India is adapting to rising heat with smart and sustainable cooling 

Sudheer Perla, Managing Director of Tabreed Asia, highlights that the HVAC sector is undergoing a significant transformation, fuelled by urbanisation, increasing temperatures, and the urgent need for sustainable cooling solutions. As cooling demand continues to surge, innovative approaches such as District Cooling, low-GWP refrigerants, and renewable energy integration are crucial for improving efficiency and minimising environmental impact.

What is the anticipated outlook for the HVAC industry in 2025?

The HVAC industry in India is poised for transformative growth, driven by urbanisation, rising temperatures, and the urgent need for sustainable cooling solutions. Heat stress is already a significant challenge, with South Asia experiencing up to 12 per cent productivity loss and India projected to face a 24.7 per cent GDP loss by 2070 under high emissions scenarios. Urban areas are particularly vulnerable due to the Urban Heat Island (UHI) effect, intensifying cooling demands in buildings, industries, and transport.

India’s cooling sector will grow eightfold by 2038, with AC penetration rising from 8 to 40 percent. Cooling demand could drive energy consumption to 45 percent of peak power load by 2050, pushing GHG emissions 90 percent above 2017 levels. Incremental efficiency improvements alone would not suffice.

In response, several states have launched proactive measures to mitigate these risks. Gujarat’s Heat Action Plan focuses on early warning systems and building community resilience, while Odisha, which faces frequent heatwaves, has implemented strategies to cool public spaces and protect vulnerable workers. Maharashtra’s Cooling Action Plan aims to reduce cooling energy intensity by 30-40 percent by 2038 through improved efficiency standards, urban planning promoting passive cooling, and adopting low-GWP refrigerants.

Innovative solutions like District Cooling (DC) are gaining traction. The India Cooling Action Plan (ICAP) and the 2023 District Cooling Guidelines from the Bureau of Energy Efficiency underscore District Cooling as a key strategy, integrating supply-side technologies and natural design measures to optimise energy use and reduce emissions.

As cooling becomes essential infrastructure in India—on par with power or water utilities—models like “Cooling as a Service” (CaaS) offer accessible and energy-efficient solutions. These models incentivise energy efficiency, aligning the interests of various stakeholders and ensuring long-term system reliability. Collaboration among government bodies, industry, and the private sector will be key to the widespread adoption of these transformative solutions.

How does Cooling-as-a-Service address the challenges of traditional cooling models in India?

The cooling market in India has shifted towards energy-efficient solutions aligned with the country’s climate commitments. Traditionally, cooling infrastructure was in-house, with operations & maintenance (O&M) outsourced to Integrated Facility Management (IFM) companies. This model inherently faced agency issues, as the IFM operator had little incentive to ensure asset longevity or optimise energy use, resulting in a “business-as-usual” mindset.

Artificial Intelligence (AI) and the Internet of Things (IoT) technologies were introduced to optimise performance, predict equipment failures, and reduce energy consumption. However, their effectiveness is constrained by a lack of skilled personnel to interpret data and implement strategies. Similarly, the Energy Service Company (ESCO) model, focused on retrofits and energy savings over 7–12 years, is constrained to small-scale, quick-payback interventions rather than transformative upgrades.

Lately, we have seen more examples of Design-Build-Operate (DBO) models emerge, which outsource the design, construction, and operation of cooling plants while retaining in-house ownership. However, this approach often leads to delayed decision-making on capital expenditures and transfers occupancy risk entirely to the service provider, jeopardising operational efficiency and reliability.

The emergence of CaaS, a model enabling District Cooling infrastructure deployment, offers a more integrated solution. Under CaaS, the service provider designs, builds, finances, owns, and operates (DBFOO) cooling assets, eliminating the need for customer capital investment. The CaaS model aligns incentives by tying provider revenue to energy efficiency and reduction of consumption, ensuring optimised plant performance. Risks, such as tenant-imposed penalties for cooling delivery failures, are mitigated through back-to-back contracting. Moreover, with providers responsible for capital investment and long-term performance, they are incentivised to deploy and maintain advanced, efficient technologies, ensuring peak system performance throughout its lifecycle. By addressing financial, operational, and technological barriers, CaaS guarantees reliable, sustainable cooling, establishing itself as a transformative model for India’s cooling needs.

How can renewable energy integration improve HVAC sustainability?

District Cooling systems support circular energy systems by integrating technologies that decarbonise and boost resource efficiency. They reduce waste, optimise resource use, and facilitate the adoption of ancillary energy sources, addressing operational and upstream emissions across their lifecycle.  Technologies like Waste-to-Energy (W2E) plants, City Gas Distribution (CGD) networks, and geothermal systems enhance sustainability and resilience. Recovering waste heat—70 percent of the heat in W2E plants is wasted—anchors demand and improves viability for DC networks. CGD networks offer cleaner alternatives to diesel generators, reducing redundancies during outages and promoting low-carbon fuels, making District Cooling a key solution for sustainable urban energy systems.

A prime example of this circular energy integration is in Masdar City, UAE, where geothermal energy produces cooling in the nation’s first geothermal cooling plant. Such projects underscore the scalability of DC systems in driving decarbonisation while maintaining economic feasibility.

Within this broader circular framework, renewable energy integration plays a pivotal role. By eliminating operational emissions associated with fossil fuel-based power consumption, renewables ensure that DC systems align with global sustainability targets. Whether through solar, geothermal, or other renewable technologies, this alignment strengthens DC systems’ overall value proposition in addressing the growing cooling demand sustainably.

In addition to demand-side gains through integration with alternate sources of power and the reduction of energy consumption, DC systems ensure asset longevity through world-class operations and maintenance practices that alleviate the need for frequently replacing equipment, thus addressing the often-ignored upstream emissions resulting from equipment manufacture.

How do low-GWP refrigerants contribute to lowering greenhouse gas emissions?

Low-global Warming Potential (GWP) refrigerants are essential for reducing greenhouse gas emissions in HVAC systems. Traditional refrigerants, such as hydrofluorocarbons (HFCs), have a GWP of up to 2,000 times more potent than CO2. Despite the relatively small volume of refrigerants used, global refrigerant emissions equal approximately 2,000 million tons of CO2 annually—equivalent to the entire global aviation industry. This makes the transition to low-GWP refrigerants even more critical.

Low-GWP alternatives, including hydrofluoroolefins (HFOs) and natural refrigerants like ammonia and CO2, deliver the same cooling efficiency but significantly lower environmental footprint. These refrigerants are far less harmful to the atmosphere, helping to decarbonise the cooling industry. International agreements such as the Kigali Amendment to the Montreal Protocol have accelerated the phase-out of high-GWP refrigerants, driving manufacturers and consumers toward more sustainable alternatives. This transition is crucial for meeting global climate targets and reducing the carbon footprint of cooling systems, supporting the move towards a more sustainable and climate-resilient future.

While the transition to low-GWP refrigerants is slow for the traditional split/window AC systems, District Cooling systems, due to their sheer scale and size, can fast-track the use of refrigerants with lower GWP and Zero Ozone Depletion Potential (ODP), which would otherwise not be as commercially viable. District Cooling utilities, like Tabreed, are already transitioning to chillers that use hydrofluroolefins (HFOs), which have a GWP impact of less than <1. Moreover, refrigerant leak detection systems (RLDS) and refrigerant recovery units (RRUs) at Tabreed’s plants ensure zero leaks or effective recovery during maintenance or when leaks are detected. These evolving market trends represent a significant improvement over current market practices.

What are your suggestions for decarbonisation in the HVAC industry?

To combat rising temperatures and heat stress, India’s energy consumption for space cooling, currently among the lowest at 69 kWh compared to the global average of 272 kWh, is expected to increase dramatically.  In China, AC penetration rose from 5 percent in 1990 to 85 percent by 2005. With just 8 per cent penetration, India is expected to follow, requiring one new unit every 15 seconds to address rising heat. Sustainable cooling solutions to address this unprecedented challenge are essential.  Current efforts focus on increasing clean energy supply to meet growing demand. In 2020-21, electricity demand for space cooling was estimated at 160,000 GWh, indicating that India’s renewable energy generation capacity of 150,000 GWh is utilised for space cooling alone. It is evident that sufficient demand-side optimisation is lacking and requires immediate attention to address the growing demand. With its significant energy efficiency benefits, District Cooling emerges as a crucial solution and warrants urgent focus to accelerate its adoption.

The government can accelerate the adoption of DC through a long-term systems approach that considers cooling needs, power demand, costs, and resource management while factoring in health and environmental impacts. This analysis can guide policies to mandate DC adoption, unlocking the potential for large-scale sustainable cooling solutions in India’s high-growth zones. Business models like Cooling as a Service (CaaS) can de-risk adoption by transferring responsibilities to DC providers through clear Service Level Agreements (SLAs). Finally, increasing consumer awareness can empower individuals to demand more sustainable cooling solutions, further supporting the transition.