Keeping cool in a hotter world is using more energy, making efficiency more important than ever

The world just experienced its hottest June on record, and unprecedented temperatures have not let up this July – endangering millions of lives and pushing electricity grids to their limits as people crank up their air conditioners, if they have them, to keep cool.

Heat alerts warning of dangerous conditions for human health are proliferating globally – from China, where temperatures recently rose above 50°C, to Tokyo and the Southwestern United States. In Europe, the Cerberus heatwave – named after the three-headed dog that guards the gates of Hell – has fuelled wildfires, driven a spike in heat-related deaths and caused mobile phones to suddenly give out.

This extreme heat also has major consequences for global energy systems. Record-shattering temperatures are feeding demand for air conditioning and driving surges in demand for electricity – which can result in a vicious cycle of increased greenhouse gas emissions that in turn make the world even hotter.

And with electricity prices still elevated in many regions as a result of the global energy crisis, people are also feeling the heat in their pockets, often paying more than double what is needed to keep cool due to inefficient air conditioners.

There are solutions to mitigate both higher energy usage and consumer costs, from stronger standards for air conditioning units to new incentive programmes from grid operators. As policy makers race to make the world’s energy systems more sustainable, they must consider the consequences of rising cooling demand – and seize the opportunity to invest more in energy efficiency at this critical time.  

Data shows extreme heat drives higher air conditioner demand, with sustained average daily temperatures of 30°C typically boosting weekly sales by around 16%. Amid the current global heat wave, people are looking online for air conditioners more than ever, with Google searches up 25% worldwide compared with averages for this time of year over the past decade.

Demand is rising fastest in emerging and developing economies where fewer households own air conditioners. In the United States and Japan, more than 90% of households have an air conditioner, while in Southeast Asia, only 15% do. That number drops to 5% in India and Africa. In fact, only one in 10 of the 2.8 billion people living in the hottest parts of the world have access to air conditioning or other cooling options in their homes.

While the need for cooling is growing, greater usage of air conditioners is straining power systems around the world. As highlighted in the International Energy Agency’s (IEA) new Electricity Market Report, the summer of 2023 will be another stress test. Cooling represents around 10% of global electricity demand. In hotter countries, it can drive a rise in electricity demand of more than 50% in summer. In the hottest regions, the capacity of the grid needs to cover a doubling of electricity demand compared with milder months and cooling can account for over 70% of electricity peak demand.

The more temperatures rise, the more people turn to their air conditioning. In Texas, for example, every 1°C increase in the average daily temperature above 24°C drives a rise of about 4% in electricity demand. In India, where air conditioner ownership is lower, the same temperature increase drives a 2% rise. Power grids in both India and the Southeastern United States have hit record levels of peak demand in the last two months, along with those in 10 other countries, including Brazil, China, Colombia, Japan, Malaysia and Thailand.

Swings in demand as a result of changing cooling needs also carry the threat of shortages, restrictions, blackouts and brownouts. This can often mean grid operators need to bring older, inefficient and more polluting power plants online to cope with the spikes in demand. For example, one power plant in China burned around 800 tonnes of coal in just one hour in June to help keep Shanghai residents cool.

Given the growing pressure on power grids during hotter periods of the year, operators need to adopt new methods to ease the strains. This can include allowing appliances and cooling equipment to adjust their energy consumption based on real-time electricity demand, helping to balance the grid during periods of peak demand while providing consumers with energy cost savings.

This “demand response” can take the form of a voluntary reduction in electricity use by consumers in an emergency – or consumers can be paid to provide this service to the grid.

For example, in Texas, when electricity demand hit an all-time high in June, the grid operator  increasingly used its demand response and energy flexibility programmes. These provide financial incentives to energy consumers to reduce demand during times of electricity grid stress or shift consumption to times of day when grid pressures and power prices are lower. Demand response payments are 20 times higher this year, rewarding those who participate in the programme.

Korea launched a new pilot programme in December 2022 in which intelligent appliances automatically respond to demand reduction requests based on grid conditions instead of relying on consumers’ manual adjustments to controls, resulting in a 24% improvement in electricity savings.

Consumers’ choices also have a role to play. According to the latest market data, the typical air conditioner sold is less than half as efficient as the highest-performing product on the market. This is the case in every region of the world. And opting for a more efficient model does not always carry a higher price tag.

For instance, consumers in Thailand with a budget of USD 350 can purchase a low-efficiency unit or one that is 50% more efficient for the same amount. Purchasing the more efficient unit could almost halve their electricity bill, resulting in savings of up to USD 2000 over the unit’s lifetime. This pattern is not exclusive to Thailand and is evident in market data for most countries around the world.  

The good news is there are quick and relatively straightforward fixes. One example is implementing mandatory minimum energy performance standards (MEPS) and labels showing the energy efficiency of appliances and equipment – a policy that has proved to be incredibly effective. In countries and regions with the longest-running programmes, such as the United States and the European Union, MEPS and labels have helped more than halve the energy consumption of air conditioners.

Such policies could quickly double the average efficiency of air conditioners sold, lowering energy bills and helping reduce emissions towards the levels needed to reach net zero emissions goals. Coupled with better insulated buildings and neighbourhoods and cities built with energy needs in mind, higher efficiency translates not only into lower running costs for air conditioning, but also results in less need for investment in new capacity for electricity systems.

Last month, at the IEA’s 8^th Global Conference on Energy Efficiency, 45 governments from around the world endorsed the goal of doubling the average global rate of energy efficiency improvements by the end of the decade. Seeing momentum build ahead of the COP28 Climate Change Conference in Dubai – a city reliant on air conditioning throughout the summer and a leader in efficient district cooling – is encouraging. Yet as global temperatures continue to hit new highs, and air conditioning use expands, it is clear policy makers need to go further – adopting specific interventions to reduce emissions, ease strain on power systems and lower consumer costs for the difficult summers to come.