The Future of Cooling in Southeast Asia

Increasing energy efficiency through stronger policy action

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.


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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.

	Indonesia commercial	Rest of ASEAN* commercial	Indonesia residential	Rest of ASEAN residential
2010	0.662757879	1.55511904	3.292340683	15.95599722
2011	0.729809064	1.692789056	3.594113568	16.91348973
2012	0.795204681	1.905672271	4.190081042	18.6261731
2013	0.898046568	2.193734412	4.85136634	19.86552745
2014	0.975896108	2.407680902	5.449197816	21.05633314
2015	1.062410281	2.603941154	6.091743256	22.37318405
2016	1.151668872	2.799440229	6.842995922	23.77564493
2017	1.219240122	2.936763666	7.803357968	25.34277891
2018	1.163877721	2.879819745	9.181764921	27.16225257
2019	1.15170287	2.992050239	10.80593088	29.37630808
2020	1.078723381	3.244735574	12.31426544	31.42907631
2021	1.130577813	3.40169429	14.51431271	34.11668275
2022	1.216209016	3.739352589	17.01995246	37.10567313
2023	1.336666157	4.108892181	19.88019066	40.44297063
2024	1.472528547	4.53365855	23.13305439	44.14173617
2025	1.61853753	4.894757567	26.82377322	48.21655092
2026	1.741596199	5.216767949	30.93233136	52.67543227
2027	1.922452966	5.732460661	35.52329152	57.54654471
2028	2.17853331	6.145940361	40.61179601	62.83889726
2029	2.428503469	6.614678047	46.18735873	68.56275317
2030	2.764733608	7.321386243	52.23226415	74.72161867
2031	3.077656461	7.759649063	58.71213554	81.28323859
2032	3.479088932	8.510414639	65.61923743	88.26327558
2033	3.890731646	9.124840194	72.90687697	95.63425703
2034	4.349611892	9.688329381	80.52112169	103.3654705
2035	4.819872623	10.25696159	88.3984619	111.4192258
2036	5.299694393	10.81601295	96.43235034	119.7430304
2037	5.866523839	11.41886534	104.5992761	128.319284
2038	6.63066844	12.08062451	112.8342701	137.0890534
2039	7.431026323	12.80300658	121.0752342	146.018307
2040	8.320150474	13.57275266	129.2634379	155.0440135
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* Note : ASEAN is the Association of South East Asian Nations

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.

	Invisible	Sustainable Development Scenario	Buildings efficiency 	Equipment efficiency 	Stated Policies Scenario
2015	65	65	0	0	65
2016	72	72	0	0	72
2017	74	74	0	0	74
2018	79	79	0	0	79
2019	89	89	0	0	89
2020	94	94	1	1	96
2021	99	99	1	2	103
2022	105	105	2	4	111
2023	110	110	3	6	119
2024	116	116	3	8	128
2025	122	122	4	11	137
2026	128	128	5	14	147
2027	134	134	6	17	157
2028	140	140	7	21	168
2029	147	147	8	25	180
2030	153	153	10	29	192
2031	159	159	11	33	204
2032	166	166	13	38	217
2033	173	173	15	43	231
2034	179	179	17	48	244
2035	185	185	19	53	257
2036	192	192	21	59	272
2037	199	199	24	64	287
2038	206	206	26	70	302
2039	213	213	29	76	318
2040	221	221	31	81	333
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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.


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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.

 

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.


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