Business / Sat, 13 Jul 2024 The Indian Express

The Republic of ACs: India’s growing need for cool air

Once considered a luxury appliance, the demand for ACs rides on the back of rising incomes and rising temperatures associated with climate change. We have had people from all income groups coming to buy ACs — both window and split ACs are in demand. (Express Photo)OLX, an online platform for selling and buying used goods, too has recorded this spike in demand for ACs. Electricity demand is sensitive to temperatures, and in India’s case, there is a sharp increase in demand as temperatures cross the 25-degree Celsius threshold. (Express Photo)“More ACs mean more electricity demand.

In May, as his three-room house in Siyana tehsil of Bulandshahr, Uttar Pradesh, turned oppressively hot, Rajpal Singh, an electrician with a housing society in Ghaziabad near Delhi, took a decision he had been putting off for a while — he bought an air conditioner (AC).

“I got a second-hand window AC for Rs 6,000. The heat was unbearable and our cooler had become ineffective,” says Singh, who is in his 40s and earns Rs 12,000 a month. “It’s a good AC and cools the room well. But I got a chance to sleep in the AC room for only two days. I had to return to Ghaziabad for work,” he adds.

His rented room in Ghazibad’s Vaishali neighbourhood only has a fan. But he is glad his wife, two sons and the occasional guests who come to his village home can sleep well at night.

In another part of the state, 77-year-old Babu Ram Verma, who has settled down in Gonda’s Itraur village after his retirement from a government job, is considering buying an AC for the first time in his life. He has reached out to his relatives to help him get one for a reasonable price. “It’s so hot… room coolers and fans are now useless. It gets especially difficult at my age and with all these health issues. Earlier, one could spend the day under trees in orchards. But now it has become impossible to do so,” he says.

This year so far, as temperatures broke all records — at least eight states recorded their highest number of heatwave days since 2010 and two states, Himachal Pradesh and Kerala, recorded heatwaves for the first time this year – India’s already booming AC market got another boost, breaching new territories and fuelling an unstoppable demand for cooling. Rising humidity levels that accompanied the rains have added to discomfort levels.

Once considered a luxury appliance, the demand for ACs rides on the back of rising incomes and rising temperatures associated with climate change.

Since 2010, air conditioner ownership in India has increased threefold, reaching 24 units per 100 households in 2023, according to the World Energy Outlook 2023 report by the International Energy Agency (IEA).

Even the National Sample Survey Office (NSSO) data shows a jump in the number of AC owners. Speaking to The Indian Express, Shalu Agrawal, Director of Programmes, Council on Energy, Environment and Water (CEEW, a public policy think-tank in India), said, “While the 2011-12 NSSO report, which captures the combined ownership of air cooler and air conditioners, shows that 12% of the households had these appliances, the 2022-23 report reveals that this number has reached nearly 24%.”

This number is expected to only increase in the following years. According to the IEA report, household air conditioner ownership in India is estimated to expand ninefold by 2050, reaching more than 1 billion.

Though there is no pan-India data for AC sales, every indicator — from retail figures to trade body estimates, surveys and research papers — points to what’s now an irreversible appetite for cooling.

An unstoppable demand

At Aircon Paradise, a Ghaziabad-based AC retail showroom that caters to a clientele across Delhi-NCR, owner Aryan Malhotra says he has sold at least 25% more AC units this season when compared to the last three years.

“There has been a huge jump in demand. That’s because unlike in 2023, this year, it did not rain at all during May, April, and most of June. None of the AC manufacturers expected this demand. As a result, there has been a shortage of ACs in the market since May. We have had people from all income groups coming to buy ACs — both window and split ACs are in demand. Most people have bought ACs on EMIs or have got it financed from the AC company,” says Malhotra, adding that the overall AC sales may have gone up by more than 100% this season.

To boost sales, AC manufacturers have come up with different schemes: from cashback offers on credit cards to low-interest EMI options and paper finance schemes, which, unlike credit card EMIs that typically offer six-month-long EMIs, allow the buyer to pay the full amount within 18 months from the date of purchase.

Not far from Malhotra’s shop is an AC repair and rental shop owned by Ankit Gupta. He says that this season, he has rented out more than double the number of ACs than he usually does. “If I was giving 10 ACs on rent till last year, this time, I would have given at least 25 ACs…I have also got a lot of calls for AC repair. Most people think their ACs are not working properly because of some technical fault, but the reality is that ACs can be effective up to a certain point only — given the unusually high heat and humidity this season, the smaller ACs were not very effective,” he says.

The AC wave has washed up on new shores to include small towns India and Tier 2 and 3 cities such as Dehradun,where once even air coolers were a rarity, and The AC wave has washed up on new shores to include small towns India and Tier 2 and 3 cities such as Dehradun,where once even air coolers were a rarity, and Lucknow . (Express Photo)

OLX, an online platform for selling and buying used goods, too has recorded this spike in demand for ACs. In a statement issued in June, Amit Kumar, CEO and MD, OLX India, said, “Air conditioners have registered more than a 3X spike in demand, and the demand for coolers has also more than doubled. In Tier 1 cities, the demand for air conditioners almost doubled (89%), while in Tier 2 and Tier 3 cities, we witnessed a 150% growth, reflecting the sudden change in consumer needs… Notably, the growth rates in Tier 2 and Tier 3 cities have significantly outpaced those in Tier 1 cities, with demand in Tier 2 cities witnessing a 5X spike in demand for air conditioners.” The data provided by OLX compared the sales in March 2024 to the previous three months.

Amit Behl, owner of Behl Associates, Dehradun’s leading electronics distributor, says he had a good year, with his AC sales breaking all previous records by a significant margin. When compared to all of last year, he has seen an almost 100% increase in AC sales in the three months starting April. “This time, we experienced an extended summer without any rain. For many people in Dehradun, air conditioners are no longer a luxury but a necessity. May was particularly strong in terms of AC sales, with most buyers being first-time AC consumers. We have got business even from remote villages,” says Behl, who has been in the business for nearly 15 years.

In Bhopal, where AC dealers claimed to have sold 50% more units than the previous year, retailer Jagat Sinha says

there was a considerable shift in the demographics of people who bought ACs this year. “A lot of lower middle-class and middle-class people bought ACs. The preferred choice is the split AC,” he says.

In April Voltas, a leading AC brand owned by the TATA Group, released a statement that said, “The company achieved over 2 million AC units during fiscal 2023-24, the highest ever sale of ACs by any brand in a financial year in India, with a volume growth of 35 per cent.”

Projected household appliance ownership in India till 2050. Projected household appliance ownership in India till 2050.

The cost of cool air

The insatiable demand for cooling, however, comes at a cost. Experts point out how the large-scale use of these appliances is, in fact, counterproductive and ends up fuelling the climate crisis.

What is immediately evident is the stress on power generation. “The impact of cooling needs on electricity consumption is already clear. Electricity demand is sensitive to temperatures, and in India’s case, there is a sharp increase in demand as temperatures cross the 25-degree Celsius threshold. Electricity consumption due to space cooling increased 21% between 2019 and 2022, and today nearly 10% of electricity demand comes from space cooling requirements,” the IEA report revealed.

Amid extremely high temperatures, Delhi’s peak power reached new heights on June 18. It jumped to 8,647 MW, breaking the previous record of 8,000 MW, which was registered in May this year.

Similarly, in April, Kolkata witnessed an increased load on the power grid, which officials attributed to additional consumption from 1.5 lakh AC connections that were added without “proper authorisation”.

“CESC (Calcutta Electric Supply Corporation) is urging people to get proper authorisation before using ACs. A small number of ACs is manageable, but when a significant portion of residents use them without authorisation, it creates a huge strain on the system. If the overload is too high, the smart grid will automatically shut down to prevent damage. We want to appeal to people to take sanction and then use ACs,” CESC Executive Director Avijit Ghosh told The Indian Express in May.

A large part of this energy demand is being met by electricity generated by fossil fuels such as coal — in India, the share of coal-fired power generation stood at 75% of total power generated from all sources in FY24.

Experts worry that with the growing energy demand, countries like India may continue or even increase its reliance on coal — India’s coal-fired thermal capacity grew to 218 GW in FY24 from 205 GW in FY20, a 6% growth, data on NITI Aayog’s energy dashboard in May showed.

Amid extremely high temperatures, Delhi’s peak power reached new heights on June 18. It jumped to 8,647 MW, breaking the previous record of 8,000 MW, which was registered in May this year. (Express Photo) Amid extremely high temperatures, Delhi’s peak power reached new heights on June 18. It jumped to 8,647 MW, breaking the previous record of 8,000 MW, which was registered in May this year. (Express Photo)

“More ACs mean more electricity demand. At least in the medium term, when the electricity grid is predominantly powered by thermal power, it means more [GHG] emissions,” according to Agrawal.

But it is not just the electricity used to run ACs that is contributing to the climate crisis. The appliance has refrigerants, also known as coolants, which, if leaked, add to global warming. Currently, these coolants in ACs are generally either hydrofluorocarbons (HFCs) or hydrochlorofluorocarbons (HCFCs).

ACs also contribute to the ‘urban island effect’ — a phenomenon that occurs when a city or certain pockets within a city experience much warmer temperatures than their surroundings or nearby rural areas on the same day. As ACs work like a heat pump, they cool the room by releasing the heat outside. Thereby, making the outside temperature warmer.

A 2014 study, ‘Anthropogenic heating of the urban environment due to air conditioning’, published in AGU Journal, found that excess heat generated by a city’s worth of air conditioners can increase the outside temperature by 1 to 1.5 degree Celsius at night.

The solutions

Prima Madan, director, cooling and efficiency, Natural Resources Defense Council (NRDC), told The Indian Express: “In India, the cooling demand is still increasing and it gives an opportunity to meet this demand in the most climate-friendly and sustainable way.”

To do so, Madan emphasised that the country needs to take a “whole systems approach”, which relies on not only ACs for cooling but also natural cooling-friendly architecture.

“There are adaptive thermal comfort approaches such as a cool roof (built to reflect more sunlight than a conventional roof, absorbing less solar energy) that can reduce dependence on mechanical cooling,” Madan said.

Most agree on how at least in the longer term, there is no alternative to better urban planning to cool our homes – better architecture, more trees, vegetation, and water bodies.

(With inputs from Avaneesh Mishra and Anand Mohan J)