India's Electricity Demand Expected to Explode as Air Conditioning Proliferates

By Institute for Energy Research —— Bio and Archives January 3, 2019

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Growing air conditioning use among India's 1.3 billion people is one of the country's biggest energy challenges. India is currently the world's fastest growing market for air conditioners. By 2050, the International Energy Agency projects it will be the largest. If air conditioning use is not made more efficient, electricity consumption from air conditioning in India is expected to increase by a factor of 30 between 2010 and 2030. To avoid escalating electricity demand, the government is counting on more-efficient air conditioners. Demand is also increasing in other developing countries where climates tend to be hot and incomes and populations are growing. For example, as China's middle class emerged between 1992 and 2007, homes with air conditioning in many urban areas went from approximately zero to nearly 100 percent. Developing countries, which consumed less than half the world's energy in 2000, now account for 58 percent. The International Energy Agency projects that they will account for 67 percent by 2040.

India's Air Conditioning Conundrum

Annual electricity consumption from air conditioning in India is expected to increase from eight terawatt hours in 2010 to 239 terawatt hours by 2030 without more intensive efforts to improve their efficiency. That would equate to about one-seventh of India's total annual energy load today. However, the real issue is peak usage. Air conditioners would account for half of India's expected peak capacity if they do not become more energy efficient. Increasing the efficiency by 40 percent is expected to avoid the need to build over 100 new 500-megawatt coal-fired power plants. India has had previous success with energy efficiency programs when it promoted the use of high-efficiency light bulbs through bulk purchasing, which drove manufacturers to decrease bulb prices by more than 90 percent. About one billion high-efficiency light bulbs have been sold in India--roughly one for every person--accounting for 12 percent of the global demand for LED bulbs and saving about 41 terawatt hours of electricity every year. The availability of cheaper bulbs in that large of a market helped encourage a global switch to LED bulbs. In 2016, a branch of the Indian government, Energy Efficiency Services Ltd. (EESL), is hoping for the same success with air conditioners as it had with light bulbs. Unlike light bulbs, however, air conditioners are considered a luxury item, costing between 31,000 and 35,000 rupees ($439 to $496) for the highest efficiency models. Nevertheless, the agency started a pilot program with banks, which use air conditioners to keep their ATMs from overheating. Then the agency began replacing 50,000 air conditioners in 6,000 government buildings. The agency is now working with companies such as Mahindra Automotive, which has ordered 1,100 of the super-high efficiency air conditioners to replace aging units in its office, expecting a 15-to-30 percent energy savings over the next 18 months. EESL is also hoping to arrange financing plans and to get manufacturers to build units designed specifically to increase efficiency in India's high humidity environments.

India Generates Most of Its Electricity from Coal

Most of the India's electricity (76 percent) is supplied by coal-fired plants and more coal plants are likely to be built. India has the fifth largest coal reserves in the world at 97.7 billion metric tons, according to the BP Statistical Review of World Energy. India plans to double its coal production by 2020, making it the second largest producer of coal in the world, behind China. Further, an Indian conglomerate--Adani Group--wants to build one of the world's biggest new coal mines in eastern Australia. Adani plans to self-fund the new mine and a railway needed to haul its coal to the coast, where it will be shipped to the company's own power plants in India. It intends to start construction immediately and hopes to eventually mine 27.5 million tons a year.

Conclusion

India, as well as other developing countries, will be faced with accelerating electricity demand as the country's citizens are able to afford luxuries, such as air conditioning. The country is hoping that energy efficiency will keep demand for peak-load from skyrocketing and is instituting a program to increase efficiencies of air conditioners. Despite that, the country is building coal plants as well as other types of plants to meet increasing electricity demand as a consequence of development.