Global temperatures have reached new heights in recent years. 2023 was the warmest year on record, and 2024 is on track to beat it. The frequency and intensity of heatwaves are increasing, causing extreme temperatures of up to 50ºC in some regions, with multiple national temperature records broken during 2024. Ensuring that cooling needs are met is of primary importance. The extreme temperatures are driving strong demand for much-needed cooling technologies such as air conditioners. However, these are also pushing up electricity use to record levels and straining power grids around the world. In 2024, more than 40 countries representing nearly 70% of global electricity demand, including Brazil, China, India, Mexico and the United States, reached new power peak demand records during heatwaves, while many others suffered major power outages and rolling blackouts. Electricity grids in countries with high AC ownership and hot climates are particularly impacted. Nearly 80% of countries in Latin America and Asia Pacific either reached new peak demand records during a heatwave or suffered heat-related grid disruptions. In Europe, a heatwave hit the Balkan region in June, leading to major power cuts, and in July temperatures reached 43°C, resulting in record electricity demand in Serbia and Croatia. In sub-Saharan Africa, where AC ownership is low, prolonged droughts combined with severe heat events caused power system outages and rolling blackouts throughout 2024.

World electricity consumption is forecast to grow by 4% in 2024, with increased cooling demand in EMDEs a major driver. India’s electricity consumption is expected to grow by over 8% this year, amid fast economic growth and rapid electrification paired with record cooling demand. While many factors contribute to electricity consumption growth, peak demand is mainly driven by AC ownership and maximum daily temperatures, increasing the need for new infrastructure.

New IEA analysis for several regions shows that during cooling seasons, the peak demand-temperature curves have shifted upwards and become steeper, indicating peak electricity demand has risen at every temperature level, but more so when there are high temperatures. In India each 1°C increase leads to additional peak demand of over 7 GW, up from around 4 GW in 2019. This reflects the rapid growing stock of air conditioners seen in the last five years and shows the increased impact of heatwaves on the grid. In this same period, annual peak demand rose by nearly 40%. In Brazil and Türkiye, countries with lower power demand overall, a 1°C increase leads to an extra 3.6 GW and 2 GW, respectively, posing similar levels of strain on their grids.

In the Middle East and parts of the United States, space cooling can represent more than 70% of peak residential electrical demand on extremely hot days. On the warmest days in Texas, where almost every household owns at least one AC, cooling demand can take a 50% share of total peak demand. On a global average basis and in EMDEs such as India and Brazil, the share of cooling in total peak demand is between 10% and 20%.  

The increasing intensity and extended duration of heatwaves in already hot and humid climates have shifted cooling appliances from being luxury items to becoming necessities. As a result, sales of air conditioners have risen this year in many countries. In Japan, domestic AC sales increased for four consecutive months, with an annual growth of 11%, after suffering its hottest summer on record. In India, production volumes of ACs have also been growing in recent years. The Indian Bureau of Energy Efficiency uses production volumes as an estimate for sales, given that imports are limited. Estimated sales volumes increased by more than 25% year-on-year between 2021 and 2023, with nearly 11 million units sold last year. The AC market experienced unprecedented growth in 2024, as the country faced intense heatwaves, with temperatures exceeding 50°C. Many manufacturers in India reported record-breaking sales in the first half of the year, estimated to have reached 14 million, with demand outpacing inventory plans. Peak electricity demand rose to over 250 GW, nearly 15% higher
than in the same month last year. The government had to take emergency measures to manage the crisis, including deferring power plant maintenance work and reopening idled coal units.

Air conditioners vary in their levels of efficiency. Sales in India are still largely dominated by models in the lower efficiency classes (1-3 Stars on a five-point scale on the efficiency of air conditioners in India), while efficient models (4‑5 Stars) account for the minority of sales. For new products, in 2023, 3-Star models accounted for 61% of units produced, well ahead of 5-Star models, which accounted for 23%. Some households also rent second-hand inefficient models to cope with extreme heat. 

Despite the fast growth in the last few years, AC ownership in EMDEs is still well below that of advanced economies. Only around 5% of households in sub-Saharan Africa are equipped with an air conditioner, fewer than 20% in India and around 30% in Brazil, but the share of ACs in homes is set to increase sharply as income levels rise. The implementation of an integrated policy package to promote energy efficient air conditioners is essential for providing much-needed cooling demand while mitigating the impact on electricity grids. The following policy actions can be part of a comprehensive approach:

• Implement and update labelling schemes: IEA analysis shows that high efficiency air conditioners are not necessarily more expensive than average models, while they can cut electricity consumption in half. Comparative labels can help users identify best-in-class models when making a purchasing decision.
• Implement minimum energy performance standards: These standards can exclude inefficient models from the market and lower energy expenditure for consumers. MEPS should be in line with international best practices and harmonised across the region.
• Promote access to highly efficient models: Offering rebates and other financial mechanisms to purchase highly efficient models at lower prices can enable more consumers to buy them.
• Provide financial and technical support to local manufacturers: Manufacturing processes might need adaptations to produce more efficient air conditioners. Offering financial incentives and technical support can encourage manufacturers to make the necessary changes.
• Promote demand-response-ready models: Promoting and enabling the utilisation of demand-response ready air conditioners can ease the strain on grids during high temperature events. Load shifting by pre-cooling during low demand or high solar PV generation hours reduces peak demands and works best in well-insulated buildings.
• Encourage behavioural change: Promoting actions such as keeping windows closed during heatwaves and shading them with shutters or blinds during the day, combined with passive cooling measures, can help reduce the need for air conditioners. Setting the cooling temperature set-point of the air conditioner higher lowers both energy demand and bills.

Buildings and urban infrastructure should also be addressed. Air temperatures and the urban heat island effect can be lowered by promoting the expansion of vegetation, green areas, water sources, and green roofs and facades. Using high-albedo surfaces on external walls, streets and sidewalks also reduces the increase in temperatures. Mandatory building energy codes that address cooling needs can limit the increase in energy demand associated with new buildings, while retrofits are an effective way to reduce the cooling demand of existing buildings.