Study: Doubling Air Conditioner Efficiency Could Save India Up to Rs 2.5 Lakh Crore and Avert Power Shortages

A new study has found that India could avoid power shortages and save consumers up to Rs 2.5 lakh crore (about USD 25 billion) over the next decade by doubling the energy efficiency of air conditioners (ACs). The study, titled "Beating the Heat: How Air Conditioner Efficiency Standards Help India Avert Power Shortages and Cut Consumer Bills," was prepared by a university research centre focused on India's energy and climate.

The study notes that India adds about 10 to 15 million new ACs every year, with another 130 to 150 million expected over the next decade. Air conditioners are becoming the single largest driver of peak electricity demand. They already contribute as much as 60 to 70 gigawatts (GW), or about a quarter of peak demand, and a single AC uses 100 to 150 times the electricity needed by an LED bulb. Without policy action, ACs alone could push peak demand to 120 GW by 2030 and 180 GW by 2035 — over 30 per cent of projected national peak demand. India recently crossed 270 GW of peak demand during a severe heatwave.

In India, AC energy efficiency is rated using the star-labelling system and the Indian Seasonal Energy Efficiency Ratio (ISEER), administered by the Bureau of Energy Efficiency (BEE). The study notes that a planned upgrade to AC efficiency standards in 2028 will raise the minimum efficiency threshold by 25 per cent (one star). It recommends a long-term roadmap that keeps raising the bar until today's most efficient AC (better than the current 5-star rating, or ISEER 6.7) becomes the minimum standard by 2033.

According to the study, such a roadmap could cut peak demand by about 10 GW by 2030 and 47 GW by 2035 — roughly equal to 100 large power plants — saving an estimated Rs 8 lakh crore in power infrastructure spending. Even with slightly higher upfront prices, efficient ACs could pay for themselves within two to three years through lower bills. The study points out that over 1,000 AC models already perform above the current 5-star threshold, many of them made by domestic manufacturers.