Energy Efficient Inverter AC is the Future - Interview with Daikin India's Managing Director

On refrigerants

1. Under the Montreal Protocol, India is currently phasing out use of HCFC-22 - an ozone-depleting chemical refrigerant used in room ACs. What is your company's strategy for phasing out HCFCs?

Under the Montreal Protocol, India has signed the HCFC Phase-out Management Plan (HPMP) to phase out HCFC-22, which is not only an ozone depleting potential refrigerant, but also has high global warming potential (GWP). So, as far as Daikin is concerned, we have already phased out R-22 from our residential range of AC's that includes both Fixed Speed AC and Inverter AC's, because HCFC-22 is predominantly used in residential ACs. Our whole residential AC line-up has been converted into a refrigerant known as R-32 which is a hydro fluorocarbon, known as HFC-32. The advantage of R-32 is that it is more energy-efficient, has zero ozone depleting potential and the GWP is one-third of R-410a and almost one-third as R-22.

2. When did the phasing out of R-22 begin and in what way has it helped?

There are two predominant refrigerants which are currently used in India, one is R-22, which is an HCFC and currently being phase out under Montreal Protocol, and the second one is R-410a, which itself is a 50:50 blend of two HFCs - refrigerants R-32 and R-125. R-32 is not a new refrigerant, it was developed in the 1990's, but Daikin started using it as standalone refrigerant in 2012. In that year, we converted our partial line-up to R-32 from R-22 and by 2013, the entire line-up got converted. It has helped because R-32 has better energy efficiency and less charge size as compared to both these predominant refrigerants currently used in India, namely R-22 and R-410a. As compared to R-22 which depletes the ozone layer and has a high GWP, R-32 is ozone friendly with a lower GWP that is almost one-third. When compared to R-410a, which has even higher GWP than R-22, R32's GWP is one-third.

3. For the past few years, increasing attention is being given to HFCs - which are not ozone depleting but add to global warming. In January, Prime Minister Narendra Modi and US President Barack Obama announced that India would work to address these gases in Montreal Protocol in 2015. How does this impact your company strategy when selecting a new refrigerant replacing HCFC-22?

Our strategy to convert our residential product range from R-22 to R-32 was very encouraging and advantageous. The Indian market responded very well to this and we are able to sell more than 2,50,000 AC's in FY-14 with R-32 refrigerant. As for the global market of R-32 AC, in Japan we sold 3 million ACs with R-32 and apart from that we have launched these ACs in 27 European countries. Also simultaneously, R-32 ACs have been launched in Australia, Thailand, Indonesia, Philippines, Vietnam and Malaysia. In Japan, apart from residential AC range, light commercial AC's till 4.5 Tonnes are also launched with R-32 refrigerant.

4. Are you aware of the environmental impact of the HCFC-22 alternatives available? Has your company evaluated these technologies or alternatives?

We evaluated all the available options with alternate refrigerants including HFC's like R-410a and then decided to move towards R-32.

After assessing these alternate options including R-410a, we evaluated the performance of these alternatives at high ambient temperature and it was seen that performance of R-32 is better by almost 10 to 15% when compared to alternatives like R-410a. Apart from that, the refrigerant charge volume is reduced by 30% as compared to R-410a. Also from the perspective of economical viability, R-32 is economical and is available at almost same price as R-22.

So we can state that R-32 is the most balanced refrigerant as compared to other alternates currently available with regards to parameters like efficiency, ozone, price, safety, life cycle, and climate performance

Also, as far as R-410a is concerned, it is a blend of two gases, R-32 and R-125 in a ratio of 50% each. Therefore, it becomes quite complex for a refrigerant manufacturer to deal with the issues of availability, mixing etc, where as R-32 is a single chemical refrigerant.

5. What are the safety implications of transitioning to alternative refrigerants? What steps has your company taken to address safety in manufacturing? What is the safety for the end user? Does this add to the cost of your products?

As far as safety is concerned, while using this refrigerant in AC's, we assessed all the parameters like operating pressure etc and we carried out some minor modifications in our production line as we converted directly from R-22 to R-32.

Daikin, along with Japan's Ministry of Economy, Trade and Industry (METI) also organized R-32 training to service technicians. When it comes to cost, the price of R-32 AC is same as R-22 AC.

On efficiency

1. The room air-conditioning market in India, worth Rs 9,500 crore, is expected to double in the next three to four years with a 15 per cent growth. What does this mean for the AC industry?

It is a very positive thing for the Indian AC industry, since it has been growing for the past few years. The growth has picked up this year and as per recent reports by NRDC and CEEW, by 2030, 300 million ACs will be installed. As of now, 70% of the installation is yet to happen, only 30% has been done till now. So, from the growth point of view, it is really amazing and we have a clear cut strategy of promoting R-32 refrigerants and inverter AC, since it is the future. Daikin inverter AC proportion isapproximately 35% to 40%. Moreover, the Indian industry is moving towards growth with the introduction of various technologies like inverter ACs and Variant Refrigerant Volume (VRV).

2. A recent report by leading think tank Council on Energy, Environment and Water (CEEW) estimates that emissions from room AC use in India can be reduced by up to 38% by enhancing efficiency and shifting to low global warming refrigerants. What is your take on this? What steps is your company taking to improve the energy efficiency of products?

Inverter AC is an emerging technology, so from that point of view, we have done a lot of analysis, with regard to comparing them with fixed speed AC. In some of the branding by Daikin, over the last few years, there is a saving of 64% inverter ACs, compared to fixed speed ACs. Also, by using R-32, the condenser side has been reduced by 10% (condenser means outdoor unit, because in split ACs, there is an indoor unit, installed inside a room. and the outdoor unit \ installed outside and to release the heat). In terms of saving, it has been to the extent of 64%. We have done an analysis and also introduced a model in India, which is one of the most efficient. It has a co-efficient of performance (COP) of 3.8 and with that we can easily save about 64% of energy. So, these are the steps which have been taken by Daikin, wherein R-32 can save 10% and the inverter AC can save about 64%.

3. What are the barriers and opportunities for enhancing energy efficiency in room ACs in India?

The Bureau of Energy Efficiency (BEE) revises energy performance standards every two years. BEE is expected to introduce new standards ave new standards that include inverter AC into the standards and labeling programme. What we feel is that this is an opportunity, because when inverter AC is endorsed by the BEE, people respect it and then choose a more efficient product.

With regards to barriers, the performance standard is revised every two years. By the time the industry sets its product line-up for one year, next year they have to change again. Secondly, the refrigerants come under the Ministry of Environment and Forests (MoEF). So, there are no guidelines to use low GWP HFCs in India. Therefore, some of the guidelines need to be formulated as to how India can move from HFCs to low Global Warming Potential (GWP) HFCs.

4. BEE's Standards and Labelling (S&L) Program requires mandatory rating of ACs sold in India. The stringency of the rating increases every two years. In what way can the S&L program and other policies be more supportive of growth in the AC industry?

The S&L programme by the BEE should consider extending the rating from two years to at least three to four years so that the industry can streamline their product basis and sell that accordingly. The current programme is valid only for fixed speed ACs and that too which are less than 3 tonnes. They should also think about the industry which is selling ACs that are more than three tonnes in capacity. For the benefit of the industry, some of the technologies like fixed speed ACs and inverter ACs should be combined so that consumers can choose a higher energy efficient product in the market. They should think about merging the technologies so that the industry can explain to the consumer and the consumer in turn can choose a more efficient product.

5. What is the level of consumer awareness about environmentally friendly aspects of ACs? Which aspects are the most important: energy efficiency, refrigerants, maintenance or costs? Is cost the only factor for the consumer?

The top most criteria is of course the cost factor, but that is mostly in Tier II and Tier III cities, wherein they buy just one AC, which is two star or three star and is competitive in the market. In metros, some of the consumers are more aware and want to opt for ACs which are energy efficient. However, research shows that while aspects such as features, specifications and energy efficiency are significant, cost is still a predominant factor that dominates the concerns of the Indian consumer.

Inverter AC: The market in India is about 9% to 10%, so those are premium customers who opt for it. In fact for them, energy efficiency matters much more than cost.

6. How would you rate the ACs manufactured at your end, as far as maintenance is concerned? Does this have an impact on efficiency?

Generally, what Daikin does is offer a five-year warranty on compressors and one-year warranty on ACs .We also offer Annual Maintenance Contract (AMC) which a consumer can opt for and our service engineers go and do the maintenance. However, if the consumer continues to use the AC for three to four years without any maintenance, it will affect his appliance. Since pollution levels are high and a lot of dust accumulates, choking is possible and impacts efficiency. So, we recommend that customers go in for maintenance on a half-yearly basis.

Steering ahead

1. What are your company's expansion plans for 2015 and the next few years? What is your current capacity for manufacturing these environmentally friendly ACs?

In India, we are manufacturing till 2 Tonnes R-32 ACs. But in Japan, we have also launched ACs which are 4.5 tonnes. In the longer run, you will see a lot of R-32 ACs coming up in both the residential and commercial AC category.

Keeping the consumers in mind, we have developed a campaign where we have tried to make them aware about environment friendly ACs and refrigerants. India being a price sensitive market, such green technologies will also help the consumer save cost and energy. The cost of an inverter AC is higher by Rs 4,000 to Rs 5,000, but they can recover that money within one year.

2. What would your advice be to other Indian AC manufacturers considering using R-32 as a refrigerant alternative to HCFC-22?

Currently, R-22 is used in residential ACs and in light commercial ACs, whereas R-410a and R-134-a is used in commercial ACs like chillers. So, they should look for refrigerants which can cater to residential AC and commercial requirement in the near future. While R-22 can be replaced by R-32, for other commercial ACs, other refrigerants are yet to be developed. They should look for an option which can cater to residential and light commercial ACs. HCFC is going to be phased out by 2030 and the government has already defined reduction levels. Since the demand is high and the availability is going to be very less, they should choose a refrigerant which is commercially available in the market.

This article was originally published in the Energy Manager quarterly magazine of the Society of Energy Engineers and Managers (SEEM) in India, Vol. 8, No. 01 (Jan-March 2015).