A condenser is a heat exchanger that transfers heat from the refrigerant gas to an external cooling source (water or air are typical mediums). This transfer causes a phase change from gas to liquid condensation. There are different types of condensers: air cooled and water cooled. An air-cooled condenser uses ambient air to cool and condense the hot refrigerant gas back down to a liquid. It can be located inside the chiller or can be remotely located outside, but ultimately it rejects the heat from the chiller to the air. In a water-cooled condenser, water from a cooling tower cools and condenses the refrigerant.
For more information visit How Does a Chiller Work?