The Future of cooling in Southeast Asia

Increasing energy efficiency through stronger policy action

About this report

Space cooling is the fastest-growing use of energy in buildings globally and in Southeast Asia. Electricity use for cooling in buildings across the region has increased dramatically over past decades. Yet today, only 15% of households in Southeast Asia have an air conditioner, indicating significant potential for further growth in major markets. As incomes rise, access to electricity improves, and prosperity becomes more widespread, air conditioning will become increasingly affordable for more people across Southeast Asia.

The Future of Cooling in Southeast Asia explores the expected rise in demand in energy consumption, peak electricity demand and CO2 emissions by 2040, and sets out an alternative scenario in which policy drives industry transformation to produce more efficient air conditioners.

Dramatic rise in AC sales

Driven by increasing temperatures and higher incomes, the Southeast Asian region is set to see a skyrocketing of AC sales. The overall number of air-conditioner units in 2040 could rise from 40 million units in 2017 to 300 million units in 2040, half of which will be in Indonesia.

Stock of air conditioning units in Southeast Asia in the Stated Policies Scenario, 2010-2040


And rising electricity demand

Without stronger measures to encourage the uptake of more efficient units, rising electricity demand from cooling alone is projected to require around 200 GW of additional generation capacity in 2040 and cooling could be responsible for as much as 30% share in the region’s peak electricity demand. Stronger policies that address efficiency in cooling equipment and buildings could be adopted in line with the Sustainable Development Scenario that can lead to as much as 110 TWh savings by 2040.

Reduction in cooling energy demand in the SDS compared to the STEPS, 2015-2040


This is nearly equivalent to the current electricity production of Malaysia, Philippines and Viet Nam combined. These measures would also help reduce the share of cooling in the peak electricity demand from 30% in the Stated Policies Scenario to below 20% in the Sustainable Development Scenario, foregoing additional generation capacity by as much as 100GW.

Impacts of higher efficiency

Energy savings in the Sustainable Development Scenario could amount to reducing CO₂ emissions by almost 30 million tonnes – equivalent to the emissions of more than 6 million cars – as well as avoidance of other emissions that impact public health. As much as 75% reduction in NOx emissions, an 80% reduction in SO₂ emissions, and up to 95% reduction in PM2.5 emissions can be achieved by 2040, compared to the Stated Policies Scenario. This is especially relevant for Southeast Asian countries where air pollution causes long-term economic costs and hundreds of thousands of premature deaths.

Decomposition of factors for reduction of PM2.5 emissions between the STEPS and SDS


Global average efficiency needs to double

The efficiency of cooling equipment is measured through Seasonal Energy Efficiency Ratio (SEER) values, a unit that also takes into account changes in operating conditions throughout the cooling season. Today's global average SEER values of around 4.0 would need to rise to around 6.0 by 2030 and 8.0 by 2040 in order to achieve energy savings in the Sustainable Development Scenario.

The best available technology in ASEAN countries is twice as efficient as the market average, indicating a large untapped potential to promote more efficient cooling in the region. More efficient ACs are not only readily available, but also not always more expensive than the average.

All the markets analysed have locally manufactured models with an efficiency of at least 3.7 W/W, and up to 5.6 W/W in Thailand and Vietnam. This suggests that within one manufacturing production cycle, local manufacturers could have the technical capability to increase the efficiency of their products significantly. Through the ASEAN SHINE Initiative, the ASEAN countries have already committed to a regional MEPS level of 3.08 W/W measured in Cooling seasonal Performance Factor (the ratio of the total amount of heat removed to the total amount of energy consumed evaluated over a cooling season). The evidence in this analysis should reassure governments that they can significantly raise their MEPS beyond the ASEAN SHINE Initiative and aligned towards the efficiency levels in the SDS without harming their local industry and without raising the cost to consumers.

Efficiency of available air conditioners in selected ASEAN countries, 2018

Efficiency Of Available Air Conditioners In Selected Asean Countries 2018

Source: IEA analysis based on information from CLASP, the Kigali Cooling Efficiency Program and the National registration databases of Indonesia and Singapore.

Policy recommendations to transform the AC market...

The IEA has put together a series of policy recommendations to transform the Southeast Asian room air conditioner market. At the heart of this strategy is a roadmap for AC minimum energy performance standards (MEPS) to which all countries across the region can commit. Policies such as MEPS can push the market towards adopting higher efficiencies by eliminating ACs with lower energy efficiency. This can be complemented by policies that pull the market by government procurement of high energy efficiency ACs to secure the demand for manufacturers, and by providing rebates or tax incentives. The process of transformation can be facilitated by measures such as product registration systems, labelling, awareness campaigns, and early replacement incentives.

A regionally coordinated MEPS ladder can guide policymakers and increase market size and predictability for manufacturers, thereby lowering costs.

The IEA proposes a progression of minimum performance standards based on pre-defined levels in terms of Cooling Seasonal Performance Factor, or CSPF (the ratio of the total amount of heat removed to the total annual amount of energy consumed). In the MEPS ladder, each country could decide its own starting level and target and commit to revising its MEPS every 2-3 years. This builds up on the initiative of the Southeast Asian countries on the ASEAN SHINE Initiative. Countries with MEPS starting at a higher level could adopt a more ambitious timeline. Other countries could choose to progress at a slower rate but would require larger changes every revision.

... alongside other actions

Efficient space cooling doesn’t depend on ACs alone, efficient building design would be crucial to preserve the gains of efficient AC units. Building envelope improvements, enforced through codes, standards, and mandatory retrofits would help in ensuring that buildings become efficient as well. Creation of national cooling plans would also help in streamlining the efforts toward space cooling and cooling in other sectors, thereby ensuring a strong framework for implementation.