With rising temperatures and humidity, India’s air conditioning market is also growing quickly. Yet for much of the Indian middle class, access to cooling remains constrained by more than just upfront cost. The bigger anxiety is how high the electricity bills will be when the AC is running. This is the gap Gurgaon-based startup Optimist is trying to address, with a focus on making thermal comfort affordable not just to buy, but to run. In a conversation with Optimist CTO Pranav Chopra, we learned how the company is approaching this problem through engineering rather than feature additions. Rather than adapting globally standardised designs for India, Optimist has gone back to first principles, redesigning components for a market where outdoor temperatures can touch 50°C and humidity renders fans and coolers ineffective for much of the year.
Here, you will read about the company’s strategy centred on total cost of ownership, and its use of technologies like microchannel heat exchangers and proprietary algorithms that flag refrigerant loss before it affects cooling. The goal, as Chopra frames it, is straightforward: help tens of millions of households sleep comfortably, without the anxiety of what that comfort will cost them each month.
Optimist is entering a crowded AC market in India. What specific gap did you identify that existing brands are not addressing?
When Ashish (Optimist CEO) and I started, we looked at heat stress in India through a climate adaptation lens. Climate solutions are usually split into mitigation and adaptation. Mitigation, like reducing emissions or using solar, takes time to show results. In the meantime, people have to adapt to rising temperatures and humidity.
That is already happening. Heat is not just increasing; humidity is rising as well. Dry heat is manageable, but humid heat at lower temperatures can be dangerous. This is especially true for the Global South, including India, where conditions are already hot and often humid. So the most critical adaptation becomes cooling.
We looked at how cooling works today. Fans and air coolers have been the default, but they become ineffective in high humidity. Earlier, in cities like Delhi, coolers worked for most of the summer. Now cooling demand has stretched from about six months to eight or nine months, with a shorter dry phase and a longer humid phase.
Last year was a good example. Delhi did not cross 40°C, but it felt extremely uncomfortable because of high wet-bulb temperatures, which combine heat and humidity. It felt closer to Chennai conditions. In such environments, coolers fail, and the only effective solution becomes an air conditioner, which significantly increases energy demand.
Cooling already accounts for about 15% of total energy consumption. At the same time, only around 8% of Indian households have ACs. As incomes rise, this will increase. If we continue with current inefficiencies, by 2030 or 2035, we will need massive investments in power generation just to meet cooling demand. The grid will struggle, and access will become constrained. People may be able to buy ACs but not afford to run them reliably.
So we focused on access. Access is not just about buying the product; it is about being able to run it. We approached this from a total cost of ownership perspective.
We also realised that AC technology has largely been designed for temperate markets. In India, most brands focus on adding features or meeting star ratings, rather than fundamentally designing for local comfort needs. This leads to poor outcomes. ACs either over-dehumidify, making the air too dry, or over-cool the room to remove humidity. Instead of comfort at 25°C, users end up setting 19°C.
We defined our vision as improving access to thermal comfort. In simple terms, success would mean tens of millions of households being able to sleep comfortably, because heat stress directly impacts health and productivity.
To understand this better, we spoke to 30 to 50 customers in their homes during the 2024 Delhi summer. We found that many middle and lower-middle-income households can now afford to buy ACs, typically in the Rs 35,000 to Rs 40,000 range, supported by EMIs and fintech options. Yet many still avoid buying them.
The reason was consistent. People said their neighbour’s electricity bill shot up to around Rs 10,000 after installing an AC. The issue is not just high cost, but unpredictability. They do not know when the bill will spike.
This insight led us to focus on delivering comfort at a much lower energy cost. We also re-examined what comfort means. Many ACs today market minimal airflow, but users told us they prefer strong airflow, often using fans alongside ACs. With better airflow, you can feel comfortable at 26°C instead of 24°C, which reduces energy use.
So we approached the problem in two ways.
From a technology standpoint, we went back to first principles. The current vapour compression system is over 100 years old, with limited recent improvements beyond inverter compressors. We identified scope to improve efficiency within this system.
Our first step was redesigning the outdoor heat exchanger, the condenser, using microchannel heat exchanger technology. This is already widely used in automotive systems, but not in residential ACs. It allows better heat transfer and improves efficiency without increasing cost.
With this approach, we achieved around 40% improvement in efficiency compared to earlier benchmarks. Our 1.5-ton AC has an ISEER of 6.05, and our 1-ton model will reach around 7.0. For context, a five-star rating starts at around 5.6. This puts us ahead of many current offerings, without increasing cost.
Our goal was to show that with the right intent and engineering, you can build a product suited for this market without compromising on cost or efficiency. The industry’s typical approach is to increase size and copper usage to improve efficiency, which raises cost. We avoided that by focusing on smarter engineering instead of adding material.
We also focused on reliability and predictability. An AC should not fail when it is needed most, and it should not create unpredictable expenses. That led us to develop a graded gas charge indicator.
Most ACs only indicate when gas is completely depleted, by which time cooling has already stopped. Our system provides three levels: optimal, needs attention, and critical. This gives users an early warning before performance drops significantly.
This is particularly useful in peak summer, when service delays are common. Instead of suddenly losing cooling and waiting several days for repair, users get time to act in advance. It also helps reduce refrigerant leakage into the environment.
At the same time, we focused on usability. Most AC remotes are complex, with features users do not understand or use. We simplified the interface to make it intuitive, while moving advanced controls to the app.
How have you approached features and usability, especially with the app versus the remote?
It is not a de-featured product. We have all the standard AC features, but we have moved advanced functions to the app to improve usability.
For example, setting a timer on a conventional remote is complicated. You have to set the clock first, then navigate through multiple button presses, and if the remote battery dies, everything resets. In the app, it works like setting an alarm on your phone, which is far more intuitive.
Overall, our approach combines better efficiency, better comfort delivery, and better usability to make cooling more accessible and predictable for Indian consumers.
What’s the underlying technology, if you can share?
It’s just clever algorithm development.
We run the AC in two to three different operating modes over about 15 to 20 minutes, and analyse how various sensors behave. Based on that, we determine the gas charge level.
For example, when there is no gas, the indoor coil temperature is very close to room temperature. If the room is at 27°C, the coil may be around 24 to 25°C, so only a small difference. But identifying partial gas loss is more complex. You cannot rely on a single parameter like temperature difference alone, which is why you need a more sophisticated algorithm.
Our proprietary algorithm evaluates behaviour across multiple operating conditions and can identify whether the gas is optimal, low, or critical. So instead of just saying ‘no gas’, it can indicate that cooling is still happening, but not at optimal levels. For instance, the AC may not reach 22°C but can still maintain around 24 to 25°C. That gives the user time to act.
This also helps detect leaks early. Instead of losing all the refrigerant, you catch the issue in advance, which benefits both the user and the environment by reducing gas leakage.
So the idea is to use engineering and algorithms to solve both user and environmental problems together. It is not a trade-off.
More broadly, this reflects our approach. The industry has typically improved efficiency by adding more material, which increases cost. We believe there is room for smarter engineering instead of just scaling hardware.
At the same time, we are aware of the limits of vapour compression technology. There are physical constraints, and in three to five years, improvements will plateau unless there is a fundamental shift in compressor technology.
That is why we are also working on next-generation systems. Our focus is not just building ACs, but delivering thermal comfort.
We are developing hybrid technologies based on indirect evaporative cooling, specifically M-cycle systems, combined with advanced control logic. These systems aim to use the strengths of multiple technologies together to deliver efficient and cost-effective cooling for typical homes.
This work is still at an early stage, but it represents our longer-term direction beyond conventional AC technology.
So what’s the horizon for this advanced technology?
For that pipeline, we are targeting around three years to reach a pilot product.
For our current vapour compression AC line, we are launching this year. From there, the plan is to improve the product by about 10 to 15% every year.
Right now, our focus is on optimising the outdoor unit. Next, we will work on the indoor unit, and then move towards improving the system as a fully integrated machine.
In parallel, we are developing more advanced control systems, specifically Model Predictive Controls, instead of relying on the basic fuzzy logic used in most ACs today. This will allow more precise control of cooling, enabling both fast cooling and efficient operation depending on the situation.
The AC claims reliable cooling even at 50°C. What engineering decisions, especially around the compressor and heat exchanger, made this possible?
That is a combination of selecting the right compressor and designing a microchannel heat exchanger. When you intend to improve energy efficiency and not reduce the cost of the product. The microchannel heat exchanger technology is inherently 20 to 30% more efficient in heat transfer. Couple that with the most appropriate compressor selection. Usually, all product development intentions are to reduce cost and hit the bare minimum efficiency standard that the government has regulated.
What has happened in India is that there are only two or three compressor models or SKUs powering all ACs in India. One particular compressor model sells around 5 million units, while the total AC market in India is only about 15 million units per year. So 30% of all ACs, across one ton, 1.5 ton, and 2 ton, have the same compressor. Now that cannot be right. All of this has been done for the benefit of scale. You shave off Rs 20 or Rs 30 from your bill of materials. Because that’s your intention: hit 5.0 ISEER, so why would I pay Rs 30 extra?
The recent surge of non-traditional brands in the AC segment suggests a heavy reliance on outsourced manufacturing. Is white labelling effectively powering this expansion?
Yes. At least 15 of the roughly 30 active brands in the market are sourcing the same core product from the same manufacturers, with minor cosmetic changes like branding or external design. These are standardised units produced by white-label manufacturers.
In many cases, these brands are not involved in product design or technology development. They are primarily selling pre-built products.
As a result, nearly 30% of the market consists of essentially identical machines with slight visual differences. The focus is on leveraging production scale to reduce costs by small margins, often Rs 30 to Rs 100 per unit.
This cost-driven approach also affects component choices. For example, many brands use compressors rated for 1.5 tons in 2-ton ACs, pushing them beyond optimal operating conditions, which reduces efficiency.
When we explored this with compressor manufacturers, they confirmed that more suitable and efficient options exist. Surprisingly, these would cost only around Rs 100 more at current volumes, and almost the same at scale.
This challenges the industry narrative that higher efficiency necessarily requires significantly higher costs. In reality, small cost savings at the component level often come at the expense of 15 to 18% efficiency loss. For consumers, paying slightly more upfront could translate into savings of around Rs 500 per month on electricity bills.
You are quoting an ISEER of 6.05, which is among the highest in the segment. Under what real-world conditions should consumers expect to see this efficiency translate into lower bills?
These ratings are based on standardised testing conditions used across the industry. The tests follow international ISO standards, adopted in India through BIS.
The AC is tested at 35°C outdoor temperature and 27°C indoor temperature. Both full-load and half-load tests are conducted, measuring cooling capacity and power consumption. These values are then fed into a BEE-defined formula, which calculates the ISEER.
So our rating comes from the same standardised conditions used for all ACs.
How do you test AC performance?
The lab includes a psychrometric testing setup with two rooms.
One measures air properties, temperature and humidity, at the inlet and outlet. The difference in enthalpy gives cooling capacity.
The second room is an environmental chamber where temperature and humidity can be controlled.
Can you test extreme conditions?
Yes. We can simulate outdoor temperatures up to around 50°C.
At 46°C, the system delivers over 100% of rated capacity. Even at 50°C, it continues to provide meaningful cooling, with indoor temperatures about 7 to 8°C below the set point.
The product uses a microchannel heat exchanger and an electronic expansion valve. How do these improve performance over conventional designs?
In a conventional AC, you have copper tubes with aluminium fins. Refrigerant flows through the tubes, and air passes over them to transfer heat.
In a microchannel heat exchanger, the refrigerant flows through multiple very small channels, typically under 1 to 1.1mm in size. This creates many parallel flow paths and significantly increases the surface area for heat transfer.
The result is more efficient heat exchange, which improves overall performance.
Are other companies, globally or in India, adopting this technology?
Some have tried. For example, LG introduced this technology in India around 10 years ago, but it did not succeed.
One reason was market positioning. At that time, competitors pushed ‘100% copper’ as a marketing advantage, framing aluminium negatively. More importantly, the technology was used primarily to reduce cost, not improve performance.
Microchannel systems can either reduce size and cost or improve efficiency at the same size. Earlier implementations focused on cost reduction.
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Was the issue specific to India or more fundamental?
In India, there were also material issues. Aluminium comes in different alloys, and the wrong alloy was used earlier, leading to corrosion concerns.
There are specialised alloys designed specifically for microchannel heat exchangers. They are slightly more expensive but far more suitable.
Another challenge is serviceability. Unlike copper coils, microchannel units cannot be repaired on-site through brazing.
So how do you address service and durability concerns?
The approach is to design for durability rather than repair.
If you select the right alloy and coating, the system should not leak for many years. In rare failure cases, around 0.5% to 1%, the unit can be replaced under warranty. This is comparable to existing warranty structures.
We validated this using an acetic acid salt spray test, an international standard for corrosion testing. Our unit lasted around 900 to 1,000 hours under continuous exposure, which indicates strong durability, even in coastal conditions.
What about corrosion in real-world environments like NCR?
In areas like Noida, corrosion often affects the indoor unit due to condensation mixing with polluted air, forming mild acids.
We have not yet implemented microchannel technology in the indoor unit because it requires further work on coatings for such conditions.
For the outdoor unit, our testing indicates strong resistance even in harsh environments.
How does the global adoption of this technology differ from India?
Globally, microchannel technology has mainly evolved for heat pumps, not cooling-only ACs.
In markets like North America, Europe, and Japan, systems are designed for both heating and cooling. This creates different engineering challenges, such as condensation drainage and frost handling.
These challenges have been addressed over time, especially in Europe’s heat pump push.
Why hasn’t it been widely used for cooling-only systems?
Because global markets do not face extreme heat conditions like India.
Typical usage temperatures in the US or Europe are much lower. High-ambient cooling at 45 to 50°C is a problem unique to regions like India.
So globally, this technology has not been optimised for such conditions. That is the gap we are working on.
Many brands now market AI-driven cooling. Do you think AI influences consumer choice?
Our gas indicator is not AI. It is engineering and algorithms.
AI, as a term, initially attracted attention, but now it is being overused. Many brands are adding ‘AI’ to every feature without real substance.
Consumers are beginning to see through this. The differentiation window for such terms has become very short.
So does AI matter from a marketing perspective?
In the short term, yes. But it will quickly become noise.
Every brand is using AI as a label. Over time, this leads to fatigue, and it may even hurt companies that are actually building meaningful AI systems.
What would ‘real AI’ in ACs look like?
True AI-driven control would require different hardware and processing capability, which current ACs do not have.
At best, some companies are using machine learning to refine control logic, which is still meaningful, but not the same as true AI.
There is also a misconception that Wi-Fi equals AI, which is not accurate.
What is your approach to AI going forward?
We are building towards it by first collecting data.
We are developing physics-based system simulations and plan to build genuinely AI-driven control systems over time. That is why all our ACs will be connected to enable data collection.
How reliable are current testing standards in reflecting real-world performance?
Current standards are limited.
They are based on a single condition, 35°C outdoor and 27°C indoor. Real-world performance varies significantly across different conditions.
Researchers like Yashkumar Shukla at CEPT, working with organisations like RMI, are pushing for improved testing standards that reflect real usage.
What is the issue with current testing methods?
Manufacturers optimise systems specifically for the test condition, a process called cycle balancing.
So performance is maximised at 35°C, but behaviour outside that range is not well understood. There is very little data on how ACs perform across a full temperature range, say from 28°C to 45°C.
Does that mean even brands lack real-world performance data?
Yes. Most companies do not have comprehensive data across operating conditions.
This is a major gap in the industry, and one we aim to address by collecting and analysing real-world data.
Are ACs suitable for coastal or high-humidity regions?
They are not explicitly tested for those conditions.
Most coatings used today are standard solutions, often applied without deep optimisation for specific environments.
So, performance can vary by location?
Yes. An AC that works well in Delhi may not perform the same in coastal cities.
The challenge is to handle this variability without creating different products for each region.
How do you plan to address this?
Through control algorithms.
In the future, software or firmware updates could optimise performance for different regions, such as Chennai versus Delhi, without changing hardware.
At the same time, hardware must meet a strong baseline for durability across conditions.
What steps have you taken on durability?
We selected an alloy that exceeds typical automotive standards.
While many Indian automotive components are designed for around 500 to 600 hours of corrosion resistance, our system has been validated at around 1,000 hours.
This should improve performance in coastal and polluted environments.
What is your go-to-market strategy?
We are focusing on three cities initially, Delhi NCR, Bengaluru, and Hyderabad.
The plan is to build strong service and installation networks in these regions over one to two seasons before expanding.
Pricing starts at Rs 37,990 with installation and warranty. How are you managing costs?
We are not managing costs through compromises. We are managing it through better engineering.
The compressor and heat exchanger account for 50% to 60% of the total cost. Our design improves efficiency without increasing their cost.
At scale, our bill of materials is comparable to or better than incumbents.
How does this differ from typical industry practices?
The industry often designs for performance first and then cuts costs later, or adapts products from other markets by reducing materials.
In India, this sometimes includes reducing copper thickness, which impacts reliability.
We approached it from first principles, using established technologies and adapting them properly, without introducing unnecessary cost.
Where are you manufacturing?
We are manufacturing in Haridwar through a contract manufacturing partner.
How are you building trust as a new brand?
Trust is critical, especially among middle and lower-middle-income consumers.
We are focusing on transparency and accurate claims. For example, we report true capacity instead of relying on regulatory tolerances.
We are also setting up experience stores and exploring mobile demonstrations to allow customers to experience the product before buying.
What is your broader roadmap from a climate perspective?
Our goal is to improve thermal comfort, not just sell ACs.
We are challenging the industry model where efficient products are treated as premium. Many consumers understand the long-term value of efficiency, but the industry is not engaging with them properly.
How are you staying connected to users?
We ensure that leadership and R&D teams are directly involved in customer interactions.
Even engineers will engage with customer feedback, so product decisions are grounded in real-world experience.
Can you give an example of this approach?
While developing the gas indicator, the engineer had to decide thresholds for alerts.
Instead of purely technical criteria, we based the decision on user impact, deciding whether a false positive or false negative would be worse for the customer.
This customer-first thinking applies even at the algorithm level.
What does the long-term roadmap look like?
We will continue improving the current AC platform step by step.
At the same time, we are working on deeper technology development, including compressors and hybrid cooling systems.
The goal is to push beyond current limitations and build fundamentally better solutions over time.
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