You already have heat pumps. The gas inside is the problem.

For a decade, Philippine hotel facilities engineers have been told to install heat pumps. We did. Most properties from boutique to 500-key now run R410A or R134a air-water heat pumps for hot water, pool, and a chunk of the air-side load. That decade is up.

Three things have shifted at the same time, and the result is that capital replacement of those legacy units is now the right move on a 24-month payback — before the gas they run on becomes a financial liability.

Shift 1 — The gas is on a deadline

The Philippines codified the Kigali Amendment domestically through DENR DAO 2021-31 (Revised Chemical Control Order for HFC Phasedown). The numbers are now PH law:

The wholesale price of R410A has already risen 3 to 5 times since 2022 as Kigali quotas tightened global supply. Every recharge call costs more. Every leak service costs more. Annual service contracts on F-gas equipment are climbing 12-18% per year — and that's before insurance premiums for properties with large refrigerant charges.

Shift 2 — Salt air is killing the equipment

Most luxury Philippine hotels sit within five kilometres of the sea. Boracay, Palawan, Cebu, Bohol, Pangasinan, La Union — all aggressive marine atmospheres. The heat-pump industry knows this and rates equipment for it, but the low-cost imports that dominated the 2014–2018 wave were not built to those marine corrosion classes.

The visible failure pattern:

• Aluminium fin pitting visible inside 18-24 months
• Copper coil perforations within 4-6 years
• Refrigerant leak frequency triples versus inland installations
• COP degradation accelerates as the heat exchanger surface roughens

And the invisible failure pattern: most heat pumps lose 1 to 2% COP per year from compressor wear and slow refrigerant loss. By year 10, a unit specified at COP 4.0 is silently delivering 3.0 to 3.2 — a 25% increase in your kWh bill that nobody flagged. We see this on every plant-room walkthrough.

Shift 3 — BOI incentives now favour replacement

Republic Act 11285 (the Energy Efficiency and Conservation Act) establishes the framework for Board of Investments fiscal incentives on energy-efficiency capital expenditure. The specific incentive package depends on the project profile and is confirmed by BOI on a case-by-case basis under the Strategic Investment Priority Plan.

What we know with certainty:

• RA 11285 framework — codifies energy efficiency as a public-policy priority and grants BOI authority to issue fiscal incentives on qualifying projects
• DOE designated-establishment classification — Type 1 / Type 2 compliance support is a standard part of the framework
• BOI registration — Karnot supports the application paperwork as part of standard project scope
• Final incentive package — confirmed by BOI based on the specific project, not guaranteed in advance

Verify the applicable incentives with your tax adviser before commitment. The framework exists; the specific incentives depend on your project's BOI assessment.

Why R290 (and not R32) as the replacement

R32 has been positioned by the major HVAC OEMs as the "bridge" replacement for R410A. It has GWP of 675 versus R410A's 2,088 — better, but still an HFC, still subject to the same Kigali phase-down schedule. Replacing one HFC with another is a stranded-asset decision.

R290 (propane) is a natural hydrocarbon refrigerant. GWP of 3. No Kigali clock. No PFAS classification under SEC PFRS S2. Superior thermodynamic efficiency in tropical conditions — Karnot iHEAT delivers heating COPs of 4.14 to 5.59 in Philippine ambient (versus typical R32 units at 3.0 to 4.0).

The historic concern with R290 is flammability — propane is an A3 (highly flammable) refrigerant. Karnot addresses this through sealed monobloc architecture: the entire refrigerant circuit (compressor, evaporator, condenser, expansion valve) lives in a single hermetic outdoor unit. Only safe water enters the building. Even in the unlikely event of catastrophic rupture, the propane harmlessly dissipates to atmosphere. The IEC 60335-2-40 (7th edition, 2022) safety standard formally permits commercial-scale R290 charges using exactly this architecture.

What the numbers look like in practice

Based on a published Philippine 32-room hotel benchmark, with the diesel boiler swapped for an iHEAT R290 unit:

That is a single-load (DHW) retrofit. A full thermal retrofit covering DHW + iSPA pool + iCOOL kitchen cold storage + iMESH chiller upgrade typically pays back in 3-5 years gross, well under 3 years post-BOI.