The High Cost of Inefficient Cooling

India is facing a massive surge in cooling demand that threatens both household finances and the national power grid. New analysis from Carbon Brief shows that more energy-efficient air-conditioning units could save Indian households ₹69bn ($724m) a year.

The scale of the shift is already visible in the market. India saw nearly 14m air conditioners sold in 2024, up from 10m in 2023. Between 2021 and 2023, AC sales volumes increased by more than 25% year-on-year. This expansion is driven by extreme heat, which recently pushed India’s power demand to a record 270 gigawatts (GW) on 21 May 2026.

The opportunity for decarbonization lies in the efficiency gap between hardware ratings. If the roughly 15m households expected to buy a new air conditioning unit this year choose a “five-star” rated model instead of a “two-star” version, it would cut CO2 emissions by nearly 5m tonne (Mt).

This is not merely an environmental calculation; it is a structural necessity for the grid. While solar power helps meet daytime electricity demand, coal power plays a significant role in powering air conditioners on warm nights. Without higher efficiency, the trajectory of emissions and demand remains unsustainable. According to the government’s 2019 India Cooling Action Plan (ICAP), India’s space-cooling demand was expected to grow nearly 11-fold by 2037 compared to 2017. This growth would lead to a 435% increase in annual greenhouse gas emissions related to air conditioning over the next two decades.

The primary barrier remains the cost of technology, which keeps installation uneven across the country. For the transition to work, the upfront cost premium for high-efficiency units must be offset by the long-term savings that could reach ₹69bn annually.

The question for policymakers and manufacturers is whether they can bridge the gap between the immediate affordability of low-rated units and the long-term stability of the national grid.