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					</table>Global markets for air conditioners have expanded rapidly in recent years. Annual AC unit shipments are now 25% higher than they were five years ago, driven largely by growth in emerging and developing economies, according to the International Energy Agency (<a href="https://www.iea.org/" target="_blank" rel="noopener">IEA</a>).
In 2024, amid exceptional heatwaves, global AC shipments reached 200 million units. That year, shipments grew by about 10% in India, the Middle East, the U.S. and Europe, and by 40% or more in Latin America and Africa.
In 2025, demand softened in several markets as India experienced unseasonal rainfall and milder summer temperatures reduced cooling needs across parts of Southeast Asia and Latin America.
AC Efficiency Varies Across Markets
India has tightened AC efficiency requirements every two to four years since 2009. The average efficiency of units sold in the country now exceeds the highest Indian efficiency standard from a decade ago by about 30%. However, India’s minimum performance requirement remains only around half the efficiency level applicable to ACs sold in Japan.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-2.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-101843 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-2.png" alt="IEA Report-2" width="599" height="465" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-2.png 599w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-2-300x233.png 300w" sizes="auto, (max-width: 599px) 100vw, 599px" /></a>Global electricity demand for space cooling has increased by 50% since 2015, reaching approximately 2,900 TWh and exceeding the European Union’s total annual electricity consumption.
The average equipment efficiency globally has improved steadily, driven largely by the increasing cost competitiveness of high-efficiency models and tighter regulations now in place in over 100 countries. The average AC unit sold globally in 2024 was about 20% more efficient than the average unit a decade earlier.
The stringency of efficiency regulations varies: Japan and Singapore set very ambitious standards, while others require ACs to be only one-quarter as efficient. In Japan, the longstanding Top Runner Program remains world-leading, even though it has not been updated for over 15 years.
Meanwhile, many emerging and developing economies, such as Brazil, China, India, Indonesia and Saudi Arabia, have accelerated policy action quickly in recent years while starting from a lower efficiency baseline.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-101846 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1.png" alt="IEA Report7" width="1084" height="527" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1.png 1084w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1-300x146.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1-768x373.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1-650x316.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1-624x303.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report7-1-600x292.png 600w" sizes="auto, (max-width: 1084px) 100vw, 1084px" /></a>
In 2025, cooling accounted for about 1,400 GW of peak electricity demand across global markets, equivalent to the total installed power generation capacity of the United States. While cooling represents around 10% of annual electricity consumption, it accounts for approximately 30% of peak electricity demand because its use is concentrated during specific months and hours.
Under existing policy conditions, electricity consumption for cooling is projected to increase by 1,600 TWh by 2035, roughly equal to the combined annual electricity demand of Japan and Korea. Under a sensitivity scenario involving a strong El Niño event in 2026 and 2027, followed by similarly intense events every three years, cooling could add another 700 TWh to electricity demand by 2035.
Electricity demand is also on the rise due to the electrification of industry, rising electric vehicle uptake, rapid growth of data centers, and electrification of other end-uses. Fuelled by rapid growth across sectors, electricity demand reached a record high in 2025, putting extra pressure on the electricity infrastructure and electricity security around the world.
The IEA said global cooling requirements could rise further as El Niño is expected to return in 2026, potentially triggering heat waves that extend into 2027. These extreme conditions are expected to intensify heat waves worldwide and lead to a permanent increase in cooling demand.
More than 60% of the additional demand would come from faster adoption of air conditioners, while the remainder would result from heavier use of existing equipment.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-1-1.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-101849 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-1-1.png" alt="IEA Report-1" width="624" height="450" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-1-1.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-1-1-300x216.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-1-1-600x433.png 600w" sizes="auto, (max-width: 624px) 100vw, 624px" /></a>China remains the world’s largest air-conditioner manufacturing base and market, producing around 170 million units annually and exporting approximately 60 million units. Its maximum manufacturing capacity is estimated at 300 million units.
Globally, only around 40% of the population currently has access to air conditioning, although more than 80% experience cooling needs during at least part of the year. Nearly 90% of households in Japan and the U.S. own an AC, while ownership remains considerably lower in India and Southeast Asia despite high cooling requirements.
The IEA noted that average AC efficiency improved by around 20% between 2014 and 2024. However, the most efficient products available today can be four times as efficient as the least efficient models and more than twice as efficient as the average unit sold.
El Niño Could Increase Cooling Demand
Space cooling demand is set to rise to 1,600 TWh by 2035, and this could increase electricity demand across the globe, with El Niño returning after three years. In extreme heat conditions, electricity demand will accelerate further, leading to faster adoption of air conditioners.
This scenario raises immediate challenges for electricity systems. In most regions, cooling demand is concentrated in a limited number of months each year and during certain hours. This means that although cooling demand represents around 10% of annual electricity consumption, it accounts for 30% of peak electricity demand. This concentration of demand puts strain on power systems, particularly during heat waves, when cooling demand rises sharply, and disruptions to electricity supply can occur. As a result, heat waves can reduce the reserve margins of power systems.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-101850 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3.png" alt="IEA Report-3" width="1162" height="590" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3.png 1162w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3-300x152.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3-768x390.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3-650x330.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3-624x317.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/IEA-Report-3-600x305.png 600w" sizes="auto, (max-width: 1162px) 100vw, 1162px" /></a>
The IEA said building and urban design can reduce cooling requirements. Measures such as insulation, shading, ventilation, thermal mass, and fans can limit heat gains and reduce dependence on air conditioning. Using an AC at 26°C with a fan can provide the same comfort as using it alone at 24°C while reducing energy consumption by approximately 25%.
Urban heat islands can make city centers more than 10°C warmer than surrounding rural areas during heat waves. Adding green spaces and water bodies, planting street vegetation, and removing sealed pavement surfaces can each lower temperatures by up to 5°C. District cooling can also improve efficiency, shift heat away from densely populated areas, and provide thermal storage to help manage peak electricity demand.
Since March 2026, eight countries have introduced measures to manage cooling-related electricity consumption. Bangladesh, Cambodia, Malaysia, the Philippines, Singapore, and Sri Lanka have prescribed minimum air-conditioning temperatures of between 24°C and 26°C in offices. Jordan has restricted AC use in public offices, while Seychelles has asked public offices to switch off air conditioning once a week.
The IEA analysis called for stronger efficiency standards, short-term demand-management measures, improved building codes, passive cooling, district cooling, and heat-action planning to limit electricity system costs and strengthen resilience as demand for cooling continues to rise.
According to a recently published IEA report, energy-efficient, grid-interactive buildings can <a href="https://www.mercomindia.com/grid-interactive-buildings-key-to-managing-indias-energy-surge-iea" target="_blank" rel="noopener">help</a> 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.
Also, according to another IEA report, the combined global market value of clean energy technologies has <a href="https://www.mercomindia.com/global-market-value-of-clean-energy-technologies-reaches-1-2-trillion-in-2025-ieac" target="_blank" rel="noopener">grown</a> by 20% per year on average over the past decade, reaching nearly $1.2 trillion in 2025.

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