- India’s energy efficiency investments hit $18 billion in 2023 and are set to reach $20 billion in 2024.
- Rising air-conditioner demand challenges India’s energy efficiency goals, with low-efficiency models dominating sales.
According to the latest report from the International Energy Agency (IEA), India’s energy efficiency initiatives have gained significant momentum in 2024, with the country making substantial progress in recent years. Energy efficiency investments across various sectors reached $18 billion in 2023, double the amount invested just four years earlier, and are expected to approach $20 billion by the end of 2024.
Following a modest improvement in primary energy intensity of less than 1% in 2021 and 2022, India has accelerated its efforts, with a projected 2.5% improvement in 2024, bringing the country in line with the average annual improvement seen between 2010 and 2019. Under the IEA’s Stated Policies Scenario, India could achieve an even more significant improvement of 3% annually, potentially exceeding 4% if current pledges are fully realised.
India’s energy efficiency strategy is built around various policies and programs. Key initiatives include the comprehensive Standards and Labelling program, which covers 39 appliances—16 with mandatory standards and 23 voluntary. The Perform, Achieve, and Trade (PAT) scheme for industry and incentives for electric mobility in the transportation sector are also central to the country’s energy efficiency efforts. Enhanced building codes and expanded appliance labelling further drive improvements, with the state-owned Energy Efficiency Services Ltd (EESL) playing a pivotal role in scaling up market adoption.
Programs like the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and the Production Linked Incentive (PLI) program have provided tax benefits and incentives for local manufacturing, supporting the growth of energy-efficient technologies. While public funding remains crucial, private investments from domestic and international sources and energy service companies (ESCOs) are becoming increasingly important to sustain and scale these efforts.
India’s energy efficiency market is valued at $18 billion, with the ESCO sector alone worth nearly $900 million. EESL, the nation’s “super ESCO,” captured over 20% of this market, generating around $190 million last year. EESL’s initiatives, such as the National Energy Efficient Fan Programme and the Street Light National Programme, have driven the widespread adoption of energy-efficient products. However, private ESCOs face challenges, including user acceptance, financing issues, and monitoring hurdles. To mitigate these risks, the Partial Risk Guarantee Fund, supported by the World Bank, plays a key role.
Buildings account for over a third of India’s total energy use and are a focal point of the efficiency drive. Energy codes, such as the 2007 Energy Conservation Building Code (ECBC) for commercial buildings and the residential Eco-Niwas Samhita (ENS) introduced in 2018 and 2021, have been updated in 2024. So far, 25 of India’s 36 states and territories have adopted the ECBC, with some implementing stricter standards.
Full implementation of the residential code is expected by 2022, with significant energy savings estimated at 25-35% and a reduction in peak demand by 15 GW by 2030. This could also help prevent 250 million tonnes of CO₂ emissions. The rising demand for air-conditioning (AC), spurred by rising temperatures, presents a pivotal challenge to India’s energy efficiency goals. AC sales surged by over 25% from 2021 to 2023,