India’s Cooling Growth Trajectory

India’s Cooling Growth Trajectory

Approximately 8 percent of the current households have room air conditioners. This is anticipated to rise to 21 percent and 40 percent in 2027-28 and 2037-38, respectively.

Cooling is a cross-sectoral requirement and an essential element for economic growth. There is significant use of cooling in different sectors of the economy such as residential and commercial buildings, cold-chain, refrigeration, transport, and industries. The cooling demand in these and other sectors will grow in the future due to the expected economic growth of the country, increasing per capita income, population growth, urbanization, as well as existing low penetration of air conditioning.

The Indian cooling market

The aggregated nationwide cooling requirement, in TR (ton of refrigeration), is projected to grow around eight times by 2037-38 as compared to the 2017-18 baseline. The building sector cooling shows the most significant growth in TR, at nearly 11 times as compared to the current baseline; the cold-chain and refrigeration sectors grow around four times; and transport air conditioning grows around five times the 2017-18 levels. The space cooling sector presents unique opportunities for optimization of cooling demand since a large portion of the cooling demand is yet to come.

Within space cooling, room air conditioners constitute the dominant share of the sector’s cooling energy consumption – at around 40 percent in 2017-18 and growing to around 50 percent in 2037-38. Room air conditioners also show the highest growth at around 11 times of the current baseline (in terms of installed TR), as well as the highest potential for optimization and energy savings. Room air conditioners currently have a fairly low penetration in India, at around 7–9 percent, and most of the homes are cooled by fans and air coolers. These appliances will remain pervasive in 2037-38 and will consume nearly as much energy as all commercial AC systems combined (chillers, DX, and VRF).

The residential sector is likely to be the leading driver for the growth of air conditioning in India in the next 20 years because of urbanization trends, a sustained economic growth leading to an increasingly higher penetration of room air conditioners in urban households, and a largely tropical climate exacerbated by urban heat islands and heat wave events.

Overarching growth drivers

The growth drivers which will have a significant bearing on the sales of new comfort cooling equipment, especially room air conditioners, in the following decades are:

Growth in per-capita income. As per IESS, Indian per capita income is likely to double between 2017 (Rs 90,922) and 2027 (Rs 178,634) (over the 2017 baseline) and then again double between 2027 and 2037 (Rs 361,195) (over the 2027 baseline).

Purchasing power of urban and rural populations. There is a considerable gap in the per capita income of rural and urban populations; the per capita income in 2011-12 was Rs 101,313 and Rs 40,772 respectively for the urban and rural population.

Rate of urbanization. As per IESS, India is presently 33 percent urbanized and will be 39 percent and 45 percent urbanized in 2027 and 2037, respectively.

Building stock and its cooling demand

Buildings represent a dominant share of India’s overall cooling needs. India is also seeing one of the fastest construction growths worldwide. In view of the rapid increase in building stock and the associated air conditioned area, it becomes increasingly important to reinforce the need to build in strategies and interventions to reduce the need for active cooling of buildings. By incorporating energy efficient design and construction strategies, buildings can have inherently reduced energy consumption footprints over their operating lifetime. Existing examples of high-performance buildings in the country show that on an average, the annual energy consumption of conventional conditioned buildings could be reduced substantially.

The current penetration of room air conditioners in the country is low indicating the households’ reliance on fans, air coolers, or passive cooling from ventilation and window shading for thermal comfort. A significant percentage of households might not be able to afford air conditioning for thermal comfort even in the next 10–20 years. A thermally comfortable building design is not only important to achieve reduced cooling requirement, but also from a climate resilience perspective. Urban areas are most vulnerable to climate change impacts such as increased temperature and urban heat island effects due to their lack of access to passive cooling, thermally comfortable housing, and common cooling services. Building climate-resilient housing and providing affordable and efficient cooling appliances, especially fans and air coolers, will reduce these vulnerabilities.

Under national missions like Housing for All, Smart Cities, and Solar Cities, the country is witnessing significant increases in commercial and residential building stocks and with expected lock-in period of several decades. It is imperative to design and construct for thermal comfort using affordable and sustainable building design principles. National Mission on Sustainable Habitat (NMSH), National Mission on Enhanced Energy Efficiency (NMEEE) now renamed ROSHANEE, Energy Conservation Building Code (ECBC – both for commercial and residential) focus on building design and construction practices but require widespread and rigorous implementation to fully realize their potential.

Residential sector. In 2017, approximately 272 million households were estimated in India which will increase to 328 and 386 million in 2027 and 2037, respectively. Census 2011 of the country breaks down the number of households into the following segments: non-exclusive room, one room, two rooms, three rooms, four rooms, and five rooms and above. Approximately 60–70 percent of all the households fall in one room and two room categories. National Building Code (2016) and various housing policies/missions/reports provide a range of floor area for each category of households. One room, two rooms, three rooms, and more than three rooms segments cover 31 percent, 23 percent, 38 percent, and 8 percent, respectively in 2017 and it is assumed that similar trends would be followed for next 10 years.

Approximately 8 percent of the current households have room air conditioners. This is anticipated to rise to 21 percent and 40 percent in 2027-28 and 2037-38, respectively. As per NSSO 2011, there were approximately 1.2 room air conditioners per household.

From 2001 till 2017, the majority of households were buying their first room air conditioners; however, based on the research conducted by the AEEE14 and interactions with various stakeholders, it is likely that in the next 20 years, many households, especially those in the urban areas, would be buying their second or third air conditioners.

Building design and construction can enhance the comfort levels considerably if built in a climate sensitive manner. National Building Code, Model Building Bye-Laws, and various green building rating systems lay emphasis on building sustainably by integrating climate responsive design elements which are low cost and energy efficient. BEE’s upcoming Energy Conservation Building Code – Residential (ECBC-R) Part 1 delves into designing an energy efficient envelope which helps in reducing heat transfer through an envelope thus enhancing the thermal and visual comfort. The following interventions can help in reducing the sharply rising cooling demand and delay the purchase of first room air conditioners in many cases:

  • Regulatory and policy actions in the adoption of energy efficient building practices. The regulatory compliance by mainstreaming the passive building design focused on occupants’ comfort can significantly reduce the cooling requirement
  • Promoting capacity building and fostering market awareness toward the need for an efficiently built environment and thermally comfortable habitat that would spur the demand for sustainably designed buildings from all strata of the society

Commercial sector. The intensity for air conditioning demand and corresponding electricity consumption intensity in the commercial building sector are significantly higher as compared to the residential sector, although the overall national electricity consumption is one third of the latter. The commercial sector floor area is expected to grow around 1.5–2 times in the next decade, and 2.5–3 times by 2037-38. The operational TR is expected to be roughly 20 percent less than the total deployed air conditioners stock due to the additional stand-by capacities typically observed in large commercial facilities. The range of air conditioning systems utilized in commercial buildings includes chillers, packaged DX units, VRFs, and room air conditioners.

A TR reduction potential of around 13 percent, which translates to around 9 million TR could be achieved by 2027-28, and around 23 percent which translates to around 32 million TR by 2037-38 could be realized through more rigorous implementation of ECBC in the upcoming commercial buildings in the country.

Energy efficient cooling is the future

Increasingly, cooling is recognized as a developmental need that is linked with achieving many sustainable development goals. A large part of the cooling demand is catered through refrigerant-based cooling globally across sectors such as buildings, cold-chain, refrigeration, and transport. Refrigerants used in cooling equipment are regulated under the Montreal Protocol regime. Another important aspect related to refrigerant-based cooling is energy use. According to the International Energy Agency (IEA), refrigeration and air conditioning (RAC) causes 10 percent of the global CO2 emissions. India has one of the lowest access to cooling across the world, which is reflected in its low per-capita levels of energy consumption for space cooling, at 69 kWh, as compared to the world-average of 272 kWh.

As part of demand side management of cooling energy use, Minimum Energy Performance Standards (MEPS) and star rating scheme for room air conditioners are in place in the country and MEPS for room air conditioners are being systematically ratcheted up. The Kigali Amendment to the Montreal Protocol has, for the first time, recognized linkages between maintaining and/or improving energy efficiency of RAC equipment with refrigerant transition under the protocol. The Montreal Protocol has been a driver for the adoption of environmentally friendly and energy efficient technologies by the industry. In the past, while transitioning away from controlled refrigerants under the Montreal Protocol, many new technologies have been adopted by the industry. The Kigali Amendment to the Montreal Protocol was adopted by the Parties to the Montreal Protocol in October 2016 for phase-down of HFCs. These chemicals are not ozone depleting but have a high GWP values.

Space cooling is an important component of the total cooling requirement in the country. Indoor thermal comfort, an essential for physiological and psychological well-being, can be typically provided by active heating or cooling or a combination of both – this is contingent mainly on the local weather and the seasonal variations therein. The weather conditions vary across the country. Barring the few states on the foothills of the Himalayas, the need for heating in the country is quite limited, both in terms of region and in terms of the duration. Hence, in the country thermal comfort can be predominantly linked to space cooling in buildings using refrigerant-based air conditioning and non-refrigerant-based cooling through fans and air coolers.

Based on India Cooling Action Plan Draft – Ministry of Environment, Forest & Climate Change, Government of India.

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