Improving efficiency of air conditioners (ACs) typically involves improving the efficiency of various components such as compressors, heat exchangers, expansion valves, refrigerant,and fans. We estimate the incremental cost of improving the efficiency of room ACs based on the cost of improving the efficiency of its key components. Further, we estimate the retail price increase required to cover the cost of efficiency improvement, compare it with electricity bill savings, and calculate the payback period for consumers to recover the additional price of a more efficient AC.

The finding that significant efficiency improvement is cost effective from a consumer perspective is robust over a wide range of assumptions. If we assume a 50% higher incremental price compared to our baseline estimate, the payback period for the efficiency level of 3.5 ISEER is 1.1 years. Given the findings of this study, establishing more stringent minimum efficiency performance criteria (one-star level) should be evaluated rigorously considering significant benefits to consumers, energy security, and environment

10aAir Conditioners10aappliance energy efficiency10aAppliance standards and labeling10aEnergy Analysis and Environmental Impacts Division10aindia10aInternational Energy Department10ainternational energy studies group1 aShah, Nihar1 aAbhyankar, Nikit1 aPark, Won, Young1 aPhadke, Amol, A.1 aDiddi, Saurabh1 aAhuja, Deepanshu1 aMukherjee, P.K.1 aWalia, Archana uhttps://ies.lbl.gov/publications/cost-benefit-improving-efficiency