Today in Energy

October 10, 2017

Buildings energy consumption in India is expected to increase faster than in other regions

graph of average annual change in buildings energy consumption, as explained in the article text
Source: U.S. Energy Information Administration, International Energy Outlook 2017 Reference case

EIA’s International Energy Outlook 2017 (IEO2017) projects that among all regions of the world, the fastest growth in buildings energy consumption through 2040 will occur in India. In the IEO2017 Reference case, delivered energy consumption for residential and commercial buildings in India is expected to increase by an average of 2.7% per year between 2015 and 2040, more than twice the global average increase.

Most of this growth is the result of increased electricity and natural gas use (because of greater access to these energy sources) and the increased use of appliances and energy-using equipment. Despite the rapid growth in buildings energy consumption, the IEO2017 Reference case shows that, among the IEO2017 regions, India’s per capita buildings energy use through 2040 is the second lowest after Africa.

graph of India buildings energy consumption by fuel, as explained in the article text
Source: U.S. Energy Information Administration, International Energy Outlook 2017 Reference case

Rapid economic growth, rising income, growing population, and urbanization are factors in the growth in India’s buildings energy consumption. Patterns of energy use vary between rural and urban populations. India has the world’s highest projected gross domestic product (GDP) growth rate among the IEO2017 regions, averaging 5.0% per year from 2015 to 2040.

During the projection period, household disposable income in India is expected to increase by an average of 4.2% per year, which is the second highest among IEO2017 regions after China. India is projected to account for about 19% of the increase in world population over the projection period, surpassing China as the world’s most populous country in 2023. The United Nations projects India’s population to continue to become more urbanized; about 45% of the Indian population will live in urban areas by 2040, an increase of nearly 12 percentage points from 2015.

Buildings energy consumption represented about 14% of total delivered energy consumption in India in 2015. Although EIA expects the rate of India’s commercial energy growth to be higher than its residential energy growth, the residential sector remains the greater consumer of buildings energy, representing more than 70% of the buildings total throughout the projection period.

In the IEO2017 Reference case, residential delivered energy consumption is projected to grow by an average of 2.4% per year from 2015 to 2040, the fastest growth rate among IEO regions. EIA expects household per capita disposable income to grow by an average of 3.2% per year as more people have access to electricity and the ownership of electricity-using appliances and equipment (particularly air conditioners) grows. As a result, EIA expects residential electricity consumption to increase nearly twice as fast as total residential sector energy use from 2015 to 2040. Electricity’s share rises from 46% of the energy delivered to India’s residences in 2015 to 68% in 2040.

India’s commercial sector accounted for nearly 69% of the country’s gross domestic product in 2015, and this share is expected to continue growing, leading to more energy demand in the commercial sector. EIA projects that total delivered commercial sector energy use in India will increase by an average of 3.4% per year—again, the fastest growth rate among IEO regions. India’s economic growth, rising income, and population growth are likely to increase the need for education, health care, leisure, recreation, and other services, which EIA expects will lead to an increase in demand for lighting, space cooling, and office equipment. In the IEO2017 Reference case, electricity and coal remain the most prominent fuels consumed in India’s commercial sector.

EIA projects the electricity share of India’s total commercial energy consumption to continue increasing, from 59% in 2015 to 65% in 2040, displacing some coal consumption. Buildings energy consumption in India is also affected by various energy efficiency programs such as the Standards and Labeling program and the Energy Conservation Building Codes.

More information about projected residential and commercial buildings energy consumption is available in EIA’s International Energy Outlook 2017.

Principal contributor: Behjat Hojjati