Efficient ACs Can Save India ₹2.5 Lakh Crore, Prevent Power Shortages: Study

Lucknow: As India faces another intense summer and rising electricity demand, a new study by the India Energy and Climate Center has warned that the country could face severe power shortages unless room air conditioners become significantly more energy efficient over the next decade.

The study, titled “Beating the Heat: How Air Conditioner Efficiency Standards Help India Avert Power Shortages and Cut Consumer Bills”, says India can save consumers up to ₹2.5 lakh crore and reduce pressure on the national grid by doubling the energy efficiency of air conditioners by 2035.

Researchers said India is currently adding 10 to 15 million new AC units every year and another 130 to 150 million units are expected to be installed over the next decade. Without stronger efficiency standards, air conditioners alone could account for 120 GW of peak electricity demand by 2030 and nearly 180 GW by 2035, more than 30 percent of the country’s projected peak demand.

“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, lead author of the study and faculty member at University of California, Berkeley.

He said India risks blackouts and costly emergency measures if cooling demand continues to rise unchecked. However, he added that targeted policy intervention could turn the challenge into an opportunity for consumers, manufacturers and the power sector.

The report welcomed the planned 2028 revision of air conditioner efficiency norms by the Bureau of Energy Efficiency, which proposes raising the minimum efficiency threshold by 25 percent. It recommended a long-term roadmap under which the most efficient ACs currently available in India become the minimum standard by 2033.

According to the study, such measures could lower peak electricity demand by 10 GW by 2030 and 47 GW by 2035. Researchers said this would be equivalent to avoiding the construction of nearly 100 large power plants and could save around ₹8 lakh crore in power infrastructure investments.

The report also highlighted the financial benefits for consumers. Although high-efficiency ACs may cost slightly more initially, the study estimates they could generate net savings of ₹90,000 crore to ₹2.4 lakh crore by 2035 through lower electricity bills. Most consumers would recover the additional upfront cost within two to three years, it said.

Amol Phadke, co-author of the study and UC Berkeley faculty member, said higher efficiency does not necessarily mean significantly higher retail prices.

“Our analysis of global markets, including India, shows that efficiency is not the main driver of retail prices,” he said, adding that production scale and competitive supply chains can help reduce costs over time.

Researchers noted that the market is already shifting towards higher efficiency standards. More than 1,000 AC models currently sold in India already exceed the country’s existing 5-star efficiency benchmark, with many manufactured domestically.

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Jose Dominguez, another co-author and researcher at the IECC, said India has an opportunity to emerge as a global manufacturing hub for efficient and affordable cooling appliances under initiatives such as Make in India and the Production Linked Incentive scheme.

The study comes at a time when urban air conditioner ownership in India remains relatively low at around 15 percent but is growing rapidly because of rising temperatures, urbanisation and income growth.

“Every AC installed today locks in future electricity use,” Abhyankar said. “We have a narrow window to ensure they are efficient. If we get this right, India can stay cool, avoid shortages, and lead the world in sustainable and affordable cooling.”