in regions that haven’t historically needed it, such as Europe and US states like Washington, Hawaii, and California. This has boosted heating, ventilation, and air conditioning (HVAC) manufacturers, who are responding to strong interest with more efficient and environmentally friendly units.

• Lennox International President Gary Bedard said demand for AC replacements in the US spiked this summer, especially in areas marred by record heat.
• Year-to-date, HVAC leaders Lennox InternationalLII
  , Carrier GlobalCARR
  , Johnson Controls InternationalJCI
  , and Trane Technologies ($TT) are up 36%, 44%, 34%, and 64%, respectively.

Cool off: The HVAC boom has also benefited contractors and entrepreneurs, who have seen increased requests for service, maintenance, and warranty work. The explosive demand has created a deluge of investor and private equity interest, with The Wall Street Journal recently describing trade workers as “America’s new millionaire class.” However, contractors warn that the HVAC industry could face equipment and parts shortages, along with added complexity from new regulations.