Energy-efficient, grid-interactive buildings (EGIB) can help manage peak power demand, improve system flexibility, and enable large-scale integration of renewable energy to address grid strain caused by rising building energy demand in India, according to an International Energy Agency (IEA) report.

Energy Demand from Buildings

India’s buildings sector, which accounts for over one-third of total energy consumption, is projected to see demand rise from 8 exajoules (EJ) in 2023 to nearly 11 EJ by 2050. Homes account for 90% of the energy demand from buildings.

Energy demand from buildings in the country experienced an annual growth rate of approximately 2% since 2010.

The total floor area of buildings grew at an annual average of 2.7% between 2010 and 2023. India is expected to add one billion square meters of newly built space every year over the next decade.

The expanding floor space, along with the increasing use of appliances, has driven up energy demand across residential and commercial spaces. Currently, electricity accounts for nearly 30% of building energy use.

Building electrification is projected to rise to over 5% annually through 2030. Cooling is a significant driver of energy demand. Roughly 20% of Indian households have air conditioners (ACs), compared with 90% in the U.S. and Japan. However, cooling demand in the country is expected to grow considerably.

In 2024, 14 million AC units were sold in India. The report estimates that another 130 million to 150 million AC units could be sold between 2025 and 2030.

These developments are expected to strain India’s energy infrastructure by increasing peak load, straining power generation and transmission capacity, and requiring costly grid upgrades and flexibility solutions to maintain stability.

Further, the country’s renewable energy capacity is expected to increase to over 550 GW by 2030, nearly triple the 2022 level.

Variable renewable energy (VRE), primarily solar and wind power, will drive this growth. Power generation from these sources is expected to account for almost 90% of India’s renewable energy capacity by 2030.

VRE accounted for 11% of total power generation in 2023. IEA projects this share to increase to over 20% by 2030. With VRE supply varying with the weather, India will need greater flexibility in the power system through initiatives such as leveraging dispatchable generation, enhancing the grid, and increasing storage and demand response capabilities.

Enablers for EBIG

IEA highlights the core enablers needed to transform buildings into EGIBs. It classifies these enablers into six categories: energy efficiency, decarbonization, smartness, materials, resilience, and building-to-grid interaction.

The report states that enhancing energy efficiency measures could eliminate approximately 25% of new energy demand by 2030 and over 50% by 2050. The key tools for improving energy efficiency in buildings would include energy conservation and sustainability codes; retrofit programs that promote upgrades to insulation, glazing, air-conditioning, and ventilation systems; and improved appliance standards.

Notably, the Bureau of Energy Efficiency has issued the Energy Conservation and Sustainable Building Code (ECSBC) 2024, which establishes standards to enhance energy efficiency in commercial and office buildings. A key feature of the code is its emphasis on enabling solar integration at the design stage, encouraging developers to account for renewable energy systems early in the project planning process.

Some states have begun introducing provisions to help integrate sustainable energy technology into buildings. According to the report, decarbonization initiatives would focus on integrating rooftop solar and on-site storage projects. While India has made significant progress in deploying renewable energy, the country has adopted limited distributed storage. This limited adoption constrains buildings’ ability to manage energy variability and provide grid flexibility.

To help accelerate decarbonization, the IEA recommends stronger incentives for building-level renewables and storage installations, better grid standards, and flexible business models that enable customers to monetize demand.

Initiatives under the smartness category will be driven by digital infrastructure. The report highlights the increasing rollout of smart meters and energy management systems under national programs are enabling real-time energy optimization and demand response. Under the materials category, the report notes that India is beginning to integrate embodied carbon into building design, driven by voluntary rating systems, fly ash utilization policies, and local initiatives. However, progress in this integration is limited by insufficient data, a lack of life-cycle assessment methods, and the absence of standards and benchmarks for low-carbon materials.

India has introduced multiple resilience measures through building codes, cooling policies, and state-level cool-roof initiatives. However, the report states that these efforts remain fragmented across policies, and the lack of a unified national framework limits the large-scale adoption of climate-resilient building practices.

According to IEA, India has experienced progress in smart meters, time-of-day tariffs, demand response pilots, distributed energy resource (DER) aggregation, and vehicle-to-grid systems. It expects that strengthening data governance, standards, and incentives will significantly help scale grid-interactive buildings.

EGIB Progress in India

The report states that India has made significant progress in enabling EGIBs. However, it observes some issues in the implementation of regulatory initiatives such as building energy codes, smart meter rollout, efficiency standards, and interoperability due to a lack of standard protocols, fragmented systems, weak DER integration despite strong aggregation, and the absence of mandatory regulatory frameworks. The report notes pilot projects such as the Tata Power Delhi Distribution and Honeywell automated demand response pilot, highlighting the potential of demand-side flexibility. This pilot connected 160 buildings and delivered peak load reductions of up to 11 MW and a demand reduction of approximately 10% during grid stress events. However, replication of such pilot projects has been slow.

Policy Push to Scale EGIB Adoption

To accelerate EGIB adoption, the report recommends instituting a national policy that integrates regulations, incentives, and information tools across the building lifecycle. It also calls for strengthening building energy codes, specifically expanding coverage and enforcement, and introducing retrofitting requirements.

Scaling rooftop solar and battery storage will be critical for accelerating EGIB adoption. These initiatives must be supported by financial incentives and grid interconnection standards.

The report also calls for achieving a nationwide smart meter rollout by 2028, along with a broader deployment of digital infrastructure to enable real-time energy management.

It states that unlocking demand flexibility will require time-of-use dynamic tariffs, stronger demand response programs, and enabling participation of building owners, households, commercial consumers, and aggregators in VPPs and aggregation markets.

The report highlights the importance of innovation, including support for DER aggregation, AI-based energy management, and vehicle-to-grid integration.