In a world subject to climatic constraints, energy efficiency can be an effective compass to identify solutions likely to generate savings in carbon, energy and resources. The International Energy Agency (IEA) projects that 40% of the emission reductions needed to meet global climate goals would come from energy efficiency (Fischer 2021). In developing countries like India, energy efficiency is much more than a climate imperative and can open up various development opportunities. India has achieved near universal access to electricity in recent years, but gaps in power supply reliability and quality remain (Agrawal, Mani, Jain, et al. 2020).
One way to address these shortcomings is to improve the financial disincentive for electricity distribution companies (discoms) to provide reliable electricity in areas with low revenue collection. This can be achieved by improving the energy efficiency of underserved and low-income households (Phadke et al. 2019). There is a wide scope for developing the super efficient (SE) appliances, especially lights, fans and television sets (TVs), which make up the bulk of the appliance inventory in India, but challenges like that high upfront cost, limited availability in local markets, and low awareness of benefits prevent consumers from actively adopting effective variants (Chillayil and Kottayil 2021). This study focuses on scaling up super-efficient variants of one of the most commonly used household appliances: ceiling fans.
The Business Case for Ultra-Efficient Ceiling Fans Conventional fans use induction motors and consume about 75W at maximum speed. SE fans, using brushless direct current (BLDC) motors and an improved fan blade design, use 28-35W at maximum speed. Manufacturers of these ventilators in India include newer players such as Atomberg, Halonix Technologies, Oceco, and Ram Ratna Electricals, as well as historical players in the ventilator industry such as Havells, Orient Electric, Crompton, and Usha. Of the 90% of Indian households using ceiling fans, only 3% use energy efficient variants (Agrawal, Mani, Aggarwal, et al. 2020). According to CEEW’s India Residential Energy Survey (IRES), adoption of energy-efficient fans, while low, is concentrated in major urban centers like Delhi and Mumbai, and among high-income households. In India, 40 million ceiling fans are sold every year, of which less than 3% currently include SE models. This puts the potential annual SE fan market at Rs12,000 crore. There is a wide scope for upgrading SE devices, especially lights, fans, and TVs. The total addressable market for SE fans in the Indian residential sector was approximately 476 million ( ₹1,42,800 crore or $20 billion) as of 2020. This includes 410 million ceiling fans already in use in households and an unmet demand of 66 million.
Monetary savings from energy savings are shared between consumers, the discom, and the state government, depending on each state’s current rate structure. For example, in Uttar Pradesh (UP), rural domestic consumers and those below a “vital” consumption threshold receive a tariff subsidy from the state government, in addition to an implicit cross-subsidy . According to our estimates, replacing a conventional ceiling fan with an SE fan in all homes of domestic consumers could save Rs 573 crore ($215 million) in subsidies for the state government and ₹270 crore ($37 million) cross-subsidy for state discoms.
By switching from a conventional fan to an SE fan, an average residential consumer would save ₹500 ($7) per year. These savings are enough to recoup the current average selling cost of an SE fan ( ₹3000 or $41) in six years, which is less than the technical lifespan of a ventilator (10-15 years) but not attractive enough. The payback period is even longer for low-income consumers paying a subsidized electricity rate. SE fans currently have a small share of the fan market, implying untapped economies of scale. Achieving these savings would reduce ventilator prices, thereby improving the payback period. We observe that a halving of retail prices for SE fans would make the payback period attractive (three years or less) for paying consumers ₹6 per kWh and more. Consumers paying lower tariffs would need additional financial support to reduce the payback period to less than three years (e.g. consumers paying ₹4 per kWh would be
The study is available by clicking here.
(Dhruvak Aggarwal, Council Research Analyst and Shalu Agrawal, Senior Program Officer, on residential energy access, demand side management and power sector reforms.)