India to see 15-fold jump in demand for power to cool homes, says IEA report

India to lead the world in terms of power consumed for residential cooling



The International Energy Agency (IEA) has estimated that India will lead the world in terms of the power consumed for residential cooling. The agency estimates that India’s cooling-related energy demand will soar from 90 terawatt hour in 2016 to 1,350 terawatt hour (TWh) in 2050 — a 15-fold increase. With the Indian Meteorological Division forecasting above-normal temperatures in the current summer season across most parts of the country, continued strong momentum in room AC sales.

Why is this important

Currently, AC penetration remains very low at 10 per cent. There are 9.1 million households with washing machines and/or refrigerators but no ACs. Thus, as more households install ACs going forward, demand could reach 18-48 million (which is equal to 3-8 years of annual industry AC sales) and penetration levels could increase significantly from current low levels of 10 per cent in urban India. To conclude, huge room for growth can be expected in this space.

Stocks to be impacted

Blue Star (CMP Rs. 740, M Cap Rs. 7,106 Cr., PE 29.6x FY20E) and Whirlpool of India Ltd (CMP Rs. 1551, M Cap Rs. 19,677 Cr, PE 32.1x FY20E)

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