India can prevent power shortages & save ₹2.2L Cr with efficient ACs: study

As India prepares for another scorching summer, a new study from the India Energy and Climate Center (IECC) at the University of California (UC) Berkeley highlights a major challenge—rapidly increasing demand for air conditioning (AC) could lead to severe power shortages as early as 2026. However, by doubling the energy efficiency of ACs, India can not only prevent these shortages but also save consumers up to ₹2.2 lakh crore ($26 billion) in electricity costs over the next decade.

Efficient ACs prevent power shortages

India is adding 10 to 15 million new ACs every year. Over the next ten years, an additional 130 to 150 million units are expected to be installed. If energy efficiency is not improved, ACs alone could drive peak electricity demand to 120 GW by 2030 and 180 GW by 2035, accounting for nearly 30% of the total demand.

“This growth is outpacing India’s power supply and could lead to serious electricity shortages as early as 2026,” said Nikit Abhyankar, the study’s lead author and a faculty member at UC Berkeley. “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.”

The study suggests that the government should strengthen India's Minimum Energy Performance Standards (MEPS). By 2027, the lowest efficiency rating (1-star) should be upgraded to match today’s highest rating (5-star). Further improvements should be made every three years.

These changes could prevent power shortages by reducing demand by 10 GW by 2028, 23 GW by 2030, and 60 GW by 2035—saving the equivalent of 120 large power plants.

“This is not just about long-term energy savings—it’s an immediate grid reliability solution,” Abhyankar added.

Efficiency doesn’t drive AC prices

Many consumers worry that more efficient ACs will be too expensive. However, co-author Amol Phadke, also a faculty member at UC Berkeley, explained that efficiency is not the main factor affecting AC prices.

“A common concern with efficient ACs is that they might be more expensive,” Phadke said. “But our analysis of global markets—including India—shows that efficiency is not the main factor driving retail prices. With the right policy support, higher efficiency often goes hand in hand with lower costs, thanks to economies of scale, better supply chains, and competitive markets.”

Even with slightly higher upfront costs, efficient ACs would pay for themselves in 2 to 3 years through lower electricity bills. Consumers could save between ₹66,000 crore to ₹2.25 lakh crore ($8–26 billion) by 2035.

The AC market is already adapting to efficiency improvements. Currently, over 600 models—20% of all available ACs—exceed India's current 5-star efficiency rating. Many of these models are produced by Indian manufacturers.

“This is a chance for Indian manufacturers to lead,” said Jose Dominguez, a 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.”

Update AC tests for humidity

Another key recommendation is to update AC testing procedures to reflect India’s hot and humid climate. In cities like Mumbai and Chennai, air conditioners need to remove moisture from the air, not just cool it down.

“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.”

With AC ownership in urban areas still at just 10%, demand is set to increase rapidly. The decisions made today will shape India’s energy future.

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

By strengthening efficiency standards, improving testing procedures, and supporting domestic manufacturing, India can secure its energy future while saving billions of rupees for consumers.

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