Daybreak - Your AC bill is unlikely to go down anytime soon. Here's why

Episode Date: February 26, 2024

2024 is going to be the hottest month on record. Weather watchers have described the rise in new heat records around the world as “insane”, “total madness” and “climatic history rewritten”India is also witnessing a surge in the demand for electricity in general. and the crisis is at its peak in the summers. As incomes rise and populations grow, especially in the world’s hotter regions, the use of air conditioners is becoming increasingly common. An estimated 10 million ACs were sold in India alone last year. Naturally, electricity bills have skyrocketed and it's only going to get worse. We’ve already been warned that the growing demand for ACs is one of the most “critical blind spots” in the energy debate. Meanwhile, a fascinating technology has emerged that can save 30 to 40% in energy consumption but it is struggling in the Indian market.Tune in to find out why.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. 2024 is going to be the hottest year on record. In fact, every month over the last one year or so has been the hottest month on record. And you knew that because you can feel it right.

In fact, the first half of February has shocked weather watches around the world. One of them, Maximiliano Herrera, who blogs on extreme temperatures around the world, wrote about it. And he used the words insane, total madness and climatic history rewritten to describe the surge of thousands of new heat records around the world. This insane heat is a combination of human-induced global warming, of course, and the El Nino effect, which you must have have heard about. Meanwhile, India is also witnessing a surge in the demand for electricity in general, and the crisis is at its peak in the summers. As incomes rise and populations grow, especially in the world's hotter regions like India, the use of air conditioners is becoming increasingly common. Air conditioners and electric fans account for nearly one-fifth of the total electricity used in buildings

around the world today. Naturally, electricity bills have also skyrocketed, and, and the world, and it's only going to get worse. We've already been warned that the growing demand for ACs is one of the most critical blind spots in the energy debate. According to the International Energy Agency, over the next 30 years, the use of ACs is going to solve. Actually, it is expected to become one of the top drivers of the global electricity demand.

An estimated 10 million ACs were sold in India alone last year. Now, you know how these appliances work, right? like fridges and ACs, they have energy ratings. One star, two star goes up to five stars. The more the number of stars, the more energy-efficient the appliances. Now, India has been pushing for higher energy efficiency. In 2022, we saw new energy rating rules kick in, and they were specially relevant for commercial ACs.

This means that there is now a higher bar for appliances to get a five-star rating. The Ken's editor, Seymour Singh, who writes a newsletter about clients, climate change and its impact on tech and business wrote about a fascinating technology that has emerged and that can save up to 30 to 40% in energy consumption. And I'm sure you'll agree with how things are at this point. Any technology like this is nothing short of revolutionary. But this technology is struggling in the Indian market. As it turns out, energy transition is not as simple as upgrading your smartphone.

Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dha Sharma, and I don't chase the new cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 26th of February. You know why energy transitions, especially in ACs, is a complicated affair. We need to understand how ACs work. I will explain it as simply as I can.

ACs use refrigeration to chill indoor air. This is based on a simple law of physics. When a liquid converts to a gas, it absorbs heat. Air conditioners use this by forcing special chemical compounds to evaporate and condense over and over again in a closed system of coils. To keep cooling efficiently, the AC has to convert the gas back to a liquid again. And to do that, a compressor puts the gas under high pressure. Modern ECs have come a long way since 1902 when an engineer named Willis Edge Carrier invented cooling. There have been many technological advances since then.

In compression technology, diagnostics and controls, electronic sensors, materials, and of course, energy efficiency. But the basic science remains the same. It is the same principle that carrier used. The compressor uses massive amounts of energy to heat up the refrigeration gas running through, copper pipes. Over the years, regulators have asked for more and more energy efficiency from AC manufacturers who have been complying. And every time the ratings get more strict, energy efficiency improves. But nobody has really managed to bring about a disruptive technology to the table. Until recently, when SunTrack came around. The Arizona-based company has

invented a renewable energy technology specifically for air conditioners. To find out more about it and how it is doing in the Indian market, stay tuned. SunTrack has come up with a hybrid thermal solar AC system. It uses the sun's heat to help the compressor use less energy. The hybrid thermal solar or HTS panel is basically a set of mirrored parabolic concentrators that track the sun and harness its energy. And an HTS panel, usually 8-4 feet in size, is integrated into an ACS. refrigeration. A point to note is that HDS can support ACs only during the day when the sun is out.

Plus, so far, it is meant mostly for commercial ACs. In India, one company which has exclusive rights to sell this technology is called Perfect Infra Engineers. And it seems to be having a hard time in the Indian market. The difficulty is not so much in convincing potential customers, but in getting AC market leaders on its side and having to be a. having HDS panels integrated into their products. The promoter of perfect infraengineers Krishna Mehta told Seema that the company makes 90% of the panel in-house in Thani. The only imported bits are a few sensors and the controller technology from SunTrack. He said that each panel can run an 8 to 10 tonne AC and can save up to 30 to 40% in electricity consumption.

There are many case reports from India that say the same thing. Now, it is not like no one is buying from perfect. It has found a sizable demand from companies like Honda India, Siemens and the Adani Group's headquarters, even Mahindra and Mahindra's Pune factory. And also the state legislative assemblies in Mumbai and Raipur. And yet, this is not enough, because India's AC market leaders like Dai Kinn are not convinced.

Why is that? I will tell you in the next segment. The thing is, the Bureau of Energy Efficiency cannot give this technology a rating. And that is because HTS sits inside a product. It is not a product in itself. Seema says that in an ideal world, Perfect would work with AC manufacturers

to install and integrate its panels into ACs when they get sold, or even retrofit them in older ACs. But in the real world, original equipment manufacturers or OEMs do not seem quite keen on supporting this technology. In fact, Seema even reviewed a few documents and she found that some OEMs tell AC buyers that they will not supply them spares under the annual maintenance contract if an HDS panel was installed and integrated into their products. But why would they put such a clause? Is the HTS going to harm the product if integrated? Is that why AC manufacturers are not coordinating? Seema asked Krishna of Perfect and he told her and I'm quoting,

we give assurance in writing that we would replace the AC at our cost if anything goes wrong and we have data to show that the technology works just fine for years. For now, the government appears to be taking a lead in championing this technology. They want green solutions and Perfect is ready to demonstrate the energy savings in real time. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps, and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the website.

I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien. Thank you.