As climate change accelerates and Indian summers grow hotter each year, the demand for cooling is surging across the country. With rising incomes and urbanisation, air conditioner (AC) sales are soaring—but so is the nation’s power consumption. Between 2021–22 and 2023–24, annual AC sales have jumped from 8.4 million units to nearly 11 million. This boom in cooling demand, while improving comfort, is placing immense pressure on the electricity grid and deepening concerns over energy efficiency.
The Union government is now stepping in with a proposed financial incentive scheme that aims to take consumers toward replacing outdated, energy-guzzling ACs with newer, five-star-rated models. The goal of this scheme is to reduce the electricity bills for households, ease stress on the power grid during peak months, and contribute to India’s larger climate action goals.
Backed by the Ministry of Power and the Bureau of Energy Efficiency (BEE), the initiative is still under review but is expected to align with long-term national strategies like the India Cooling Action Plan (ICAP), The Business Standard reported.
A step towards the needed change
Air conditioning is no longer a luxury in India’s scorching summers, it’s a necessity. But most ACs in Indian homes are still rated below 3 stars, that makes them significantly less efficient. As per government data, cooling already accounts for about a quarter of the 500 terawatt-hours (TWh) of electricity consumed by buildings in 2023–24.
According to the Bureau of Energy Efficiency, swapping an old AC with a five-star-rated model could save a household up to ₹6,300 per year in electricity bills. In addition to reducing costs for families, this would lower strain on the national grid, especially during the sweltering summer months.
How might the scheme work?
While the final framework is still being finalised, officials are considering a multi-layered approach to make the switch affordable and accessible:
Buyback through recyclers: Consumers may be able to return their old ACs to certified recyclers and receive a certificate to use while purchasing a new energy-efficient unit.
Manufacturer discounts: Brands like LG, Voltas, Blue Star, Samsung, and Lloyd may offer instant discounts when consumers exchange their old units.
Electricity bill rebates: The government is exploring the possibility of offering credits on power bills in collaboration with discoms to encourage upgrades.
This initiative has taken climate goals into consideration
This plan is closely linked to the India Cooling Action Plan (ICAP), which looks forward to reducing the country’s cooling energy demand by 40% by the year 2038. Since cooling, like using air conditioners, is expected to make up about 30% of India’s total electricity use by the middle of the century, switching to energy-efficient appliances is very important. It will help save energy, lower electricity bills, and support India’s goals to fight climate change and keep the power supply stable.
The government has already started talking to major AC companies to get their support and sort out any issues before launching the scheme, the report said. These discussions will help decide important things like how much discounts to offer, how old ACs will be collected and recycled, and how the whole process will run smoothly.
A similar program is being run in Delhi
Meanwhile, a similar programme is already being run by BSES in Delhi, where consumers can receive up to 60% off on five-star or inverter ACs by trading in older models rated up to 3 stars. The AC must be in working condition, and each BSES customer can replace up to three units per CA number.
Under this scheme, people living in Delhi can swap their old AC for a new five-star inverter AC, and they don’t have to worry too much about the cost. This offer helps consumers get a more energy-efficient AC without spending a lot of money, making it easier on their pockets while also saving on electricity bills.
The Union government is now stepping in with a proposed financial incentive scheme that aims to take consumers toward replacing outdated, energy-guzzling ACs with newer, five-star-rated models. The goal of this scheme is to reduce the electricity bills for households, ease stress on the power grid during peak months, and contribute to India’s larger climate action goals.
Backed by the Ministry of Power and the Bureau of Energy Efficiency (BEE), the initiative is still under review but is expected to align with long-term national strategies like the India Cooling Action Plan (ICAP), The Business Standard reported.
A step towards the needed change
Air conditioning is no longer a luxury in India’s scorching summers, it’s a necessity. But most ACs in Indian homes are still rated below 3 stars, that makes them significantly less efficient. As per government data, cooling already accounts for about a quarter of the 500 terawatt-hours (TWh) of electricity consumed by buildings in 2023–24.
According to the Bureau of Energy Efficiency, swapping an old AC with a five-star-rated model could save a household up to ₹6,300 per year in electricity bills. In addition to reducing costs for families, this would lower strain on the national grid, especially during the sweltering summer months.
How might the scheme work?
While the final framework is still being finalised, officials are considering a multi-layered approach to make the switch affordable and accessible:
Buyback through recyclers: Consumers may be able to return their old ACs to certified recyclers and receive a certificate to use while purchasing a new energy-efficient unit.
Manufacturer discounts: Brands like LG, Voltas, Blue Star, Samsung, and Lloyd may offer instant discounts when consumers exchange their old units.
Electricity bill rebates: The government is exploring the possibility of offering credits on power bills in collaboration with discoms to encourage upgrades.
This initiative has taken climate goals into consideration
This plan is closely linked to the India Cooling Action Plan (ICAP), which looks forward to reducing the country’s cooling energy demand by 40% by the year 2038. Since cooling, like using air conditioners, is expected to make up about 30% of India’s total electricity use by the middle of the century, switching to energy-efficient appliances is very important. It will help save energy, lower electricity bills, and support India’s goals to fight climate change and keep the power supply stable.
The government has already started talking to major AC companies to get their support and sort out any issues before launching the scheme, the report said. These discussions will help decide important things like how much discounts to offer, how old ACs will be collected and recycled, and how the whole process will run smoothly.
A similar program is being run in Delhi
Meanwhile, a similar programme is already being run by BSES in Delhi, where consumers can receive up to 60% off on five-star or inverter ACs by trading in older models rated up to 3 stars. The AC must be in working condition, and each BSES customer can replace up to three units per CA number.
Under this scheme, people living in Delhi can swap their old AC for a new five-star inverter AC, and they don’t have to worry too much about the cost. This offer helps consumers get a more energy-efficient AC without spending a lot of money, making it easier on their pockets while also saving on electricity bills.
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