When should I use a 2-way vs 3-way control valve?

Use 2-way control valves in variable-flow systems with variable-speed pumps, as they vary flow through the coil while maintaining constant pressure differential at the pump — this is the modern standard per ASHRAE 90.1 which encourages variable-primary flow to reduce pumping energy. 3-way control valves divert flow through either the coil or a bypass path, maintaining constant flow through the distribution system, and are now primarily used for minimum-flow protection (e.g., ensuring a chiller's minimum evaporator flow during low-load conditions) rather than for coil control. The 3-way valve's major drawback is that it bypasses chilled water back to the return without doing useful cooling, reducing plant ΔT and increasing pumping energy. For most comfort HVAC applications, 2-way PICVs have almost entirely replaced 3-way valves, though 3-way valves remain common in process cooling and older constant-volume systems undergoing phased retrofit.