By Mandar Joshi, Research Consultant; and Dr Debajit Palit, Head, Centre for Climate Change & Energy Transition, Chintan Research Foundation
India’s cooling challenge is no longer a matter of comfort; it has become a defining energy and public health challenge. Rising temperatures, rapid urbanisation and expanding access to air conditioning are driving an unprecedented surge in cooling demand. According to the International Energy Agency (IEA), cooling at some instances accounted for almost one-third of India’s total electricity consumption in mid-May 2026. On an annual basis, it accounts for slightly more than 10 per cent of India’s total electricity demand, illustrating how heatwaves are increasingly shaping the country’s power demand profile. At the same time, peak electricity demand reached a record of around 271 GW in May 2026, with cooling loads emerging as a significant contributor during extreme summer conditions. Thermal comfort appliances dominate domestic electricity use. Fans, air conditioners and coolers collectively account for about 40 per cent of household electricity consumption, rising to 61 per cent in rural homes. The India Cooling Action Plan forecasts an almost eightfold increase in aggregate cooling demand by 2037-38 compared to the 2017-18 baseline, placing enormous pressure on electricity infrastructure, increasing fossil fuel consumption during peak hours, and making it more difficult to achieve climate commitments.
India’s existing cooling paradigm is built around millions of individual room air conditioners, a model that is becoming increasingly unsustainable as cooling demand accelerates. While air conditioners provide thermal comfort, they consume large amounts of electricity precisely when the power system is under the greatest stress. During summer afternoons and evenings, simultaneous operation of millions of units creates sharp spikes in peak demand, forcing utilities to rely on expensive and often carbon-intensive generation to maintain grid stability.
The challenge extends beyond electricity demand. Decentralised air conditioning creates three interconnected environmental challenges. First, every air conditioner transfers heat from indoors to the surrounding environment, intensifying the Urban Heat Island effect and raising outdoor temperatures in already heat-stressed cities. Second, millions of standalone systems create millions of potential points for refrigerant leakage. Many refrigerants used today have a high Global Warming Potential, making leakage a significant source of greenhouse gas (GHG) emissions. Third, individual cooling systems operate independently, limiting opportunities to optimise energy use and recover waste heat. As India’s cities continue to expand, cooling can no longer be treated as an individual household appliance issue unless extremely necessary; it should be viewed as critical urban infrastructure. The country, therefore, needs sustainable cooling solutions that can simultaneously improve energy efficiency, lower emissions and support climate-resilient urban development.
The solution: District cooling systems
District cooling systems (DCSs) offer India an opportunity to fundamentally rethink how cooling is produced and delivered. Instead of every building operating its own air conditioning plant, district cooling produces chilled water at a central, highly efficient facility and distributes it through an insulated piping network to multiple buildings for space cooling. This approach benefits from economies of scale, advanced technologies and optimised system operation, making it significantly more efficient than conventional decentralised air conditioning.
For a country where cooling demand is growing rapidly, district cooling addresses multiple challenges simultaneously. According to reports by the Bureau of Energy Efficiency and GIZ, by centralising the production of cooling and distributing it through a network of insulated pipes, DCSs have the potential to reduce electricity consumption for cooling by up to 50 per cent. As per a report by Energy Efficiency Services Limited and the United Nations Environment Programme, under an optimistic scenario, the DCS installed capacity in 21 Tier I and II Indian cities could reach approximately 13 million TR (tonnes of refrigeration), through more than 300 district cooling plants by 2037-38, resulting in estimated savings of 7,850 GWh of annual energy consumption, 78,850 million litres of potable water and $10.5 billion in infrastructure investment. This saving in consumption is equivalent to the electricity consumed by the commercial segment in Delhi during FY 2023-24. As DCSs are located at a few central plants rather than being distributed across millions of individual units, refrigerant management is much easier and reduces the risk of GHG emissions.
One of the biggest challenges with renewable energy is that electricity generation does not always coincide with demand. Solar power, for instance, is abundant during the day, whereas cooling demand often remains high well into the eventing. According to the IEA, average and extreme temperatures are increasing across the country, but night-time temperatures are rising twice as fast as daytime temperatures. DCSs help bridge this mismatch by decoupling the production of cooling from its consumption.
Unlike conventional air conditioners, district cooling plants can incorporate thermal energy storage (TES), where chilled water or ice is produced when renewable electricity is abundant, or electricity prices are low, and stored for later use. During evening peak hours, the stored cooling is supplied to buildings without requiring additional electricity. This not only reduces peak electricity demand but also enables greater utilisation of solar and wind power, which might otherwise be curtailed, by thermal storage.
District cooling plants are flexible in the energy sources they use. They can be powered by grid electricity (including renewable electricity), can use waste heat from industrial facilities or power plants through absorption chillers, and, in some designs, can use treated wastewater or recycled water to reduce freshwater consumption. This kind of centralised resource integration is much harder to achieve with millions of standalone air conditioners.
For India, this flexibility is especially valuable. Considering ambitious renewable capacity addition targets and rapidly increasing penetration, district cooling can act as a flexible demand-side resource. In doing so, it can contribute to better renewable integration, lower curtailment risk and improved grid balancing.
District cooling, however, is not a one-size-fits-all solution. Unlike individual air conditioners, which allow occupants to control cooling according to their preferences, district cooling requires coordinated operation across multiple users. Delivering both efficiency and occupant comfort will therefore depend on smart building management systems and advanced thermostatic controls that enable demand-responsive cooling without compromising user flexibility.
District cooling can support India’s upcoming data centre and global capability centre loads by providing centralised, scalable cooling for dense new campuses and business districts, rather than forcing each building to install separate chillers. The Tabreed India and GIZ report on district cooling in Maharashtra notes that large-sized data centres can use DCSs for primary cooling, with redundant or backup systems handling resilience requirements. That makes DCSs most suitable as part of a hybrid design rather than as the only cooling layer for mission-critical loads.
However, district cooling is still at a nascent stage in India, despite its significant technical and economic potential. While countries in the Middle East, Southeast Asia and Europe have deployed DCSs extensively, India has only a handful of operational or planned projects. Notable examples include the district cooling network at Gujarat International Finance Tec-City, which is designed to serve millions of square feet of commercial development through a centralised chilled water network. Similar projects are being explored in cities such as Amaravati and within select smart city developments, but deployment remains limited. Moving ahead, scaling should begin where district cooling can achieve high-capacity utilisation throughout the day-night cycle. Mixed-use developments, hospital campuses with residential facilities for staff and students, airports, and integrated townships offer ideal starting points because they combine daytime and night-time cooling demand.
The policy landscape, however, is becoming increasingly supportive. The 2019 India Cooling Action Plan includes district cooling in the mix of solutions proposed for adoption through medium-term interventions to be adopted in the country. India’s Energy Conservation and Sustainable Building Code, 2024 and related policy documents increasingly recognise district cooling as a pathway to improve building energy performance, and some state-level policy and planning documents are beginning to incorporate it into the regulatory discussion.
As India urbanises and temperatures continue to rise, district cooling offers an opportunity to move beyond fragmented units towards a more efficient and resilient cooling ecosystem. Realising this potential will require innovative financing and access to low-cost capital, recognising district cooling’s long-term energy efficiency benefits and its contribution to advancing India’s nationally determined contributions. More importantly, cooling must be recognised as critical urban infrastructure, not merely a building service.
Equally important is the creation of a national multi-stakeholder platform bringing together governments, urban local bodies, utilities, developers, technology providers, financial institutions, think tanks and academia. Such a platform can undertake coordinated policy advocacy and implementation to accelerate district cooling across India. By scaling district cooling, India can manage peak electricity demand, use renewable energy efficiently, and build climate-resilient cities while ensuring affordable and sustainable cooling for all.
(The views expressed in this article are the personal views of the authors.)