Mint Explainer | How India’s data centre boom could strain its power infrastructure by 2030

What are India’s plans for data centre capacity expansion?

India has an installed data centre capacity of 1.2 GW, which will grow to about 10 GW by the end of this decade, with investments of over $200 billion, according to government estimates. India’s cumulative data centre capacity may reach 8-10 GW by 2030, Samir Chandra Saxena, chairman and managing director of Grid India, said at the India AI Impact Summit earlier this week. Large data centres are expected to come up in Andhra Pradesh, Uttar Pradesh, Maharashtra, Telangana, Karnataka and Tamil Nadu.

Why does the growth in data centre capacity raise concerns for the power sector?

Data centres consume large volumes of power. India’s AI-linked data centre build-out is expected to require an additional 40-45 TWh (terawatt hours) of power in 2030, up from 10-15 TWh consumed in 2024. This would increase the share of data centres’ electricity consumption from 0.8% of the total to 2.5-3% by 2030, Niti Aayog said in a report.

According to Deloitte, a traditional data centre consumes 5-10 kW per rack, but AI-focused racks can require at least 10-15 times more power.

Debasish Mishra, chief growth officer at Deloitte South Asia, said these data centres or clusters are likely to consume about 2 GW of power each around the clock and have the potential to change the demand profile of the area and the state, which can impact the national grid. India has an integrated power grid that connects five regional grids into a single, seamless, nationwide network to enable efficient power transmission across the country.

“Although 10 GW does not seem to be a major factor in the country’s large power system with over 260 GW of renewable power, for a state like Maharashtra or Karnataka, 2-3 gigawatts will make a huge difference, for which the required planning might not have been done,” he told Mint. Instances of grid instability due to sudden surge in demand may lead to a grid collapse.

What can be done to address these concerns and ensure smooth operations of data centres?

The major area of concern with regard to electricity consumed by data centres is the lack of adequate transmission capacity. This can be addressed by accelerating growth in power evacuation and transmission. Saxena of Grid India said rapid expansion of data centres over the next few years would significantly alter grid planning and operations.

Acceleration of renewable energy integration through solar-wind hybrid models with storage to ensure reliability for high-density AI workloads, expansion of long-term green power purchase agreements, group captive structures and captive renewable installations to provide tariff certainty would help in easing the bottlenecks, Deloitte Asia Pacific said in a report titled Powering Asia Pacific’s Data Centre Boom released on Thursday.

Apart from upgrading transmission networks and expanding high-capacity substations near growth clusters, Deloitte suggested standardization of state-level renewable banking (storing of excess energy) policies to provide predictable round-the-clock clean power portfolios.

What is the current status of the country’s power transmission system?

India’s power transmission capacity stands at more than 500,000 circuit kilometers (ckm). The government plans to add over 191,000 ckm of transmission lines from 2022-23 to 2031-32. However, only 5,077 ckm was added by December compared with the target of 10,696 ckm for the April-December period. This has resulted in frequent instances of power generation curtailment in Rajasthan and Gujarat in the past few months.

How would green power cater to the demand from data centres?

The power demand from data centres is expected to be met largely by renewable energy as large corporations strive to achieve their climate commitments. To manage rising demand, data centres in India have already started transitioning towards renewable energy sources such as solar and wind power. Integrating renewable energy reduces operational costs, enhances power usage effectiveness, and minimizes environmental degradation.

Data centres in India are also expected to operate in a sustainable manner as they cater to other regions globally. Deloitte noted that India can position itself as a global leader in sustainable AI infrastructure while strengthening long-term energy security.

The AM Group, backed by Greenko founders, said recently their planned 1 GW AI computing hub in Uttar Pradesh will be developed with a capex of $25 billion and it would source round-the-clock green power from the group’s captive renewable power plants.