Policy Measures and Impact on the Market for the Room Air Conditioners in India

Cooling is essential to human health and productivity and is becoming more important as India urbanizes, grows economically and increasing need for cooling due to extreme weather conditions. Room air conditioners (RAC) now account for up to 50% of peak load on the grid in major metropolitan areas of India. The RAC market in India has being growing enormously and these trends have resulted in a rapid increase in electricity demand in the commercial and residential sectors. Energy efficiency mitigates the individual risk of being saddled with inefficient, environmentally harmful and poor quality RACs. India’s Bureau of Energy Efficiency (BEE) launched the labelling program for fixed-speed Room Air Conditioners in 2006 with periodic revisions for increased stringency resulting in substantial efficiency improvement of 35% at the minimum energy performance standards. The most recent development covers both fixed and inverter units under a common rating plan based on an Indian seasonal energy efficiency metric. Over the years, the RAC policy and subsequent revisions has resulted in significant market transformations towards higher efficiencies comparable to the best in class globally. Over the last decade, the annual sales of RACs in India have grown exponentially and with the improvements in efficiency have resulted in 38 million tons of carbon emission reduction as per the 2016–17 estimates. This paper analyses and discusses the trends in market growth, technology evolution and market transformation as a result of BEE’s policy program and further explores possible efficiency improvements by 2030 and its climate impacts.