What Is a Packaged HVAC System and How Does it Work?

graphic showing a Packaged-HVAC System

At first glance, the term ‘packaged HVAC unit’ might conjure images of something compact, neatly tied with a ribbon. And in a way, that’s quite close to reality. Yet, stepping into the world of home heating and cooling solutions, one will often stumble upon this intriguing concept. So, what exactly is a packaged HVAC system, and how does it work?

In essence, a packaged HVAC system combines key components like a condenser, evaporator, and compressor into one unit, often including fans, controls, and other components. Its charm lies in its compact design, allowing for outdoor or even rooftop installation, freeing up living space. 

But is this all-in-one magic right for your specific needs?  Let’s dive into the details.

What Is a Packaged HVAC System?

Have you ever walked by a massive air conditioning unit on a concrete pad outside of a home or noticed one on the rooftop of a building? What you saw might very well have been a packaged HVAC system. This marvel of engineering and design is a game-changer for many homeowners and businesses, and here’s why.

Packaged systems are all-in-one heating and cooling units. Think of them as the big machines that do all the heavy lifting. They have everything, from condensers and evaporators to compressors, all tucked neatly inside. Fancy extras? Sure! They’ve got fans, sensors, and even damper motors. 

There are several types of packaged HVAC systems available depending on whether you need heating and cooling services or just one or the other, including:

  • Packaged air conditioners: The compressor, coils, and air handler are all contained within one cabinet. They use electrical strip heating to provide limited warmth.
  • Packaged heat pumps: They are a tad more versatile. Not only can they cool your space, but they can also reverse the cycle to heat it. It’s like getting two devices for the price of one. These systems contain a compressor, coils, an air handler, and a heat exchanger. 

The heat pump transfers heat from inside your home during summer to the outdoors, keeping your space cool. Come winter, it shifts gears and pulls warmth from the outside air to warm up your cozy abode.

  • Packaged gas-electric systems: These systems provide an intriguing blend of a furnace and an air conditioner. They use natural gas or propane for heating and electricity for cooling.
  • Packaged dual fuel system: A unique system, packaged dual fuel combines the benefits of a heat pump and a gas furnace. During milder temperatures, the electric heat pump offers energy-efficient cooling and heating. Yet, when the mercury dips lower, the gas furnace roars to life, offering up a reliable heat source. 

Why are they on rooftops or outside? 

Well, they need space. They’re not the little window coolers we sometimes use for a single room. These packaged units can cool down entire buildings, be it a commercial office complex or an apartment building. 


If you opt for an indoor installation, ensure they have proper ventilation to expel the heat they extract from your living space.

Their strength? Anywhere from 5 tonnes to a whopping 20 tonnes. And while the smaller ones get by with just one compressor, the larger ones have two compressor units managing separate refrigeration systems. That’s like having twin engines powering up your comfort!

Remember, installing a packaged system requires special considerations. While you can install these units in your crawlspace, ground level, or rooftop, the process may require a building permit.

How Does a Packaged HVAC System Work?

At its core, a packaged HVAC system works similarly to a standard split system. Still, you’ll notice some differences upon closer inspection. For instance, the arrangement and ducting of a single cabinet system sets it apart. Rather than connecting the various components directly to your home’s structure, all the parts sit inside a single unit.

Once you switch it on, the action starts! 

Put simply, packaged HVAC units link up with the ductwork that has both supply and return ducts. As warm air enters the system, the fan pulls it over the cold evaporator coil, cooling it down. The dehumidified air then passes through the ducts to cool down the desired area.

Nowhere near as intimidating as you once thought, right? But what about the differences in heat production? Let’s look at each type of packaged system and how it works.

Packaged Air Conditioners

Packaged air conditioners stand out in their simplicity and design among the various types of packaged systems. These units focus primarily on cooling. Here’s how they do it:

  • Activation: Packaged air conditioner units are powered by electricity and use a fan to move the air in the desired direction. When you turn on the system, the compressor starts pumping refrigerant between the condenser and the evaporator.
  • Cooling Process: Warm air from your space is pulled into the unit. As it flows over the evaporator coil filled with cold refrigerant, the air cools down.
  • Distribution: The newly cooled air is then propelled back into your home or building through the duct system.
  • Heat Expulsion: The warm refrigerant, having absorbed the indoor heat, is then compressed and directed toward the condenser coil. Here, it releases the heat into the atmosphere, cools down, and is recycled back to the evaporator coil.
  • Supplemental Heating: While primarily a cooling unit, packaged air conditioners have a twist. They can provide limited warmth during chilly spells using electrical heat strips. However, this isn’t meant for harsh winters but more for a slight nip in the air.

Delving a tad deeper, we discover the soul of the packaged system air conditioner and the key components that make it tick. 

  • Compressor: Compresses the cooled refrigerant.
  • Coils: Absorb and transfer heat away from the house or commercial building. 
  • Condenser fan: Pulls in the air across the outdoor coils to cool them down, in turn cooling down the refrigerant.
  • Air handler: Houses a coil and blower motor, moving cooled air inside the space.

Packaged Heat Pumps 

A standout in the realm of HVAC systems, packaged heat pumps deserve special mention for their versatility. They can do the job of both cooling and heating your space, offering optimal comfort throughout the year. The best part? Everything comes in a single-boxed cabinet. Let’s break down their operation:

  • Activation: When you power up a packaged heat pump, it begins its job, much like the packaged air conditioner, by using a compressor to circulate refrigerant between the evaporator and condenser coils.
  • Cooling Mode: During hot spells, the heat pump absorbs warmth from the indoor air, cooling it down. This chilled air is then directed back into your space through the ductwork. The gathered heat is expelled to the exterior, ensuring a refreshing indoor atmosphere.
  • Heating Mode: The magic truly begins when temperatures drop. Unlike the traditional air conditioner, a heat pump can reverse its cycle. Instead of extracting heat from the indoors, it retrieves warmth from the outside air (yes, even cold air has some heat energy) and transfers it inside. It’s an energy-efficient method of keeping your home or office snug during chilly seasons.

Key Components of a Packaged Heat Pump:

  • Compressor: This is responsible for pumping the refrigerant ensuring heat transfer between the exterior and interior.
  • Evaporator and Condenser Coils: These coils alternate roles based on whether the system is in cooling or heating mode.
  • Reversing Valve: The pivotal part that allows a heat pump to switch between heating and cooling modes.
  • Blower: Helps in circulating air through the duct system, ensuring uniform temperature distribution.

Packaged heat pumps offer the best of both worlds, with their ability to cool during sweltering months and warm during colder times. Moreover, when you consider energy efficiency and cost-effectiveness, they shine brighter than most other HVAC solutions.

Packaged Gas-Electric Systems

Packaged gas-electric units are intriguing blends of traditional furnaces and modern air conditioners. They’re a great option if you’re looking for versatility combined with reliability. Here’s how they work:

  • Activation: When turned on, the system decides whether to employ gas heating or electric cooling based on the temperature set point and the outside temperature.
  • Cooling Mode: Similar to the packaged air conditioner, this unit employs electricity to cool down your space. It uses a compressor to move the refrigerant between the evaporator and condenser coils. The air is then cooled as it passes over the evaporator coil and is routed back into your living or working space via the ductwork.
  • Heating Mode: Here’s where the system takes a different route. It utilizes natural gas or propane instead of relying on electricity or a heat pump mechanism. The furnace section kicks in, warming up the air and delivering it through the duct system.

Key Components of a Packaged Gas-Electric System:

  • Compressor: Central to the cooling process, it manages the refrigerant flow.
  • Evaporator and Condenser Coils: Essential for heat transfer during both heating and cooling.
  • Gas Burner and Heat Exchanger: Where the combustion takes place, converting fuel to heat.
  • Blower: Ensures even distribution of conditioned air throughout the space.
  • Flue: Allows combustion by-products to be safely vented outside.

By offering both heating and cooling solutions, these systems are perfect for regions with distinct summer and winter seasons. Plus, the convenience of having a dual operational system means you don’t have to invest separately in a furnace and an air conditioner.

Packaged Dual Fuel System 

What if you could combine a heat pump’s energy efficiency with a gas furnace’s power and reliability? Enter the packaged dual fuel system. This dynamic duo operates seamlessly to provide optimal comfort.

  • Activation: The system intelligently selects between the heat pump and the gas furnace depending on the external temperature and operation efficiency.
  • Cooling Mode: Functions like a typical heat pump, extracting heat from the interior and expelling it outdoors, thereby cooling the inside of the building.
  • Heating Mode: When it’s moderately cold, the electric heat pump takes the lead. However, as temperatures plummet and the heat pump loses efficiency, the system automatically switches to the gas furnace. This transition ensures consistent heating without a spike in electricity bills.

Key Components of a Packaged Dual Fuel System:

  • Compressor: Manages refrigerant circulation for cooling.
  • Evaporator and Condenser Coils: Integral for heat exchange.
  • Reversing Valve: Enables the system to switch from cooling to heating.
  • Gas Burner and Heat Exchanger: Responsible for powerful heat generation during colder days.
  • Blower: Ensures even distribution of warm or cool air.

The packaged dual fuel system provides homeowners with flexibility, cost-efficiency, and peace of mind. Whether it’s a hot summer day or a freezing winter night, this system ensures you remain comfortable without burning a hole in your pocket.

Advantages and Disadvantages of Packaged HVAC System 

While a packaged HVAC system offers numerous advantages to homeowners and businesses, it has its share of limitations. Let’s embark on a journey through its pros and cons.

Advantages of a Packaged HVAC System:

  • Space Efficiency: One of the standout benefits of the packaged system is its compact design. No longer do you need to allocate space for separate components like the condenser, evaporator, and furnace. Everything comes bundled together, allowing for rooftop or outdoor installations and freeing up valuable indoor space.
  • Simplified Installation: With fewer components to connect and coordinate, installation often becomes quicker and simpler, reducing labor costs.
  • Easy Maintenance: With everything located in one place, regular checks, servicing, and repairs become more straightforward.
  • Quiet Operation: Being installed outside, the operational noise usually remains away from living spaces, leading to a quieter indoor environment.
  • Versatility: As highlighted earlier, there are different types of packaged systems catering to a variety of heating and cooling needs. This allows homeowners to choose what best fits their requirements and local climate.

Disadvantages of a Packaged HVAC System:

  • Limited Energy Efficiency: While packaged systems are efficient, they may sometimes lag behind their split counterparts, especially high-end models. This might lead to slightly higher operational costs. You can expect their SEER rating to hover a bit lower, usually around 18. 
  • Installation Limitations: Though versatile in placement, not all homes or businesses have the necessary outdoor or rooftop space. Moreover, for those considering indoor installation, proper ventilation becomes crucial.
  • Exposure to Elements: Outdoor units are exposed to the elements. Despite being built to withstand weather, long-term exposure can accelerate wear and tear compared to indoor systems.

Packaged vs. Standard HVAC Systems

Both systems have their merits, but understanding the differences is crucial to making the right choice for your specific needs.

Packaged HVAC Systems:

  • Compact Design: As the name suggests, all components – compressor, evaporator, condenser, and sometimes even the furnace – are packaged into a single unit. This contrasts with split systems, which separate the components into indoor and outdoor units.
  • Placement: Typically installed outdoors, either on the ground next to a building or on the roof. This can be a boon for saving indoor space, especially in commercial settings.

Standard (Split) HVAC Systems:

  • Separated Units: Split systems comprise an indoor unit housing the evaporator coil and a furnace and an outdoor unit housing the compressor and condenser coil.
  • Placement: The outdoor unit is positioned outside the building, while the indoor unit is typically installed in a dedicated indoor space, like a basement or utility closet.
  • Efficiency: Generally, split systems have a higher SEER (Seasonal Energy Efficiency Ratio) rating, translating to potentially lower energy bills. This is because high-end split models can achieve greater energy efficiency.
  • Aesthetics: Since half of the system is indoors, there’s less external machinery visible, which some homeowners prefer for aesthetic reasons.

Which One Should You Choose?

The choice between packaged and split systems largely depends on your specific needs and constraints:

  • Space Considerations: If indoor space is limited, but you have ample outdoor or rooftop areas for installation, packaged systems are your ally. Remember, packaged HVAC systems are usually used in commercial settings or larger residences.
  • Aesthetic Concerns: If you prefer minimal outdoor equipment, a split system might be more to your liking.
  • Budget and Efficiency: While packaged systems can be more cost-effective upfront due to simpler installation, split systems might offer savings in the long run with higher energy efficiency.
  • Maintenance Accessibility: A packaged system located outdoors or on the roof can be more convenient for easy access and maintenance.

Pro tips:

  • If you want to replace an existing HVAC system, try to opt for the same type (packaged or split), as this will reduce additional complexity and installation costs. 
  • Do remember to check the necessary permits required for installation, as this process can vary depending on your location and other factors. 
  • For those considering rooftop installation, preventive roofing maintenance should be carried out to avoid leaks or any other issues affecting the system.
  • Do not try to operate, repair, or inspect the system by yourself. Always rely on a qualified contractor who can use specialized instruments and tools for this purpose. 

FAQ About Packaged HVAC Systems

Is a packaged system more expensive than a split system?

While the unit cost might be similar, package system installation costs can be lower due to their simpler design. However, in terms of long-term energy costs, split systems might prove more economical if they’re more energy-efficient. 

Can I replace a split system with a packaged system (or vice versa)?

Yes, but this will require significant changes to your HVAC setup, including ductwork modifications and possibly electrical or gas line adjustments. Consult with an HVAC professional before making a decision.

How long does a packaged HVAC system last?

On average, a well-maintained packaged HVAC system can last 12 to 15 years, although this can vary based on usage, maintenance, and environmental factors.

How often should I service my packaged HVAC system?

Regular maintenance is key. Annual or biannual checks are recommended for optimal performance.

How efficient are packaged HVAC systems?

Packaged HVAC systems vary in energy efficiency. Generally, they can have an efficiency rating as high as 18 SEER (Seasonal Energy Efficiency Ratio). They also have a heating rating called HSPF (Heating Seasonal Performance Factor). For example, a typical heat pump might have an efficiency between 13 to 15 SEER and 7.7 to 8 HSPF.

Remember, more efficient models might cost more upfront. As of 2023, there’s a new rule. In the northern U.S., systems must have at least a 14 SEER rating. In the South, they need 15 SEER or 14.3 SEER2. Buying a more efficient model can lower your energy bills and is better for the planet. Some models might even get you tax credits. It’s a good idea to talk to a local HVAC expert to learn more.

Making an Informed Decision

A packaged HVAC system has everything in one box. This is good because it uses less space and might be easier to install. But it’s not for everyone. Check what you need and see if a packaged or split system is better for you. Having the right environment is key for a comfy home or good business. The more you learn about HVAC systems, the better you can pick the right one.

And don’t forget, talking to a local HVAC expert can help you choose the best system for you.

Main Image Credit: Juan Rodriguez

Luminita Toma

Luminita Toma is a nature-loving writer who simply adores anything pretty, from colorful flower gardens to chic interior design. After plenty of research on landscaping and home improvement, she’s got a keen eye for what makes a home beautiful. When she’s not sharing what she’s learned, there’s nothing she enjoys more than chilling with her friends, hitting the theatre, or traveling.