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VRF and air conditioner outdoor units lined up on a building roof

How do air conditioners, VRF, chillers, and fan coils work? An introductory guide to HVAC systems

YOİ Mühendislik technical team4 min readBrand and system guideOctober 28, 2026
In shortAll cooling equipment works with the same basic cycle: compressor, condenser, expansion device, and evaporator. The difference between systems is in how heat is carried to the building: with refrigerant (split, VRF), with water (chillers and fan coils), or with air (air handling units, rooftop).

HVAC is the abbreviation for heating, ventilation, and air conditioning systems. From a home split air conditioner to a hospital's chiller plant, all these systems rely on the same physical principle. In this guide we first explain the common principle, then how each system works, in plain language.

How does the refrigeration cycle work?

The refrigeration cycle works by the refrigerant evaporating at low pressure and absorbing heat from the space, then condensing at high pressure and rejecting that heat outside. The cycle consists of four main components:

  1. Compressor: Compresses the low-pressure gas, raising its pressure and temperature. It is the heart of the system; details are on our compressor page.
  2. Condenser: Here the hot gas releases its heat to the outdoor air or water and liquefies. See condenser types.
  3. Expansion device: A capillary tube or electronic expansion valve lowers the pressure of the liquid.
  4. Evaporator: The cold refrigerant draws heat from the air or water here as it evaporates. See evaporator types.

In heat pump mode, the four-way valve reverses the flow direction; the indoor unit becomes the condenser and the outdoor unit the evaporator, and the unit heats. This is how air conditioners are able to heat.

How do HVAC systems carry heat?

System familyWhat carries the heatExamples
Direct expansion (DX)RefrigerantSplit, multi, cassette and ducted types, VRF, rooftop
Water-based (hydronic)Chilled or hot waterChiller + fan coil, chiller + air handling unit, heat pump
Air-basedAirAir handling unit, rooftop, ducted systems

How do split, multi, cassette, and ducted air conditioners work?

In a split air conditioner, the compressor and condenser are in the outdoor unit and the evaporator is in the indoor unit; the two units are connected with copper pipes. In a multi-split, several indoor units are connected to a single outdoor unit. Cassette and ducted air conditioners work on the same principle; the difference is that the indoor unit is built into the suspended ceiling and distributes air through grilles. Details: split and multi air conditioners, cassette and ducted air conditioners.

How does a VRF system work?

VRF is an inverter-controlled system in which dozens of indoor units can be connected to a single outdoor unit group, sending each indoor unit exactly the amount of refrigerant it needs. Each indoor unit has an address and communicates continuously with the outdoor unit. In heat recovery VRF, some spaces can be cooled while others are heated at the same time. Details are on our VRF air conditioner page.

VRF outdoor units on a building roof

What is a rooftop air conditioner?

A rooftop unit is a device in which the refrigeration cycle, fans, and filters are installed on the roof as a single package. It distributes air directly to the spaces through ducts; it is used in large single-volume buildings such as shopping malls, supermarkets, and factories. See rooftop air conditioner.

How does a chiller and fan coil system work?

A chiller is a large refrigeration machine that cools water, usually to around 7 °C; the chilled water is sent by pumps to the fan coils and air handling units in the building. A fan coil uses its internal coil and fan to release the cooling it gets from this water into the room air. An air-cooled chiller rejects heat to the outdoor air, while a water-cooled chiller rejects it through a cooling tower. Details: chiller, fan coil, difference between 2-pipe and 4-pipe fan coils.

Concealed ceiling type fan coil and chilled water pipes inside a suspended ceiling

What does an air handling unit do?

An air handling unit (AHU) filters the fresh air it takes in from outside, mixes it with return air if needed, cools or heats it in coils, humidifies it, and distributes it through ducts to the building. In hospitals, shopping malls, and factories, both fresh air and climate control are provided by these units. See air handling unit and ventilation systems.

Why are precision air conditioning and cold rooms separate systems?

Precision air conditioners are designed for data centers and server rooms to continuously remove the heat produced by equipment within a narrow temperature and humidity range; they run redundantly and are connected to an alarm system. Cold rooms, on the other hand, use special evaporators and defrost systems to store products such as food and pharmaceuticals at low temperatures. See precision air conditioning, cold room.

Which system is right for your building?

Let us start with a heat load calculation and compare the system options in writing in terms of cost and operation.

Which system for which building?

Building typeCommonly used system
Home, small office, shopSplit or multi air conditioner, heat pump
Mid-sized office, hotel, schoolVRF, cassette and ducted indoor units, heat recovery ventilation
Large office, hospital, shopping mallChiller + fan coil and air handling unit
Shopping mall, supermarket, factory hallRooftop or air handling unit
Data center, server roomPrecision air conditioning
Food storage, productionCold room and process cooling

This table is meant as a general guide; the right choice is made according to the heat load calculation, budget, operating cost, and the building's architecture. We covered the choice between VRF and chiller in detail in our article VRF or chiller.

Frequently asked questions

What does HVAC mean?

Heating, Ventilation and Air Conditioning; the general name for heating, ventilation, and climate control systems.

Why does an air conditioner both heat and cool?

In air conditioners with a heat pump function, a four-way valve reverses the direction of the refrigerant flow. The indoor unit then releases heat into the space and the unit heats.

What is the difference between VRF and multi-split air conditioners?

Both connect multiple indoor units to a single outdoor unit. VRF supports many more indoor units, longer piping distances, and centralized control; it is designed for large buildings.

Why does a chiller system use water?

In large buildings, water carries heat over long distances safely and efficiently. Instead of distributing refrigerant throughout the building, chilled water is distributed.

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