Response-Enabled Room Air Conditioners: A Call to Action on Scaling Demand

Air conditioners have emerged as an essential cooling solution due to rapidly rising heat stress. This is especially true in India, which is projected to become one of the largest contributors to global cooling demand. Approximately 130–165 million RACs will be sold between 2025 and 2030, almost doubling India’s existing stock. This rapid growth in cooling is already straining the power system. Without intervention, major consequences to energy bills, cooling access, and grid stability will prevail.

This report explores how integrating demand response (DR) technologies into room ACs (RACs) can help India slash cooling-related energy demand without compromising the RAC end-user’s thermal comfort and presents a call to action for key stakeholders.

Key Findings

• CLASP’s analysis suggests that India will be market-ready for DR-RACs by 2028, with approximately 53–67 million units deployed by 2030.
• Adoption of the DR-RAC initiative detailed in this analysis could reduce India’s peak demand by 8–10 GW—equivalent to erasing the entire peak demand of Delhi in 2024—and save 563–709 GWh of electricity in 2030.
• Peak demand savings from DR-RACs could help avoid $12.8 billion in grid investments by 2030—equivalent to $473 per participating DR-RAC owner—which is enough to effectively offset the cost of the unit.
• DR-RACs can help India alleviate demand surges that would otherwise need to be met with additional power plant and grid investment.
• The incremental costs for integrating DR in an RAC in India will likely remain at the lower end of the $10–$30 range.

Call to Action

1. RAC manufacturers, consumers, and utilities must support the Bureau of Indian Standards (BIS) in developing DR-RAC standards
   1. Technical standardization is essential: Establishing technical standards for DR-RACs is a critical prerequisite and will help build confidence in DR-RACs as a reliable resource option for the grid.
   2. India should develop DR standards by leveraging global best practices: BIS should draw from examples of other countries and relevant international standards to develop robust DR-RAC standards that are contextualized to India’s needs and conditions.
2. Stakeholders must begin to build the basis for DR-RACs within their own segments
   1. Appliance manufacturers: Support the development of standards, incorporate DR-RAC-compliant components into RAC designs, and collaborate with policymakers to advance DR regulations.
   2. Utility (or DR aggregators-operators): Quantify the benefits of DR-RACs, explore different business models, conduct pilot programs, and educate consumers about cost-saving opportunities.
   3. Technology and testing labs: Support the development of DR-RAC standards, develop appropriate test methods, and invest in DR-RAC testing and certification.
   4. Researchers and policymakers: Investigate economic incentives, behavioral drivers, policies, and regulatory mechanisms to accelerate DR-RAC adoption.
3. Investors must catalyze funding to scale DR-RAC deployment
   1. Public- and private-sector investments: Mobilize investments to support research and development and manufacturing of DR-RACs, scale business models, implement demonstration projects, and support grid modernization to integrate DR.
   2. Financial institutions: Develop innovative financing models such as risk-sharing mechanisms or green bonds to incentivize DR-RAC adoption and implement DR programs.
   3. Government support: Introduce subsidies or tax incentives to lower the upfront cost of DR-enabled RACs, encouraging manufacturers to integrate DR capabilities.