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Title: Cost-Benefit of Improving the Efficiency of Room Air Conditioners (Inverter and Fixed Speed) in India

Abstract

Improving efficiency of air conditioners (ACs) typically involves improving the efficiency of various components such as compressors, heat exchangers, expansion valves, refrigerant and fans. We estimate the incremental cost of improving the efficiency of room ACs based on the cost of improving the efficiency of its key components. Further, we estimate the retail price increase required to cover the cost of efficiency improvement, compare it with electricity bill savings, and calculate the payback period for consumers to recover the additional price of a more efficient AC. We assess several efficiency levels, two of which are summarized below in the report. The finding that significant efficiency improvement is cost effective from a consumer perspective is robust over a wide range of assumptions. If we assume a 50% higher incremental price compared to our baseline estimate, the payback period for the efficiency level of 3.5 ISEER is 1.1 years. Given the findings of this study, establishing more stringent minimum efficiency performance criteria (one star level) should be evaluated rigorously considering significant benefits to consumers, energy security and environment.

Authors:
 [1];  [1];  [1];  [1];  [2];  [3];  [3];  [3]
  1. Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States). Energy Analysis and Environmental Impacts Division
  2. Government of India, New Delhi (India). Bureau of Energy Efficiency
  3. Collaborative Labeling and Appliance Standards Program (CLASP), Washington, DC (United States)
Publication Date:
Research Org.:
Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
Sponsoring Org.:
USDOE Office of International Affairs (IA). U.S.-India Space Cooling Collaboration
OSTI Identifier:
1342227
Report Number(s):
LBNL-1005787
ir:1005787
DOE Contract Number:
AC02-05CH11231
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English

Citation Formats

Shah, Nihar, Abhyankar, Nikit, Park, Won Young, Phadke, Amol, Diddi, Saurabh, Ahuja, Deepanshu, Mukherjee, P. K., and Walia, Archana. Cost-Benefit of Improving the Efficiency of Room Air Conditioners (Inverter and Fixed Speed) in India. United States: N. p., 2016. Web. doi:10.2172/1342227.
Shah, Nihar, Abhyankar, Nikit, Park, Won Young, Phadke, Amol, Diddi, Saurabh, Ahuja, Deepanshu, Mukherjee, P. K., & Walia, Archana. Cost-Benefit of Improving the Efficiency of Room Air Conditioners (Inverter and Fixed Speed) in India. United States. doi:10.2172/1342227.
Shah, Nihar, Abhyankar, Nikit, Park, Won Young, Phadke, Amol, Diddi, Saurabh, Ahuja, Deepanshu, Mukherjee, P. K., and Walia, Archana. 2016. "Cost-Benefit of Improving the Efficiency of Room Air Conditioners (Inverter and Fixed Speed) in India". United States. doi:10.2172/1342227. https://www.osti.gov/servlets/purl/1342227.
@article{osti_1342227,
title = {Cost-Benefit of Improving the Efficiency of Room Air Conditioners (Inverter and Fixed Speed) in India},
author = {Shah, Nihar and Abhyankar, Nikit and Park, Won Young and Phadke, Amol and Diddi, Saurabh and Ahuja, Deepanshu and Mukherjee, P. K. and Walia, Archana},
abstractNote = {Improving efficiency of air conditioners (ACs) typically involves improving the efficiency of various components such as compressors, heat exchangers, expansion valves, refrigerant and fans. We estimate the incremental cost of improving the efficiency of room ACs based on the cost of improving the efficiency of its key components. Further, we estimate the retail price increase required to cover the cost of efficiency improvement, compare it with electricity bill savings, and calculate the payback period for consumers to recover the additional price of a more efficient AC. We assess several efficiency levels, two of which are summarized below in the report. The finding that significant efficiency improvement is cost effective from a consumer perspective is robust over a wide range of assumptions. If we assume a 50% higher incremental price compared to our baseline estimate, the payback period for the efficiency level of 3.5 ISEER is 1.1 years. Given the findings of this study, establishing more stringent minimum efficiency performance criteria (one star level) should be evaluated rigorously considering significant benefits to consumers, energy security and environment.},
doi = {10.2172/1342227},
journal = {},
number = ,
volume = ,
place = {United States},
year = 2016,
month = 6
}

Technical Report:

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  • Improving efficiency of air conditioners (ACs) typically involves improving the efficiency of various components such as compressors, heat exchangers, expansion valves, refrigerant,and fans. We estimate the incremental cost of improving the efficiency of room ACs based on the cost of improving the efficiency of its key components. Further, we estimate the retail price increase required to cover the cost of efficiency improvement, compare it with electricity bill savings, and calculate the payback period for consumers to recover the additional price of a more efficient AC. The finding that significant efficiency improvement is cost effective from a consumer perspective is robustmore » over a wide range of assumptions. If we assume a 50% higher incremental price compared to our baseline estimate, the payback period for the efficiency level of 3.5 ISEER is 1.1 years. Given the findings of this study, establishing more stringent minimum efficiency performance criteria (one-star level) should be evaluated rigorously considering significant benefits to consumers, energy security, and environment« less
  • Falling AC prices, increasing incomes, increasing urbanization, and high cooling requirements due to hot climate are all driving increasing uptake of Room Air Conditioners (RACs) in the Indian market. Air conditioning already comprises 40-60% of summer peak load in large metropolitan Indian cities such as Delhi and is likely to contribute 150 GW to the peak demand in 2030. Standards and labeling policies have contributed to improving the efficiency of RACs in India by about 2.5% in the last 10 years (2.5% per year) while inflation adjusted RAC prices have continued to decline. In this paper, we assess the technicalmore » feasibility, cost-benefit, and required policy enhancements by further accelerating the efficiency improvement of RACs in India. We find that there are examples of significantly more accelerated improvements such as those in Japan and Korea where AC efficiency improved by more than 7% per year resulting in almost a doubling of energy efficiency in 7 to 10 years while inflation adjusted AC prices continued to decline. We find that the most efficient RAC sold on the Indian market is almost twice as efficient as the typical AC sold on the market and hence see no technology constraints in a similar acceleration of improvement of efficiency. If starting 2018, AC efficiency improves at a rate of 6% instead of 3%, 40-60 GW of peak load (equivalent to connected load of 5-6 billion LED bulbs), and over 75 TWh/yr (equivalent to 60 million consumers consuming 100 kWh/month) will be saved by 2030; total peak load reduction would be as high as 50 GW. The net present value (NPV) of the consumer benefit between 2018-2030 will range from Rs 18,000 Cr in the most conservative case (in which prices don’t continue to decline and increase based estimates of today’s cost of efficiency improvement) to 140,000 Cr in a more realistic case (in which prices are not affected by accelerated efficiency improvement as shown by historical experience). This benefit is achievable by ratcheting up the 1 star level for fixed and inverter ACs to the level of today’s five star rating for inverter ACs by 2022. Bulk procurement (similar to the Domestic Efficient Lighting Program) and incentive programs can complement the accelerated ratcheting up of star levels. Similar programs can also be implemented for other types of ACs.« less
  • Electricity demand for room ACs is growing very rapidly in emerging economies such as India. We estimate the electricity demand from room ACs in 2030 in India considering factors such as weather and income growth using market data on penetration of ACs in different income classes and climatic regions. We discuss the status of the current standards, labels, and incentive programs to improve the efficiency of room ACs in these markets and assess the potential for further large improvements in efficiency and find that efficiency can be improved by over 40percent cost effectively. The total potential energy savings from Roommore » AC efficiency improvement in India using the best available technology will reach over 118 TWh in 2030; potential peak demand saving is found to be 60 GW by 2030. This is equivalent to avoiding 120 new coal fired power plants of 500 MW each. We discuss policy options to complement, expand and improve the ongoing programs to capture this large potential.« less
  • This document is divided into ``volumes`` B through E, dealing with individual classes of consumer products. Chapters in each present engineering analysis, base case forecasts, projected national impacts of standards, life-cycle costs and payback periods, impacts on manufacturers, impacts of standards on electric utilities, and environmental effects. Supporting appendices are included.
  • The text of the appliance efficiency standards for certain types of new appliances sold in California is presented. Specifications and test methods to identify complying refrigerators, freezers, air conditioners, gas space heaters, water heaters, plumbing fittings, gas clothes dryers, and gas cooking appliances are covered.