Sweating Over Power Bills? Government Plans To Offer Cool Discounts On 5-Star AC Upgrade

With temperatures soaring across the country, the Union government is reportedly preparing to roll out a financial incentive scheme aimed at encouraging households to replace their old, energy-guzzling air conditioners with more efficient 5-star rated models. The move is part of a broader push to reduce electricity consumption and enhance energy efficiency.

According to a Business Standard report, the initiative will be led by the Ministry of Power and the Bureau of Energy Efficiency (BEE) in line with long-term goals of plans such as the India Cooling Action Plan (ICAP), which aims to cut the country's cooling energy demand by 40 per cent by the year 2038.

Why This Move Matters?

India has seen a sharp rise in AC sales in the last few years, jumping from 8.4 million units in 2021-22 to nearly 11 million in 2023-24, significantly contributing to the country's electricity consumption. Notably, most of these air conditioners have energy ratings below three stars, which means that they draw considerably more power.

Government data shows that cooling needs in buildings account for around 25 per cent of the total 500 terawatt-hours (TWh) of electricity consumed in 2023-24. This growing demand, if not addressed immediately, could strain the power grid and increase carbon emissions in the future.

How The Incentive Scheme Might Work?

Though still under discussion, officials are exploring a three-pronged approach to implement the scheme effectively -

1. Buyback Through Recyclers:
Consumers could hand over their old AC units to certified recyclers. In return, they would receive a certificate that could be redeemed for a discount when purchasing a new 5-star rated AC.

2. Manufacturer Discounts:
Air conditioner manufacturers may offer instant discounts on the purchase of new energy-efficient models in exchange for older units, encouraging quicker adoption.

3. Electricity Bill Rebates:
In partnership with power distribution companies (discoms), the government may introduce rebates or credits on electricity bills for consumers upgrading to high-efficiency ACs.

The report noted that the government has already initiated talks with leading electronics brands like Samsung, Lloyd, and LG to seek their participation and ensure smooth implementation of the program.

Interestingly, a similar scheme is run by BSES Yamuna Power Limited in Delhi, providing a glimpse into how such initiatives might work. Targeted at replacing ACs rated up to 3-star, the program offers benefits on 1, 1.5, and 2-ton models. Non-star-rated ACs are defined based on criteria such as year of manufacture, absence of a star label, and power consumption.

In collaboration with OEMs (Original Equipment Manufacturers), the scheme has developed a framework to assess and validate the ACs being exchanged. Under this scheme, residents of East and Central Delhi can benefit from discounts of up to 60 per cent when swapping their old units for energy-efficient 5-star models.

Through these schemes, the government hopes to encourage the adoption of energy-efficient appliances to curb energy consumption, reduce carbon footprints, and lower electricity bills for households-all while keeping homes cool during the scorching Indian summers.