3. Eliminating Zombie Enterprises And Other Measures To Eliminate Excess Capacity, Accelerate The Central Air Conditioning Market Development Of Water-Cooled Screw Chillers.

3. Eliminating "zombie enterprises" and other measures to eliminate excess capacity, accelerate the Central Air Conditioning Market development of Water-Cooled Screw Chillers. With the continuous decline in centrifugal chiller capacity and steady improvement in the cost-effectiveness of scroll chillers chillers, the water-cooled screw chiller, once firmly at the middle and high end of the scale, have achieved a "bright start." It was a devastating attack on lithium bromide as it ate away at the last bastion of piston coolers-a "purge" of the central air-conditioning market that was far more brutal and exciting than you might imagine.
I. Piston Chillers: the end of an era
Reciprocal chiller units were once the dominant force in the small and medium-sized refrigeration sector, but they are now in decline.
The numbers don't lie. The market share of piston chillers is being severely eroded by rolling chillers and screw chillers and has completely exited the residential market to survive only in the commercial and industrial sectors. The majority of units have a cooling capacity of less than 350 kilowatts, and the proportion of heat pumps is still rising, suggesting that more efficient technologies are edging them out of the mainstream.
The fatal defects of reciprocating chillers are: numerous parts, many vulnerable components, complex maintenance; low cooling capacity units, large projects that require multiple units to run in parallel, causing investment and operating costs to soar; strong vibration and noticeable airflow pulsation from reciprocating movement; In today's energy-efficiency-driven world, these inherent weaknesses are almost fatal.
Ironically, the Chinese reciprocating chiller market size is projected to reach only 5.58 billion yuan in 2025, a slight decrease of 6.1%, corresponding to a market size of about 340 million yuan. The market concentration of the top three has soared to 78.2 per cent-with Grid (28.4%), Midea (19.1%) and Haier Smart Home (16.7%) accounting for nearly 80% of the market. Small and medium-sized compressor brands that lack independent compressor R&D capabilities face huge market consolidation.
The reciprocating chiller were not "killed" by anyone, but by their own technical limitations.
ii. Lithium Bromide: A Fatal Weakness heel in energy-saving halo
If the decline of piston engine was the inevitable result of technological iteration, the plight of lithium bromide units is more of a "what succeeds will fail."
What is the biggest selling point of lithium bromide units? The use of industrial exhaust and waste heat for cooling and heating appears to be an optionin the case of "dual carbon" (carbon dioxide, carbon emissions and sequestration). For years, Ebara has maintained the lead in the lithium bromide market, with a market share of more than 30%, while Shuangliang Energy Saving has a solid 25% market share. In 2025, Shuangliang continued to lead the market with a 14.2% year-on-year decrease in the size of the lithium bromide unit market, successfully acquiring benchmark projects such as afterheat recovery of GT turbines in Datang Gaojing and smart manufacturing base for Xiaomi.
Under the halo, however, the Achilles' heel heel of lithium bromide is equally shocking.
First, it saves electricity, but not energy. Lithium bromide chillers are powered by thermal energy, and while they do consume less electricity, they are also less thermal efficient and consume more gas. As oil prices soar today, the economics of its operation have dropped dramatically. According to early industry analysis, when the ratio of electricity to gas is about 1: 3.3, lithium bromide chillers run at about the same cost as refrigerators, while the ratio of electricity to gas is about 1: 3.3, which is often difficult to meet in reality.
Second, there are inherently "high-end" characteristics. The aqueous solution of lithium bromide is highly corrosive to carbon steel, and equipment operates in a vacuum for extended periods of time; even a small amount of air intrusion can reduce cooling capacity and require extremely high sealing. Crystallization can also occur at too high a concentration or temperature, and these inherent defects result in lithium bromide chillers generally having a shorter lifespan than compressor chillers, resulting in high maintenance costs.
Third, the market ceiling is too low. Lithium bromide chillers less than 2% of the total central air-conditioning market. Full-year 2025 market capacity fell 17.1% year-over-year to a record low, led by lithium bromide chillers.
By "phasing out" lithium bromide, water-cooled screw chillers are essentially crushing a "niche market king" with more sophisticated technology, lower full-life costs and wider applicability. When the IPLV load of variable frequency water-cooled screw chillers is close to the primary energy efficiency standard, the differential advantage of residual heat utilization of lithium bromide is quickly attenuated when the temperature control precision of variable frequency water-cooled screw chiller is significantly reduced.
III. Water-cooled Screw Chillers: A Desperate Counterattack
Ironically, water-cooled screw chillers themselves were once a thing of the past.
Sales of water-cooled screw chillers fell 9.8% year-over-year in the first half of 2024. The continuous miniaturization of air-suspended centrifugal chillers, the expanding cooling capacity of scroll compressor, and the flexible combination of multi-component systems... multiple replacement pressures put water-cooled screw chillers in an awkward position. Cumbersome installation, high initial investment, and demand for cooling towers and dedicated engine rooms –these "asset-heavy" attributes seem incompatible with the wave of modularity and lightweight.
But instead of sitting back, the water-cooled screw compressor chose the most aggressive route, using its "all-rounder" positioning to compete with piston compressors below and lithium bromide compressors above.
The structural advantages of water-cooled screw screw compressor Compressors almost change the rules of the game for piston compressors:
Piston compressor has few moving parts, less than 10%, failure rate rate and long service life Stepless adjustment regulation is in the range the 10%~100% range%, some load efficiency and energy saving effect are significant piston compressors compressor performance degradation decreases the 25%~50% load range%, compression ratio ratio high EER value value, smooth circular motion no "surge" phenomenon phenomenon when low load is running piston.
With domestic brands such as beauty, Haier, Gree, TICA, Zhejiang Guoxiang, dongan and others continuously improving market share with flexible pricing strategies and optimized product performance, the survival space of piston chillers has been squeezed to the limit.
Up: The Encroachment of Lithium Bromide on Industrial Applications
lithium bromide was once irreplaceable in the field of industrial waste heat recovery. However, water-cooled screw chillers --especially frequencyespecially variable frequency water-cooled screw chillers --are using a combination of "electric cooling + heat recovery" to break through the barrier.
The global variable frequency water-cooled screw chillers market reached USD1.341 billion in 2025 and is projected to grow to USD1.93 billion by 2032 at a compound annual growth rate 5.4%. Variable frequency technology enables the unit to achieve a very high energy efficiency ratios under low load. Combined with thermal recycling capabilities, their overall economic performance in scenarios such as data centers and factories is beginning to challenge traditional areas of lithium bromide.
While Shuangliang remains a distant leader in energy efficiency, with a market share of more than 25% for lithium-ion batteries in 2025, its 14.2% year-over-year decline has raised alarm bells. With variable frequency screw chillers meeting their IPLV (Integrated Product Value) level energy efficiency standards and with a modular design that flexibly matches cooling capacity of 300kW to several thousand kW, the notion of lithium bromide chillers "saving money by using residual heat" is increasingly failing to impress budget-conscious customers.
IV. INTRODUCTION Matthew: The "Harvest Season"of Leading Brands the ultimate winners of this market shakeout are not those with a single technology approach, but those with multiple approaches at once.
The Matthew effect of the stronger is intensifying rapidly in the brand territory of chillers. Stronger supply chain advantages, greater economies of scale and channel advantages, higher profit margins, better product development and cost control capabilities haveall led to a concentration of market resources in leading companies, especially domestic brands.
Among foreign brands, Carrier, McQuay, Johnson Controls York, Dunham-Bush and Trane continue to dominate the high-end market. In domestic brands, Midea, TICA, Haier, Gree, Zhejiang Guoxiang, dongan and other brands are rapidly narrowing the gap through technological innovation. In markets with high technical barriers, such as oil-free systems, and relatively closed process application markets, fierce competition among leading companies is driving a significant increase in market concentration.
Regionally, East China, South China and North China are still the main battlegrounds for water-cooled screw compressors, with steady development in central and Southwest China and activation in the Northwest and Northeast China. Notably, local brands are rapidly penetrating these regions with flexible pricing strategies and flexible project execution capabilities, which are the weakest links for piston compressors and lithium bromide brands.
V. The End: Not Extinction, but "Inclusion"
It must be acknowledged that piston compressors do not disappear completely, and there is still a place for piston compressors at low temperatures and in small capacities of 30 to 350 kW. Lithium bromide will not be completely phased out-its energy-saving advantages are still irreplaceable given the abundance of waste heat from industry.
However, in the mainstream central air conditioning market, water-cooled screw chillers --especially converters --have strategically encircled both technologies. With wider cooling capability coverage, higher partialload efficiency, lower lifecycle costs and better scenario adaptability, it pushed piston chillers into the "marginal market" and lithium bromide into the "niche market."
This is not a do-or-die battle, but a a quiet "incorporation."
variable frequency water-cooled screw chillers will reach USD1.9 billion by 2026. The market share of domestic brands continues to climb, with the top three companies accounting for nearly 80% of CR3. What we are seeing is not a victory for any one type of chiller, but the inevitable history of the central air-conditioning industry from "flowering" to "oligopoly consolidation."
The days of piston chillers are over. The golden age of lithium bromide is over. The ``cleaning "of water-cooled screw compressors has only begun and is just the most exciting chapter.