Doubling AC Efficiency can save Indians ₹2.5 lakh crore in 10 Years: Report
Without policy intervention, ACs alone could drive 120 GW of peak power demand by 2030 and 180 GW by 2035
India adds 10–15 million new ACs annually, with another 130–150 million expected over the next decade.
Visual Credits: Wikimedia Commons
As intense summer heatwaves push India’s electrical grid to its absolute limits, a new report by the India Energy & Climate Center revealed that the country can reduce power consumption by making its cooling systems more efficient.
Titled ‘Beating the Heat: How Air Conditioner Efficiency Standards Help India Avert Power Shortages and Cut Consumer Bills’, it provided evidence as to how accelerating AC efficiency standards can prevent widespread power shortages and shield consumers from soaring bills.
If energy efficiency of room ACs can be doubled over the next decade, customers are staring at a potential saving of ₹2.5 lakh crore combined. According to the report, India adds 10–15 million new ACs annually, with another 130–150 million expected over the next decade. Without policy intervention, ACs alone could drive 120 GW of peak power demand by 2030 and 180 GW by 2035, or over 30% of the projected national peak demand.
Looming power crisis
India’s power grid is increasingly buckling under increasing seasonal demand, and ACs are the single-largest driver of peak electricity consumption, found the report. In fact, the primary cooling system in Indian homes contributes up to 70 GW, or around 25%, of the country’s total peak power demand.
And this demand is present even at night, leaving the grid highly vulnerable during evening hours when solar generation drops to zero.
According to the report, even if all under-construction power generation and energy storage projects come online on time, India could face severe power shortages as early as 2028.
“ACs are already contributing 60 to 70 GW to peak demand, and their growth is outpacing the grid’s ability to keep up after sunset,” said Nikit Abhyankar, the study’s lead author and UC Berkeley faculty member. “Without intervention, we risk blackouts or costly emergency fixes. But with smart policy, we can turn this challenge into a win for consumers, manufacturers, and the grid.”
Long-term solutions
While building new power plants and battery storage is necessary, the report highlighted that making ACs more efficient is a severely underutilised and far more cost-effective alternative. The Bureau of Energy Efficiency (BEE) has already planned a meaningful step for 2028, which will eliminate the inefficient 1-star rating for variable-speed ACs and lift the minimum standard floor to an Indian Seasonal Energy Efficiency Ratio (ISEER) of 4.3. Nearly 60% of models currently on the market already meet this benchmark.
However, the IECC argued that a single revision is not enough to secure grid reliability. Instead, the authors propose an ambitious 8-to-10-year policy roadmap that mandates a ‘two-star ratchet’ efficiency upgrade every three years. Under this accelerated model, the minimum market standard would rise to an ISEER of 5.3 by 2030 (the current 5-star level) and reach a top-tier ISEER of 6.7 by 2033.
If this does happen, the policy would shave over 47 GW off national peak power demand by 2035. In turn, this would eliminate the need to construct 95 large (500 MW) thermal power plants, saving India an estimated ₹8 lakh crore in avoided power infrastructure investments, found the report.
Furthermore, it would slash annual electricity consumption by 86 TWh by 2035. This is the equivalent output of 45 GW of solar capacity, potentially reducing greenhouse gas emissions by 49 million tonnes CO2 per year.
“A common concern is that more efficient ACs will be more expensive,” said Amol Phadke, co-author and UC Berkeley faculty member. “But our analysis of global markets, including India, shows that efficiency is not the main driver of retail prices. With the right policy support, higher efficiency can go hand in hand with lower costs as manufacturers scale production, supply chains mature, and markets become more competitive.”
In the US, this concern of higher costs has led to the Trump administration recently reversing a policy from the Biden-era, which required grocery stores and air-conditioning companies to reduce greenhouse gas emissions from cooling equipment, reported the Associated Press (AP). This has been done to reduce cooling costs, but will increase environmental costs by raising emissions from cooling equipment, the AP report stated.
