India can save ₹2.5 trillion by doubling AC energy efficiency: Study

A UC Berkeley study says stricter air-conditioner efficiency standards can reduce peak power demand, lower electricity bills and help India avoid future power shortages

As India’s power grid strains under another intense summer, a new study has found the country can avoid power shortages and save consumers up to ₹2.5 lakh crore ($25 billion) by doubling the energy efficiency of room air-conditioners (ACs) over the next decade.

 

Titled “Beating the Heat: How Air Conditioner Efficiency Standards Help India Avert Power Shortages and Cut Consumer Bills”, the study by the India Energy and Climate Center (IECC) at the University of California (UC), Berkeley, highlights that 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 gigawatt (GW) of peak power demand by 2030 and 180 GW by 2035, over 30 per cent of the projected national peak demand. “ACs are already contributing 60–70 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.

   

He added that without intervention, the country risks blackouts or costly emergency fixes, but with smart policy, it can turn this challenge into a win for consumers, manufacturers and the grid.

 

The study recognises the Bureau of Energy Efficiency’s planned 2028 upgrade to AC efficiency standards, which raises the minimum threshold by 25 per cent, as an important milestone. It calls for a long-term roadmap that progressively raises the bar until the most efficient AC available in India becomes the minimum standard by 2033.

 

“Such a roadmap could reduce peak demand by 10 GW by 2030 and 47 GW by 2035 — equivalent to roughly 100 large power plants — saving an estimated ₹8 lakh crore ($80 billion) in avoided power infrastructure investment. Efficient ACs also offer substantial consumer benefits. Even with slightly higher upfront prices, they could deliver net savings of ₹90,000 crore–₹2.4 lakh crore ($9 billion–$25 billion) by 2035, paying for themselves within 2–3 years through lower electricity bills.”

 

According to the study, efficiency is not the main driver of retail prices and, 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. It said the market for ACs in India is already adapting, and over 1,000 AC models, or 15 per cent of all offerings, already perform above the 5-star efficiency threshold.

 

With urban AC ownership still at just 15 per cent and rising fast, the authors stress that decisions made now will shape India’s energy future.