India’s energy efficiency efforts have gained momentum in 2024, with a substantial improvement being made in recent years, according to a report by the International Energy Agency (IEA). Energy efficiency investments across sectors touched $18 billion in 2023, double that from four years prior, and are projected to approach $20 billion in 2024.

Following an annual primary energy intensity improvement rate of under 1 per cent in 2021 and 2022, India has accelerated to a projected 2.5 per cent improvement in 2024, matching the 2010-2019 average. Under the IEA’s Stated Policies Scenario, the country could see a 3 per cent annual improvement, rising to over 4 per cent with pledged commitments.

India’s energy efficiency strategy includes a comprehensive Standards and Labelling programme covering 39 appliances — 16 with mandatory standards and 23 voluntary. Key initiatives such as the Perform, Achieve, and Trade (PAT) scheme for industry, and incentives for electric mobility in the transport sector, are pivotal.

Enhanced building codes and expanded labelling for appliances have broadened efficiency efforts, with state-owned Energy Efficiency Services Ltd (EESL) playing a central role in market expansion, it said.

Programmes such as Faster Adoption and Manufacturing of Electric Vehicles (FAME) and the Production Linked Incentive (PLI) scheme provide tax benefits and incentives for local manufacturing, critical in scaling efficiency efforts. Though public funding is essential, domestic and international private investments and energy service companies (ESCOs) are increasingly vital.

India’s energy efficiency market is valued at $18 billion, with the ESCO sector at nearly $900 million. EESL, the nation’s “super ESCO,” generated about $190 million last year, capturing over 20% of this market. Through demand aggregation, EESL has launched initiatives such as the National Energy Efficient Fan Programme and Street Light National Programme, fostering a shift to efficient products. Despite public support, private ESCOs face hurdles, including user acceptance, monitoring issues, and financing obstacles. The Partial Risk Guarantee Fund, with World Bank backing, aims to mitigate these risks. EESL’s efforts have led to cumulative savings of 58 billion kWh and a reduction of over 46 million tonnes of greenhouse gas emissions, it noted.

With buildings accounting for over a third of India’s energy use, energy codes such as the 2007 commercial Energy Conservation Building Code (ECBC) and the residential Eco‐Niwas Samhita (ENS) introduced in 2018 and 2021, have been updated in 2024. Twenty-five of India’s 36 states and territories have adopted the ECBC, with stricter standards in some states. Full adoption of the residential code is required by the 2022 Energy Conservation Act, with some states in advanced stages of preparation. Proper implementation could save 25-35 per cent in energy and reduce peak demand by 15 GW by 2030, while preventing 250 Mt CO₂ emissions.

With rising temperatures, air-conditioner (AC) sales have surged, increasing by over 25 per cent from 2021 to 2023, reaching 11 million units. In 2024, as temperatures soared past 50°C, AC demand spiked, with 14 million units sold, driving peak electricity demand over 250 GW. However, the market is dominated by lower-efficiency 1-3 Star models, with high-efficiency 4-5 Star units making up only 23 per cent of sales, underscoring the challenge of meeting cooling needs sustainably.

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