COOLING is no longer a luxury — it is fast becoming a developmental necessity, with rising temperatures, urbanisation and income growth reshaping India’s energy demand. This shift is already visible in the power system, reflected in the all-time-high peak electricity demand of 270.73 GW (gigawatts) recorded on May 21 (3:47 pm).
This transition is not only about how much electricity India will need for cooling, but also about where the demand is concentrated. Space cooling will account for nearly 74% of total cooling demand by 2037-38, making cooling one of the most important structural drivers of future peak load growth.
In the residential sector, cooling demand is set to expand rapidly as indicated by the AC stock, which is projected to rise to 240 million units by 2030 and 1.1 billion units by 2050, and contribute 52% of India’s total space cooling demand, highlighting the rising importance of both residential and commercial cooling loads. Meanwhile, digital infrastructure is creating a new and highly concentrated source of cooling demand: India already hosts 262 data centres with about 1.4 GW of the installed capacity, using less than 1% of the national electricity at present. That footprint is expected to expand to 9 GW by 2030, accounting for around 3% of India’s electricity demand, and some industry estimates put data-centre electricity use at approximately 300 TWh (terawatt-hours) by 2035.
The implications of this rising demand for the power sector are profound. In Delhi, where ambient temperatures during summer now frequently exceed 40°C and have been rising steadily each year due to climate change, temperatures inside buildings remain elevated even after sunset, as buildings continue to release stored heat and households switch on ACs simultaneously, creating a sharp and concentrated spike in demand. This synchronised cooling load is now a defining feature of India’s load curve in the evening and nighttime. This trend is closely linked to the rapid rise in air-conditioner usage as well.
Policy interventions have begun to address this shift. Measures such as Time-of-Day (ToD) tariffs, implemented in states like Maharashtra, Telangana and Kerala, aim to discourage consumption during evening peak hours and encourage increased industrial activities in solar-rich daytime periods by making electricity costlier in the evening. Similarly, national-level efforts such as the India Cooling Action Plan (ICAP) focus on reducing overall cooling and refrigerant demand, making India the first country to adopt a comprehensive, long-term national cooling strategy.
However, these measures address the problem only partially. ToD tariffs shift costs but not the underlying need for cooling, leaving households to bear higher peak-hour electricity prices alongside recurring air-conditioner expenses such as maintenance and refrigerant top-ups. These refrigerants, often with high global warming potential, further add to emissions. As a result, cooling-related emissions, already around 156 million tonnes of CO2 equivalent, are projected to more than double to nearly 329 million tonnes by 2035, underscoring the limits of current approaches and the need for more structural solutions with more relevant policy interventions.
Improving appliance efficiency remains necessary but not enough. Strengthening Minimum Energy Performance Standards (MEPS) could avoid over 60 GW of peak demand, but it does not address the fundamental issue of synchronised cooling loads.
The solution lies in shifting from appliance-level approaches to system-level optimisation, combining advanced cooling technologies with better demand management. Solutions such as heat pumps, structural cooling, radiant cooling, geothermal-based cooling, Solar Thermal and Thermal Energy Storage (TES)-based Vapour Absorption Machine for Air Conditioning System, can significantly reduce electricity consumption and use of refrigerants. TES stores heat generated during solar hours and used during peak periods, reducing peak demand by 30-50% and offering an alternative to batteries for thermal loads.
Equally critical is demand aggregation, especially in urban residential clusters where cooling loads are concentrated. District cooling systems, as demonstrated in GIFT City (Gujarat) with a 44% reduction in peak demand, leverage load diversity and economies of scale to manage demand more efficiently. With residential air-conditioning emerging as the dominant driver of peak load, integrating such solutions into real estate development offers a scalable pathway for cities, smart clusters and industrial corridors.
Policy direction must now align with this reality. Cooling should be treated as core infrastructure, given its implications for health, productivity, and economic growth. The focus must shift towards demand aggregation rather than fragmented, asset-level interventions. At the same time, policies must remain technology-agnostic and outcome-oriented, supported by evaluation metrics. Ex-ante policy design should include metrics such as estimated peak reduction, equipment efficiency improvements, emissions mitigation and cost-effectiveness. A post-facto analysis of the metrics should include peak reduction achieved, verified emissions savings, consumer cost savings and grid performance improvements that would enable evidence-based calibration/tuning of policy design. This would ensure that the policy is directed toward solutions delivering measurable system-level benefits.
There is also a need to align cooling and digital infrastructure transitions. This includes incentivising round-the-clock renewable with energy storage/small modular reactor-powered data centres, promoting low-global-warming-potential refrigerants such as CO2 (R-744)-based heat pumps, supporting advanced cooling R&D and adopting water-efficient systems, critical in a water-stressed country like India. Business model innovation will also be the key. Steps like Cooling-as-a-Service can reduce upfront costs, align efficiency incentives and accelerate adoption.
India’s cooling challenge is as much about infrastructure and solution-oriented development as it is about decarbonisation. As the country builds much of its future infrastructure in the coming decade, today’s choices will determine whether cooling becomes a systemic risk or a strategic opportunity. With the right mix of policy, technology and market design, India can deliver sustainable cooling at scale.
