The air conditioning boom in Southeast Asia

Electricity consumption needed for air conditioning in the ten ASEAN countries could quadruple between 2017 and 2040 to reach 300 TWh. But a saving of 110 TWh is possible by doubling during this period the Seasonal Energy Efficiency Ratio of installed air conditioners.

A new IEA report (1) highlights the consequences of the strong growth expected in air conditioning in Southeast Asia along with the possibilities of limiting its impact in terms of energy consumption and CO2 emissions. The report concerns the ten countries of the Association of Southeast Asian Nations (ASEAN): Cambodia, Brunei, Indonesia, Lao People’s Democratic Republic (Lao PDR), Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam.

Electricity use for cooling in buildings across the region increased 7.5 times over 30 years, from 10 terawatt hours (TWh) in 1990 to almost 75 TWh in 2017. Only China and India have seen a comparable increase in cooling-related electricity use during the same period.

At the same time, air conditioner (AC) ownership is still relatively low in the region. Only 15% of households in ASEAN countries have an AC, compared with more than 90% of households in some developed economies. There are also large differences in ownership rate across the region, with almost 80% of households in Singapore and Malaysia having an AC, compared to less than 10% in Cambodia, Indonesia, Philippines and Viet Nam. This suggests there is significant potential for AC market growth in several countries in the region, notably in countries like Indonesia and Thailand.

Driven by increasing temperatures and higher incomes, according to the IEA, the overall number of air-conditioner units could rise from 40 million units in 2017 to 300 million units in 2040, half of which will be in Indonesia. By 2040, 60% of households in ASEAN countries would have access to air conditioning, with almost two ACs on average per household. The corresponding electricity consumption is expected to increase from 75 TWh in 2017 to 300 TWh in 2040. The share of air conditioning in total electricity consumption in ASEAN countries would consequently more than double to almost 19%, up from 8% in 2017.

Without stronger measures to encourage the uptake of more efficient units, rising electricity demand from air conditioning alone is projected to require around 200 GW of additional generation capacity in 2040 and ACs could be responsible for as much as 30% share in the region’s peak electricity demand.

However, stronger policies that address efficiency in cooling equipment and buildings could be adopted in line with the IEA Sustainable Development Scenario that can lead to as much as 110 TWh savings by 2040. Today's average Seasonal Energy Efficiency Ratio values of around 4.0 would need to rise to around 6.0 by 2030 and 8.0 by 2040 in order to achieve such energy savings.

In addition to reducing CO2 emissions by almost 30 million tonnes – equivalent to the emissions of more than 6 million cars – these savings would reduce generation capacity needs for cooling to around 100 GW by 2040, nearly half of the additional capacity needs.

The IEA estimates that ASEAN governments have scope to significantly raise their minimum energy performance standards (MEPS) for ACs, without harming local industry or raising costs for consumers. The average efficiency of air conditioners sold today in ASEAN countries is well below the efficiency of the best-performing models. Indeed, the best available AC technologies are already more than twice as efficient as the market average, indicating a large untapped potential for efficient cooling in the region.

(1) International Energy Agency, The Future of Cooling in Southeast Asia: