Powering the Cloud

As data centres multiply across India, rising energy needs can strain transmission networks and challenge the country's clean-power ambitions.

- Himanshu Ojhan

On a scorching afternoon in the summer of 2024, a cluster of 60 data centres known as 'Data Centre Alley' near Washington DC suddenly disconnected from the power grid.

Within seconds, demand equivalent to a city vanished, forcing local officials to scale back output from power plants and avert a blackout in the region.

The incident served as a warning of how sudden shifts in power demand from data hubs can destabilise even advanced grids. As India races to build its own data centre clusters from Navi Mumbai to Visakhapatnam, such highly concentrated energy demand can strain the country's grid, already grappling with ageing infrastructure, renewable integration and transmission bottlenecks.

Energy Dilemma

India's data centres are poised for significant expansion, driven by 800mn internet users, rapid adoption of AI and increasing reliance on cloud services. The sector's capacity is expected to grow dramatically from 1GW in 2024 to 9GW by 2030 at a compounded annual growth rate (CAGR) of 40%.

The push began in 2018 with the RBI's directive requiring all payment data to be stored domestically, followed by proposals in the Personal Data Protection Bill (2019). Together, such regulatory changes are forcing global giants to create more capacity within India's borders, explains Narendra Sen, founder of Neev-Cloud, an AI cloud-service provider.

Google, for instance, announced a massive $15bn AI data hub in Andhra Pradesh, which is its biggest investment in India till date. In January, Amazon Web Services (AWS)—the cloud-computing arm of the global e-commerce conglomerate—said it would invest $8.3bn to expand its Mumbai cloud region. Social-media giant Meta, too, is preparing to make multi-billion-dollar investments in a subsea cable project.