Energy efficient ACs can lower power demand by 23 GW, save ₹2.2 lakh crore: Study

Updating India’s Minimum Energy Performance Standards (MEPS) and tightening standards every three years will play key role

Last summer, power shortages were rampant across India as supply could not keep up with skyrocketing demand. This year, more heatwaves are expected, with northwest India likely facing a double heatwave, according to the Indian Meteorological Department. Naturally, people’s need for cooling – primarily by running air conditioners (ACs) – will increase as well.

There can be a workaround to this annual problem. According to a new study from the India Energy and Climate Center (IECC) at University of California (UC) Berkeley, India can avoid these severe power crunches, and also save up to ₹2.2 lakh crore ($26 billion) for consumers over the next 10 years by making ACs twice as efficient in terms of energy consumption.

The rate at which ACs are being added is very high – as many as 10–15 million new ACs every year. Stretched over a ten-year period, this number can climb up to 130-150 million ACs, according to the study titled ‘India Can Avert Power Shortages and Cut Consumer Bills with Stronger AC Efficiency Standards’.

Unless policymakers step in, ACs singularly can drive as much as 30% of projected power demands. This would translate into driving 120 GW of peak power demand by 2030 and 180 GW by 2035, found the study.

Mismatched supply

“This growth is outpacing India’s power supply and could lead to serious electricity shortages as early as 2026. ACs are becoming one of the biggest drivers of peak demand, and without intervention, we risk blackouts or costly emergency fixes. But with smart policy, we can turn this into a win for consumers, manufacturers, and the grid,” said Nikit Abhyankar, the study’s lead author and UC Berkeley faculty. 

One of the report’s most important recommendations is updating India’s Minimum Energy Performance Standards (MEPS), and tightening standards every three years. An example offered is revising the 1-star label to ISEER 5.0 — same as the current 5-star level.

According to the study, this could reduce around 10 GW of power shortages by 2028, 23 GW by 2030, and 60 GW by 2035—equivalent to 120 large power plants. “This is not just about long-term energy savings —it’s an immediate grid reliability solution,” said Abhyankar.

Less expenditure

The AC market in India is a rapidly evolving one, with over 600 AC models—20% of all offerings—exceeding India’s top efficiency threshold, the 5-star level, with many produced by domestic manufacturers, found the report.

“This is a chance for Indian manufacturers to lead,” said Jose Dominguez, co-author and IECC researcher. “With the right policy signal, they can scale under Make in India and PLI schemes, positioning India as a global hub for sustainable and affordable cooling.”

If such policy changes are indeed introduced, domestic consumers will also benefit. More efficient ACs consume less power, and can offer net savings of ₹66,000–2,25,000 crore ($8–26 billion) by 2035—paying for themselves within 2–3 years through lower electricity bills.

While more efficient ACs can pinch consumers’ pockets more, overall, as more companies begin manufacturing them, economies of scale will step in to make ACs more affordable.

“In places like Mumbai or Chennai, dryness is as important as coolness,” said Nihar Shah, co-author and IECC lead on cooling. “ACs that remove moisture from the air can keep people comfortable while using only half as much electricity. Efficient dehumidification is a critical challenge for industry.”

According to the report, urban AC ownership is currently at 10%, but is rising fast. This makes it critical to make necessary policy changes, which will help Indians better adapt to a warming world.

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