India’s data centre boom drives call for industry body, power planning

Last December, IT Secretary S Krishnan had said the ministry was in discussions with the ministries of power, and new and renewable energy, and other related agencies to prepare a roadmap to ensure that the growing numbers of data centres in India — a function of the global artificial intelligence (AI) boom — are offered enough power supply.

“The representatives from MeitY and Nasscom raised concerns regarding the absence of a dedicated association or platform representing the diverse stakeholders in the data centre industry,” according to the meeting minutes reviewed by The Indian Express.

“In response, the Chairperson, CEA, suggested the formation of an association or platform along the lines of those representing other sectors, such as battery storage and solar energy, to facilitate easier communication with stakeholders,” the minutes noted.

During the meeting, Ghanshyam Prasad, the CEA chairperson stressed the importance of coordinating with generation and transmission planning authorities to meet the high electricity demand of data centres.

Representatives from MeitY pegged India’s current data centre capacity, excluding facilities under defence and banking, at 1.2 GW, which they said is expected to grow to 15-17 GW by 2030.

“The visibility provided by MeitY and NASSCOM may be the under projection of the data centre industry, which may result in the understatement of electricity demand,” Prasad said in the meeting.

At the time of the meeting, the CEA projected a national data centre load of 4.2 GW by 2031-32, based on information received from distribution companies (discoms).

However, in a February meeting of a committee under the Central Transmission Utility of India Ltd (CTUIL), representatives from a Maharashtra discom estimated that Navi Mumbai alone could see 7-8 GW of data centre load in the near future.

Then, in a Lok Sabha reply on February 10, the Union Minister of State (MoS) for power Shripad Naik said power demand from upcoming data centres will stand at 5.6 GW by 2031-32.

Closer coordination between the government and industry is expected to bring more clarity to projections, reducing the risk of over- or under-planning.

In the January meeting, officials also recommended building data centres on the outskirts of major cities — preferably near renewable energy plants — or in tier-2 and tier-3 cities, rather than in densely populated urban cores.

“Transmission line connectivity to data centres in the middle of the metro city will be a very difficult task,” the minutes said.

India’s data centre industry remains in its early stages, with 70-80 per cent of expected investment yet to come in, according to information shared in the meeting. It has attracted over $6.5 billion in investments through private equity, joint ventures, and acquisitions between 2014 and 2024, according to a new report by Anarock Capital.

The report highlights that Mumbai and Chennai dominate the market, together accounting for 70 per cent of the country’s total data centre capacity. It also projects that in 2025, an additional 617 megawatts (MW) of capacity will come online, increasing the total from 1.4 GW in 2024 to 2.1 GW.

In the January meeting, Nasscom said India contributes nearly 20 per cent of global data consumption but hosts only 3 per cent of data centres.

“Furthermore, the CAGR of data centre industry in India is 24 per cent while globally it is around 80 per cent. Hence, there is need to take steps for the growth of the industry and expand its footprint,” it said according to the meeting minutes.

The industry also highlighted “significant challenges related to power supply, telecom infrastructure, and taxation” during the meeting.

“India may become hub for the data centres as India is very economical and politically friendly country. However, factors such as reliable power (as Al data centres will require more power compared to traditional data centres), requirement of green power, permissions from the various departments etc. will play major role in expansion of this industry,” the minutes said.

With the AI boom, India is expected to become home to a number of data centres, which would have massive energy requirements. As per the International Energy Agency, data centre electricity usage could double by 2026, making the challenge for companies to become net zero or carbon negative by 2030 increasingly unattainable.

This has forced companies such as Google and Microsoft — who have big stakes in the AI game — to sign deals with nuclear power plants to purchase energy for their data centres.

India has approved subsidising the use of more than 18,000 graphics processing units (GPUs) under its ambitious Rs 10,370 crore IndiaAI Mission. These GPUs, which are likely to be the initial thrust, are likely to have major energy requirements.