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When Willis Carrier in 1902 gifted the world with the marvel of modern science called air conditioning, little did he know that decades later it would be so widely used as to have a serious detrimental impact on the environment.

True, ACs have become a necessity in our hi-tech world. They keep our labs, research facilities, hospitals, offices, malls, hospitals, airports and homes at an ambient temperature, but they also add to the Greenhouse Effect through energy consumption and emissions.

In fact, such are the environmental concerns that in the new millennium the focus has been towards developing energy-saving and green ACs. But how do you zero in on one which marries efficiency with low power consumption and yet is least taxing on the environs?

Ask Ashwin Hadalkar, a corporate executive based in Hyderabad, who recently went scouting around for an air conditioner for his new flat. There were a number of brands, several energy efficiency ratings and new generation inverter range ACs on offer. “I was flummoxed by the number of options before me. Should I opt for a fixed speed split AC, a window AC or the latest on the shelves — the premium inverter AC with variable compressors where the speed varies according to the heat load in the room?”

He points out that prices too varied drastically. If he were to follow his environment concerns and choose the one that was most brand savvy, efficient, used the least electricity and had been given the highest five-star rating from the government’s Bureau of Energy Efficiency (BEE), he had to be ready to shell out about ₹60,000. Lower stars and other variables, of course, took the price downwards by almost ₹30,000.

It is exactly because of consumer dilemma like the one Hadalkar was facing that BEE, a statutory body under the Ministry of Power, introduced star ratings on air conditioners in the first place. So that consumers could have a clear idea of what product they were buying, its environment friendly index and how it would impact their electricity bills.

Consumers also had to be educated on the relationship between price and quality. For instance, star-rated ACs may come with a higher price tag, but they pay the amount back to the customer within a year due to their energy saving capability. However, to shell out a whopping ₹10,000 extra for a 1.5 tonner Inverter AC could be tough. By default 1.5 tonne ACs are the largest selling category for homes, accounting for nearly 70 per cent of sales.

Tracing the evolution of the star rating system in the country and how it is set to change the landscape, Mukundan Menon, Executive Vice President, Products Sales Group, Bluestar India, says, “The star labelling initiated by the BEE kicked off with voluntary labelling in 2007 for fixed speed ACs, where compressors cut off or cut in when the temperature set is achieved or when the room temperature increases.”

This programme meticulously involved key stakeholders including consumer organisations, air-conditioning and component manufacturers in 2006. And January 2007 became a voluntary year for AC star ratings. This was made mandatory from January 2010 with star 1 to star 5 and the first Energy Efficiency Ratio (EER) table coming into force. In January 2012 and January 2014 it was upgraded.

“With the Star labelling programme, consumers in India got access to energy efficient ACs. The rating depends on the EER, with ratio of cooling capacity by input power,” Menon explains.

The consumer has been a major beneficiary as the standards fixed have helped get the right AC with correct cooling capacity and input power. Between 2007 and now, both voluntary and mandatory phase, the tables have been upgraded for fixed speed ACs, where the motor runs at one speed. The market size in 2015 is estimated to touch around 4.3 million sets, with the ratio of split versus window likely to be 83:17. The star rating share for fixed speed split ACs has been hovering around 25 per cent for 5/4 star, 55 per cent for 3 star and 20 per cent for 2/1 star. The 3 star constitutes the biggest chunk. The current 3 star product was a 5 star product from 2007 till 2011.

“But the prices have increased if the base price of 2007 or 2010 is taken into account. With each table upgrade, the average ticket price say for a 5 star or a 3 star AC has increased by 12-15 per cent. The manufacturers are under huge margins pressure now,” explains Menon.

The scenario is set for change yet again three months from now. If we fast forward to January 2016, we will see that by then BEE's voluntary labelling will come into play for Inverter split ACs. These ACs are considered to be more efficient than the fixed speed ACs. Apart from power savings, the key unique sales proposition of an inverter AC over a fixed speed AC is that the set temperature is precise, delivering better comfort.

Since inverter ACs have variable compressors, they have different standards as compared to fixed speed compressor ACs. For fixed speed split ACs, the 1 star rated ACs will not be approved for sale from January.

BEE proposes to merge the standards for fixed speed and inverter ACs from 2018. And the industry expects the split ACs market would gradually but certainly move towards the inverter AC splits. Currently, inverter splits account for about 10 per cent of the total split AC market.

Energy savings thanks to star labelling measures have been quantified by BEE. The electricity saved during 2007-14 is estimated at 42.257 billion units. This has helped avoid power generation capacity of 22,045.9 MW and 34.288 million units of carbon dioxide emissions.

Of course, there is the issue of a continuous hike in prices which consumers like Hadalkar face. With each energy table upgrade, the prices increase and this impacts the overall market growth. AC penetration in India is just about 3 per cent. There is a long way to go, Menon says.

Kanwaljeet Jawa, Managing Director of Daikin, points out: “The few thousands more a consumer pays to get an efficient star-rated AC gets paid back within a year.” Daikin and Bluestar are among few manufacturers offering star rated Inverter split ACs in the market.

The Centre has identified two major power guzzlers in the country, the manufacturing and process industry and the air-conditioning market and began to address these with separate initiatives.

According to estimates, running of one 1.5 tonne AC could require energy equivalent to running 25 ceiling fans. Therefore, bringing about savings in energy consumption plays a major role in the overall consumption in the country and also savings to the consumer in the long run.

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