Andhra Pradesh’s $5 Billion Energy Transition – Investment Opportunity through District Cooling

Andhra Pradesh is rapidly emerging as one of India’s most climate-vulnerable states, experiencing the highest number of heatwave days in South India. In 2024 alone, temperatures soared to 47.7°C. As air-conditioning becomes more widespread—with national penetration expected to rise from 8% to 40% by 2038—cooling demand across buildings, cold chains, transport, refrigeration, and industry is projected to increase installed cooling capacity eightfold compared to 2018.

In Andhra Pradesh, peak electricity demand is expected to rise by 57% within the next five years, reaching nearly 20 GW by 2029, largely driven by increased cooling needs. A business-as-usual approach—focused solely on renewable energy uptake or incremental efficiency measures—will not suffice to meet the state’s energy and climate goals.
Recognising this challenge, Andhra Pradesh is already taking proactive steps. The state’s draft Energy Efficiency and Conservation Policy 2023–2028 calls for promoting advanced technologies for energy conservation. These ambitions are also being reflected in discussions on the forthcoming Industrial Policy. One key solution under consideration is District Cooling.

District Cooling Systems (DCS) centralise the production and distribution of cooling, improving energy efficiency, enabling renewable energy integration, and reducing environmental impact. DCS can be coupled with sewage treatment, waste-to-energy, and other urban systems to create circular, resource-efficient infrastructure. By treating cooling as a public utility, DCS ensures affordability, reliability, and equitable access across diverse urban settings.

Andhra Pradesh has already taken a pioneering step. In 2019, the Andhra Pradesh Capital Region Development Authority (APCRDA) signed India’s first Public-Private Partnership concession with Tabreed to develop a 20,000 refrigeration tonne (RT) DCS in Amaravati. Designed to reduce electricity demand for cooling government buildings such as the High Court and Secretariat by 50%, this project sets a precedent for integrated planning.
If District Cooling is scaled across high-density urban zones as per Amaravati’s masterplan, the state could attract USD 4 billion in investments, reduce installed cooling capacity by 700,000 RT, lower peak electricity demand by 1.8 GW, and cut carbon emissions by 2.6 million tonnes.

Beyond Amaravati, the report explores opportunities in upcoming mega-projects such as Bhogapuram Airport, Jawaharlal Nehru Pharma City, Sri City, and planned IT parks and data centres. Together, these could benefit from 475,000 RT of District Cooling capacity, translating into USD 880 million in investment potential and over 500 MW in peak power savings.

This report highlights the transformative role that District Cooling can play in achieving both sustainable development and economic growth in Andhra Pradesh. With the right policy support and integrated urban planning, the state has the opportunity to become a national leader in low-carbon cooling.
 

This report is an initiative undertaken as a part of the Memorandum of Understanding signed between Tabreed India and Gesellschaft für Internationale Zusammenarbeit (GIZ)’s ‘Energy Efficiency Cooling’ programme, jointly implemented with the Bureau of Energy Efficiency (BEE), Ministry of Power, and funded by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) as part of the International Climate Initiative (IKI), to accelerate adoption of sustainable cooling practices.