Variable refrigerant flow (VRF) systems use the same refrigerant cycle as conventional air conditioners and heat pumps, but give you the ability to continuously control and adjust the flow of refrigerant to different internal units, depending on the heating and cooling needs of each area of the building. VRF systems promise greater efficiency (estimates range from 11% to 17% less energy compared to conventional units) at a somewhat higher cost. 

The VRFconcept is not really new (systems have been around for almost 30 years in Japan, Asia & Europe) but it's relatively new to the U.S. market. 

Although VRF equipment is more expensive than conventional units, there are other advantages. The evaporator coil (which pulls heat out of a room) and the condenser coil (which transfers heat outside the building) are separated, and in fact one large condenser can be connected to multiple evaporators within the building. This can reduce the need for ductwork installation.

VRF systems are similar to the more conventional ductless multi-split systems, which can also connect one outdoor section to several evaporators. However, multi-split systems turn off or on completely, in response to room temperatures, whereas VRF systems continually adjust the flow of refrigerant. This is a more energy-efficient strategy.

There are two basic types of VRF system: cooling/heating-only, and energy-recovery. Cooling/heating-only VRF systems provide only cooling or, with the incorporation of a heat pump, cooling or heating to the building's spaces — but not both at the same time. An energy-recovery VRF system, on the other hand, can provide cooling and heating simultaneously to different parts of the building, and in fact can transfer heat extracted from areas that need cooling to areas that need heating. This balancing act has the potential to produce significant energy savings. 

VRF systems may be a particularly good option for buildings with a wide variance heating/cooling loads across many different internal zones. Hotels, schools, and office buildings are good examples. There are many rooms and spaces where individual users may want to control local temperatures. Since VRF systems use copper piping with smaller diameters than some other systems, they can also be useful for projects such as historical renovations where there is limited space for installation.