Upgrading your air conditioning in 2026 is no longer just a comfort decision. H1 now controls how far you can go.

If you own or manage a commercial building in New Zealand, whether it's an office, retail space, or mixed-use property, you've likely heard about H1 energy efficiency requirements. But the rules shifted significantly in late 2025, and those changes directly affect how you approach HVAC upgrades. Understanding what's changed matters because it determines whether your retrofit is straightforward or requires a full energy design review.

On 27 November 2025, MBIE updated the settings for compliance with clause H1 of the Building Code, introducing greater flexibility while maintaining stricter thermal performance standards. The changes affect how buildings demonstrate energy efficiency, particularly around thermal envelope performance and HVAC system design. For commercial buildings over 300 m², the acceptable solutions (H1/AS2) and verification methods (H1/VM2 and H1/VM3) now provide clearer pathways to compliance with higher thermal performance expectations.

MBIE updated H1 settings on 27 November 2025 to improve clarity, flexibility and affordability.

The key shift: H1 now emphasises the relationship between your building's thermal envelope (insulation, windows, air-tightness) and your HVAC system sizing. A better-insulated building needs less cooling and heating capacity. That's not new physics, but it's now embedded in how compliance is assessed.

The 12-month transition period runs until 26 November 2026, meaning you have time to understand the changes before they become mandatory. If you're planning an HVAC upgrade now, you need to know which rules apply.

Higher thermal performance expectations in H1 directly reduce your cooling and heating loads. If your building envelope improves (better insulation, higher-performance windows, improved air-tightness), your HVAC system doesn't need to work as hard to maintain comfortable temperatures.

This changes load calculations. When engineers size air conditioning systems, they calculate the peak cooling load (how much heat the building gains on the hottest day) and peak heating load (how much heat it loses on the coldest day). These calculations depend on the building's thermal resistance. Higher R-values (better insulation) mean lower loads, which means smaller, more efficient HVAC equipment.

Improved building envelope thermal resistance directly reduces HVAC cooling and heating loads.

The 2025 H1 updates increased minimum insulation requirements for roofs, walls, floors, and windows across New Zealand's six climate zones. For commercial buildings, the reference building (the baseline used for compliance calculations) now has better thermal performance than before. Your proposed building must meet or exceed this higher baseline.

H1 updates aim to reduce heating and cooling energy demand by 23% on average across large buildings.

If you're upgrading your air conditioning without improving the thermal envelope, you're working against the new H1 expectations. The building code now assumes better insulation exists, so your HVAC system must be sized accordingly.

Not every air conditioning upgrade triggers full H1 compliance requirements.

If you're replacing an existing HVAC system with like-for-like equipment (same capacity, same location, same distribution), and you're not altering the building thermal envelope, you may not need to demonstrate full H1 compliance. The altered building must perform at least as well as it did before. If you're simply swapping out an old air conditioner for a new one of similar size, the thermal envelope hasn't changed, so H1 compliance is straightforward: the new equipment must meet current energy efficiency standards (covered under H1/VM3).

Like-for-like HVAC replacements without thermal envelope changes don't trigger full H1 compliance requirements.

However, if you're upsizing the system, relocating it, or making changes to the building envelope (adding windows, improving insulation, sealing air leaks), you've triggered alteration requirements. Now the entire altered building must comply with H1 to at least the same extent as before.

Case in point: a retail business in Auckland wants to upgrade their air conditioning because the current system can't keep up on hot days. They also plan to replace some windows with larger ones to improve natural light. The window replacement reduces the thermal resistance of the building envelope (windows have lower R-values than walls). To comply with H1, they must offset this loss by adding insulation elsewhere, perhaps in the roof or walls. Only then can they size the new HVAC system based on improved thermal performance.

This requires a full H1 design assessment, typically using H1/AS2 (the acceptable solution for buildings over 300 m²) or H1/VM2 (the verification method using energy modelling).

H1/AS2 (Acceptable Solution for buildings over 300 m²) covers the building thermal envelope; insulation, windows, doors, air-tightness. It provides a calculation method to demonstrate that your building's thermal resistance meets or exceeds the reference building standard.

H1/AS2 Second Edition became effective 27 November 2025 for commercial buildings over 300 m².

H1/VM3 (Verification Method for HVAC systems) covers the air conditioning and mechanical ventilation systems themselves. It specifies minimum efficiency standards for chillers, unitary air conditioning equipment, fans, pumps, controls, and heat rejection equipment. It also requires energy monitoring and maintenance access provisions.

Here's how they work together: H1/AS2 determines what thermal performance your building envelope must achieve. Once that's established, H1/VM3 specifies what efficiency your HVAC system must deliver. A well-insulated building needs less HVAC capacity, which often means smaller, more efficient equipment that easily meets H1/VM3 standards.

For commercial buildings, H1/VM3 requires that HVAC systems be designed to minimise energy consumption. This includes:

H1/VM3 covers HVAC controls, fans, ductwork, pumps, chillers, and heat rejection equipment efficiency.

If you're upgrading air conditioning in a commercial building, you need to verify that the new system meets H1/VM3 requirements. For most modern equipment, this is straightforward: manufacturers provide efficiency ratings. But if you're specifying a system for a building with poor thermal performance, you may struggle to meet H1/VM3 without also improving the envelope.

MBIE's updated H1 clause guidance (effective 27 November 2025) emphasises that compliance must be demonstrated using current acceptable solutions or verification methods. For commercial buildings:

The schedule method was removed from H1/AS1 Sixth Edition effective 27 November 2025.

The removal of the schedule method from H1/AS1 means there's no longer a simplified, prescriptive pathway for small buildings. Everything now requires calculation or modelling, which provides more flexibility but requires more technical input.

For your HVAC upgrade, you'll need to work with a designer or engineer who understands these methods. They'll assess your building's thermal envelope, calculate or model the energy performance, and specify HVAC equipment that meets H1/VM3 standards.

The Building Product Specifications (published July 2025) now underpin H1 compliance. These specifications define minimum performance standards for building products: insulation, windows, doors, HVAC equipment. When you specify new air conditioning equipment, it must conform to the relevant Building Product Specification for efficiency.

Building Product Specifications define minimum performance standards for HVAC equipment and building products.

If you're considering an air conditioning upgrade in 2026, here's what you need to do:

First, determine whether your project triggers H1 compliance requirements. If you're replacing like-for-like without altering the thermal envelope, compliance is simpler. If you're upsizing, relocating, or changing the building envelope, you need a full H1 assessment.

Second, understand that better insulation reduces HVAC loads. If your building has poor thermal performance, upgrading the envelope (insulation, windows, air-tightness) before or alongside the HVAC upgrade will reduce the system size needed and improve overall energy efficiency. This saves money on equipment and operating costs.

Third, work with designers and engineers who understand H1/AS2, H1/VM2, and H1/VM3. These are the current compliance pathways. They'll ensure your HVAC system is sized correctly for your building's thermal performance and meets current energy efficiency standards.

Fourth, allow time for the design process. H1 compliance isn't a checkbox; it's a design discipline. Getting it right means your building will be more comfortable, more efficient, and compliant with the Building Code.

The 2025 H1 updates didn't make air conditioning upgrades harder. They made them more strategic. Your HVAC system must align with your building's thermal performance. Plan accordingly, and you'll end up with a system that works better and costs less to operate.