Old AC Scrappage Scheme: Government to launch cash incentive to upgrade your ACs to 5-star models
If your air conditioner is over eight years old, you might soon get paid to upgrade it. The government is considering a financial incentive scheme to encourage households to replace old, inefficient ACs with energy-efficient 5-star models. The move aims to reduce power consumption, lower electricity bills, and promote sustainable cooling solutions.
How the Scheme Could Work
The proposed initiative, led by the power ministry, may offer incentives similar to the vehicle scrappage policy. Consumers could trade in their old ACs for a certificate redeemable against a new 5-star model, avail of exchange discounts from manufacturers, or receive rebates on electricity bills.
A government official told FE that the goal is to “smoothen the load curve” by phasing out inefficient ACs, which consume significantly more power. Discussions are ongoing with manufacturers, including Blue Star, Godrej, Havells, LG, and Voltas, to finalize the best approach.
Rising Cooling Demand & Energy Savings
With India’s AC market booming—from 8.4 million units in 2021-22 to 10.9 million in 2023-24—energy consumption for cooling has surged. Cooling now accounts for 25% of electricity use in buildings, which consume nearly 500 TWh annually. Older, low-star ACs contribute heavily to this demand.
Replacing an old AC with a 5-star model can save 1,276 kWh and ₹6,320 per year per unit. Scaling this up could lead to massive national savings—both in energy and costs. Additionally, the shift supports India’s Cooling Action Plan (ICAP), targeting a 25-40% reduction in cooling energy use by 2038.
Environmental & Economic Benefits
Beyond cutting electricity bills, the scheme will help reduce emissions. Cooling contributes 7% of global greenhouse gases, a figure expected to double by 2050. In India, space cooling’s share of emissions could jump from 8% in 2016 to 30% by 2050 without intervention.
For manufacturers, the policy ensures steady demand for energy-efficient ACs, boosting production in a competitive market. If implemented well, this initiative could be a win-win—for consumers, businesses, and the planet.
