India’s Data Centre Boom Opens Up A Fresh Segment For Green Developers

Highlights :

* Buoyed by one of the cheapest global green tariffs and regulatory pressure, India to add a clutch of power-intensive data centres.


* Ease of clean power procurement through green energy open access, onsite solar setups and corporate net-zero plans push adoption of renewable energy at these power hungry buildings. 


* Pegged at around 1 GW in terms of capacity, data centres are likely to see an additional 80% bump in capacity over the next 2 years.

India’s Data Centre Boom Opens Up A Fresh Segment For Green Developers India's Data Center Boom Promises New Avenues For Green Firms

By-Tej Prakash Bharadwaj & Manish Kumar  

Notwithstanding the sluggish growth of data centres in India in the early 2000s, the advent and popularity of AI means that the data center sector in India is now set for a significant expansion matching its status as a regional power. 

With a total capacity of around 1,000 Megawatt (MW) and with more than 200 such centres, India has become one of the hotspots of data centres in Asia after China in 2024. Several global and regional Information Technology (IT) giants have poured in investments in the country to cash in on this expected demand. These include the likes of Yotta with its tier 4 data centres, Adani Connex planning to invest 1.3 trillion rupees in FY2025 and Nxtra by Airtel, currently in the news for joining the RE100.

These large ‘data warehouses’, used for storing data and cloud processing, have been further supercharged by the advent of Artificial Intelligence (AI). Datacentre growth has historically been driven by 5G, Internet of Things, online streaming gaining popularity and the expansion of e-commerce. 

Industry estimates by agencies like CareEdge Ratings and CBRE peg India’s cumulative estimated capacity anywhere between 1,800 MW to 2,000 MW by 2026 from the current capacity of around 1,000 MW. However, the growth of data centres in India is still far behind the growth this segment witnessed in countries like China, United States (US) and the United Kingdom (UK), with China standing at 4.8 GW-nearly 5x that of India. 

In the US for instance, Data Centres have been identified along with EVs as the greatest new drivers of power demand seen in the past 50 years.  Thus, total US electricity demand which was relatively stable at around 4,000 terawatt-hours (TWh) since 2010, is set to change significantly now. The build-out of data centers and widespread adoption of electric vehicles (EVs) is expected to ramp up electricity demand in the US in the coming years, with Rystad Energy’s research predicting these two sectors alone will add 290 TWh of new demand by 2030.

India's Data Center Boom Promises New Avenues For Green Firms

Data centers in different parts of the country. Source: Data Center Map


Overall, the combined expansion of traditional and AI data centres along with chip foundries sprouting from the CHIPS act will increase demand cumulatively by 177 TWh from 2023 to 2030, reaching a total of 307 TWh. This marks a more than two-fold increase compared to 2023 levels, which stood at 130 TWh, highlighting the efforts of the US to position itself as a global data centre hub. Its a path India has set on as well now, ensuring outcomes are also broadly the same in terms of power demand.

Most of the data centres that came up in India emerged mostly in the coastal states and established IT hubs. For example-Mumbai and Navi Mumbai in Maharashtra alone host the largest of 51 data centres. They are followed by Bangalore, Chennai, Hyderabad, Pune, and Delhi NCR. 

But what factors actually decide the location of these data centres? Ashish Verma, Vice President (Business Development) at Gensol Engineering who has expertise in data centres and the renewable sector spoke to Saur Energy. “A lot of data centres emerged in Mumbai and other coastal areas due to the ease in using the undersea optical fibre cables that these data centres utilise. However, it is not the only criteria. Data centres rely heavily on power for their operations. So they need regions where they can enjoy a reliable grid and also easily get skilled manpower who can work in these centres. That is why a lot of them are in the major IT cities of India. States with special supportive policies for data centres also witnessed the rise of these centres,” Verma said.

Policy Support 

The Ministry of Information and Technology in 2020 came up with its draft Data centre Policy to boost its growth.The Union Budget of 2023-24 also gave data centres the status of ‘infrastructure project’ which could expedite its resource mobilization and financing. 

Several states like Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh, West Bengal, Haryana and even Odisha have come up with their state-level data centre policies which allow several incentives  and exemptions in stamp duty, development charges, power, subsidies. Some states like Odisha even allow capital subsidy and tax benefits to them. 

The Telecom Regulatory Authority of India (TRAI) also recommended in 2022 that out of suggested list of 33 Special Economic Zones (SEZs) which are located in areas with surplus power and water, one SEZ can be identified each in Andhra Pradesh, Kerala, Karnataka, Maharashtra, Haryana, UP, MP, Gujarat, Rajasthan, and Odisha, for either converting them into DCEZs (Data Center Economic Zone) or for carving out zones out of these SEZs for establishing DCs/DC parks. TRAI also advocated for giving special incentives to Data Centres that want to establish solar power plants to make their operations green. 

Power guzzlers

India's Data Center Boom Promises New Avenues For Green Firms

Estimation of power demand from data centers.


Data centres are also said to be major power guzzlers due to their whole operations dependent heavily on power. Estimates claim that around 50 percent of their overall power demand and running costs comes from their IT infrastructure alone. It is followed by their other power demands coming from cooling services, UPS, air movement and others. AI makes them even more power hungry, considering the fact that a chatGPT query takes up 25 times more power than a google search. Image generation can consume upwards of 48 Wh PER IMAGE GENERATED.

The International Energy Agency (IEA) says that the data centres and data transmission networks that underpin digitalisation accounted for around 330 Mt CO2 equivalent in 2020 (including embodied emissions), equivalent to 0.9% of energy-related GHG emissions (or 0.6% of total GHG emissions).

It also talks about their impact on global power demand. “After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centres’ total electricity consumption could reach more than 1000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan,” IEA said in its report published earlier this year. 

India's Data Center Boom Promises New Avenues For Green Firms

An IEA report on data centers and electricity demand.


In the days to come, the world is likely to see dedicated Artificial Intelligence (AI) Data Centres too. Giants like Microsoft are buying GPUs en masse to increase their processing capacities, which further increases power usage. 

A report by CBRE released in December 2023 said, “The exponential growth in AI-generated data workload is expected to drive demand for high power density Data centre facilities (~ more than 30kW / rack) as compared to traditional power density facilities (~ 8-10kW / rack).” Cooling these components takes power too.

India & Renewables  

Researchers and rating agencies claim that investing in India for data centres is cheaper. “Data centre set-up is capital intensive with close to 40% cost allocation towards hard costs i.e. land & building. 

(including fit outs), 40% towards the electrical system and a balance 20% towards Heating Ventilation and cooling system (HVAC). India offers low-cost benefits for setting up Data centres aided by relatively cheaper land and labour costs. The capex cost for setting up a Data centre in the country is roughly 45% lower vis-à-vis the world average. In CareEdge Ratings experience the per MW cost in India for setting up Data centre was close to Rs.40-45 crore and it has witnessed escalation due to incremental land, equipment and other soft cost with new capacities being set up at a cost of Rs.60-70 crore/MW,” a report of CareEdge Ratings released earlier in May this year read. 

This is in addition to the cheaper renewable energy at globally competitive tariffs for the data centres and facility to go for onsite renewable projects or procure green power from offsite locations through green energy open access. Owing to the lower tariffs and other co-benefits, several data centres are now transitioning to green energy and many of those have also announced their net-zero plans. 

CtrlS Data Center Building in Mumbai with BIPV solar panels on the vertical walls of the buildings.

CtrlS Data Center Building in Mumbai with BIPV solar panels on the vertical walls of the buildings. Photo by-CtrlS

Take the case of CtrlS, one of the India’s leading data center operators, which has presence in multiple cities. For its Mumbai data center, it roped in Waaree Renewable to install one of the largest Building Integrated Photo Voltaic (BIPV) on their building to use this onsite solar power for its operations with a power of around 1 MW. These vertical solar panels were installed on all the four walls of the building. It covers around 5,000 square feet of facade area. It is estimated that the solar power system will help provide a CO2 emissions reduction equivalent to almost 7,000 trees per year, a statement from Waaree said.

India's Data Center Boom Promises New Avenues For Green FirmsDillip Guru, Senior Vice President at CtrlS, confidently told Saur Energy that the industry is experiencing a growth rate of 30-40 percent globally, with India leading at the higher end of this spectrum.

“The power demand for data centers currently represents about 0.5% of the country’s overall demand. Globally, this figure stands at around 3%. India is expected to rapidly increase its data center requirements to match this global trend. With India’s total demand nearing 250 GW, even a 3 percent allocation would equate to approximately 7.5 GW of data center load soon, compared to the current 1 GW. This highlights a significant potential up from 1 GW to 7.5 GW in a short period,” Guru added. He also said that 60% of the total power capacity of its Noida-based data center is offset by solar power.

CtrlS aims to use 100 percent of energy through renewables by 2030 by adding 1.3 GW of renewable energy across India. Beyond solar, the company is now also looking to include wind energy for their energy needs, especially for their Mumbai and Chennai data centers.  In May 2024, CtrlS opened its third data center in the city of Hyderabad with an investment of over Rs 500 crores. The ‘Artificial Intelligence (AI)-ready’ data center with 13 MW IT load capacity is just Hyderabad’s 25th such data center.

Besides CtrlS, AdaniConnex has also planned to go net-zero by 2030.  Similarly, Nxtra by Airtel has committed to reducing absolute scope 1 and 2 greenhouse gas (GHG) emissions across its operations by 100%, i.e., reaching net zero by FY2031. It has 12 large and 120 edge data centres across the country. The company also uses a mix of captive rooftop solar plants and sources green power through PPAs.

“The company has significantly increased its renewable energy use and has contracted 422,000 MWh renewable energy till now. InIndia's Data Center Boom Promises New Avenues For Green Firms FY 2023-24, Nxtra saved around 156,595 tCO2e emissions by sourcing renewable energy through Power Purchase Agreements (PPAs) and Captive Solar Rooftop Plants, the company said in a statement,” Nxtra says. 

Ashish Arora, CEO — Nxtra by Airtel in a statement said, “We are on a healthy trajectory towards achieving our net-zero goals of 2031 and are happy to become a part of the RE100 initiative with a commitment to 100% renewable electricity.” 

Moreover, one of India’s biggest data centre players NTT India has also planned to power its data centres with solar.  NTT India plans to install 350 MW of solar energy because its data centres’ power requirements are predicted to reach 400 MW in a few years. Global firms like PubMatic claim that all of its global data centres are now using 100 percent renewable energy. Google and NV Energy have even planned to use geothermal energy to power its Nevada data centres in the US. 

Several Indian solar module manufacturers now offer BIPV solutions. These vertical solar options buildings like the data centre buildings to replace their glass facade with BIPV solar panels which can not only reduce the impact of greenhouse gases but also use the vertical facade space to generate solar power. BIPV solar panels, unlike conventional solar panels, lack solid hard frames.

India's Data Center Boom Promises New Avenues For Green FirmsCapt. Ishver Dholakiya, MD and Founder of Surat-based Goldi Solar which manufactures BIPV solar panels too, says that “BIPV panels, an emerging technology, significantly reduce space requirements, especially in densely populated cities like Delhi and Mumbai. Unlike traditional solar modules, BIPV panels integrate seamlessly into building structures, offering aesthetic and functional benefits. Although their energy generation may be slightly lower than standard solar modules, the space-saving advantage and ability to blend into urban environments make them an ideal solution for data centres seeking renewable energy sources,” he said.

He also added, “Today’s data centres are more compact and modular than their predecessors as they provide enhanced security, accessibility, and flexibility in data processing, and enable instant remote access from anywhere in the world. To secure the energy future of data centres, transitioning to renewable sources like solar power is imperative. BIPV systems help offset carbon emissions and reduce rising grid power costs.”

Ishvar said that with Asia experiencing the fastest global growth in data traffic and India being the second-largest and fastest-growing data centre market in the Asia/Pacific region after China, the shift to renewable energy is more crucial than ever.

Green Power & India 

India's Data Center Boom Promises New Avenues For Green FirmsRahul Mishra, Vice President (Commercial and Industrial) at BluPine Energy told Saur Energy that several solar project developers find the rising data centres as good clients in the C&I segment especially in  the data centre-rich states like Maharashtra, Karnataka, Telangana, Tamil Nadu and others.

“The first benefit for them to go for green power is the cheap tariff compared to expensive thermal power sources. Another reason is the entry of several multinational companies which already have their net-zero and sustainability targets which propel them to go green in their power usage,” he said. 

When asked about the mode of clean power procurement, Gensol’s Ashish Verma said that due to the large power requirement onsite solar projects like rooftop solar or BIPV could not be an option. “It is mostly the procurement of renewable energy from offsite locations through Green Energy Open Access,” he added.

Experts said that majority of the clean power demand of data centers is catered through Green Energy Open Access route.

Experts said that majority of the clean power demand of data centers is catered through Green Energy Open Access route.

In the last two years, after the Ministry of Power brought down the minimum contracted power capacity to upto 100 KW to qualify for open access, opting for green energy through open access became wider. This was complemented by more central and state level incentives under the new green energy open access rules. 

Prashant Goyal, Head – Data centre Practice, CBRE-India told Saur Energy that with a push of the Indian government towards dataIndia's Data Center Boom Promises New Avenues For Green Firms localization and Digital India, the growth of data centres in the country is imminent. He also talked about the hurdles in adoption of green power in India by the data centres which he said was related to the higher upfront cost, lack of a reliable grid in some regions and size of area required for renewable projects.

He also added that on an IT load of  1 GW,  while merely 25% of the power used is green power, the future is bright.

“Our estimates say that China, India have the highest Data centre capacity in the APAC region, outpacing Japan, Australia, Singapore and Hong Kong. We anticipate addition of around 800-850 MW of new data centre capacities between 2024-2026. In the last two years, India added around 200 MW of data centre capacities annually which is set to escalate,” he said. Talking about the central and state level policies, he added that these policies mainly talk about incentives to boost data centres but do not mainly deal with incentivising or giving any mandate to the data centres to go green. 


The rise of data centres in India and their mandate and goals to go green has opened up another opportunity  to renewable power firms. For example, the CBRE report said that after creating ripples in India’s metros and IT hubs, these centres will crop up in Tier-II cities of the country soon. 

“Though the DC industry is witnessing an expansion in tier-I cities, leading hyperscalers and cloud service providers are likely to continue exploring emerging untapped markets such as Kochi, Jaipur, Ahmedabad, Lucknow, Patna and Visakhapatnam,” the report said.

Data centres, being on a strong commercial footing with a stronger mandate to go green, will also allow nascent technologies like BIPV to gain a foothold with use cases. Similarly, expect more hybrid setups and battery storage opportunities to open up that help the broader industries gain more experience and achieve scale that will support further price drops. As an expert said, between all the power needs data centres will have by 2030, there is an opportunity to create almost 12 GW of renewable and storage capacities, which should be supported simply because this will happen faster if allowed.

It is also high time that more states come up with attractive policies and support for these Data centres to go green. 

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